The South Dakota Stock Appreciation Rights Plan of The Todd-AO Corporation is a unique financial program designed to reward employees by granting them stock appreciation rights (SARS) within the company. SARS is a form of compensation where employees have the opportunity to benefit from the increase in the company's stock price over a specified period. This innovative plan allows employees of The Todd-AO Corporation to participate in the growth of the company and align their interests with that of the shareholders. By granting SARS, employees are given the right to receive a cash payment equal to the appreciation in the company's stock value during a predetermined period. The South Dakota Stock Appreciation Rights Plan is created under the jurisdiction of South Dakota, providing employees and the corporation with certain advantages. South Dakota is known for its favorable business and tax environment, making it an appealing choice for The Todd-AO Corporation to implement this type of compensation program. There are several types of SARS that could be part of the South Dakota Stock Appreciation Rights Plan. These variations allow flexibility and customization based on the company's objectives and employee preferences. Some different types include: 1. Phantom Stock SARS: Under this type of SAR, employees are granted virtual shares equivalent to the number of SARS granted. They receive cash payments based on the increase in value of the phantom stock, thus obtaining similar benefits to actual shareholders without becoming shareholders themselves. 2. Tandem SARS: Tandem SARS are granted alongside existing stock options, allowing employees to choose between exercising the option or SARS, whichever provides the most financial advantage at the time of exercise. 3. Reload SARS: Reload SARS are designed to enable employees to benefit from subsequent increases in stock value after exercising the initial SARS. After the exercise, additional SARS are granted, providing ongoing opportunities to participate in the company's growth. 4. Performance-Based SARS: This type of SAR is based on certain performance criteria, such as meeting revenue targets or achieving specific milestones. Employees receive cash payments from the SARS only if the predetermined performance goals are met. These various types of SARS within the South Dakota Stock Appreciation Rights Plan allow The Todd-AO Corporation to efficiently reward and retain talented employees while also encouraging their participation in the company's long-term success. This compensation program serves as a powerful tool to motivate employees and foster a positive and productive work environment.