This Q&A is for instructional purposes only. The company does not offer any legal, tax, or accounting advice. Please consult with an advisor if needed.
1) What is a stock appreciation right?
Stock appreciation rights (SARs) are a type of employee compensation linked to the company’s stock price during a pre-determined period. SARs are profitable for employees when the company’s stock price rises, which makes them similar to employee stock options. However, employees do not have to pay the exercise price with SARs. Instead, they receive the sum of the increase in cash. Employees do not need to involve a broker to receive the benefits of a SAR “exercise.” A SAR exercise occurs when an employee is ready to exercise or sell one’s right to hold the instrument. The calculation of net income is located in the Q&A.
2) How do I obtain my SAR?
Respond to the survey and select the SAR choice.
3) What is the grant date of the SAR?
12/23/2021
4) What is the initial strike price (the base stock price to measure against) of the SAR?
The initial strike price will be the close price of Hudson stock (“HDSN”) on the grant date (12/23/2021). The Close Price today (12/15/2021) was $3.90 as per Yahoo Finance- https://finance.yahoo.com/quote/HDSN?p=HDSN&.tsrc=fin-srch.
Please see Q&A for an example of how the strike price is used to calculate net income.
5) What is the expiration date of the SAR?
3 years from date of grant, or 12/23/2024
6) When can I exercise the SAR?
After 6 months from the date of grant, but within 3 years of the date of grant (12/23/2024).
7) After 6 months, who do I contact to exercise the SAR?
Send an email to Human Resources humanresources@hudsontech.com. If not resolved, please contact someone on the Leadership Team.
8) Do I need to pay anything?
No.
9) Do I need to deal with a broker?
No.
10) What if I forget to exercise within the three year period?
You will lose the SAR.
11) How do I calculate my net income?
– Take the stock price close on the date of exercise
– Less: Strike price on 12/23/2021
– Take the difference and multiply by 250
– Subtract taxes (Payroll will calculate)
– = Net income
12) Do I have to pay a penalty if the stock price does not exceed the strike price at 12/23/2021?
There is no penalty- i.e. no cash due from you. However, you will have to wait at least 6 months from the date of grant and until the stock price exceeds the strike price from 12/23/2021 before exercising the SAR. There is a possibility that the SAR expires before this is achieved.
13) Please give me an example of a net income calculation:
THIS IS ONLY AN EXAMPLE
– Stock price close on the date of exercise= $5.00
– Less: Strike price= $3.90 (Used today’s close price)- https://finance.yahoo.com/quote/HDSN?p=HDSN&.tsrc=fin-srch
– Take the difference and multiply by 250= $5.00- $3.90= $1.10 x 250= $275
– Subtract taxes (assume 25%)= $68.75
– = Net income= $275 – $68.75= $206.25 (after taxes)
THIS IS ONLY AN EXAMPLE- ACTUAL RESULTS MAY BE HIGHER OR LOWER
14) How will I receive my net income?
Your net income will generally be processed in the next available payroll.
15) Who do I contact if there is an issue?
Send an email to Human Resources humanresources@hudsontech.com. Or Nat Krishnamurti (nkrishnamurti@hudsontech.com)