Management decides to allocate 1,000 shares to a particular employee at a market value of $50.00 per share under a share appreciation rights plan.One year later,the value of these shares has increased to $65.00.How many shares would this employee actually receive as a bonus at the end of the year?

Question

Quizplus · Accepted Answer

Under a share appreciation rights plan, the employee is entitled to the increase in the value of the shares, not the shares themselves. The increase in value is $15 per share ($65 - $50). For 1,000 shares, this totals $15,000. At the new value of $65 per share, this equates to $15,000 / $65 = 230.8 shares.

Management Decides to Allocate 1,000 Shares to a Particular Employee