Stock appreciation rights plan would like to pay out the SAR's value in fixed installments over five years after the date of exercise. Employer desires installment payments over time for cash flow management purposes. Does this constitute a "feature for deferral of income other than the deferral of recognition of income until the exercise of the stock appreciation right" that blows the SAR's 409A exemption? The plan's structure meets all the other criteria for exclusion from 409A coverage. Are most employers simply paying out the full SAR value in the year of exercise? Thanks.

Did you ever get an answer to this question? I am looking at the same issue. Thanks

Certainly appears to me to constitute a "feature for the deferral of compensation" within the meaning of the first sentence of 1.409A-1(b)(5)(i)(D), which would put it outside the stock right exemption. I usually draft SAR Plans to make sure they are paid within 60 days of exercise.