Market regulator Sebi has said the notional stock appreciation right (SAR) unit issued by companies to its promoters or employees does not qualify for share-based employee benefit regulations.
Under the regulations, the scheme should actually involve "dealing in or subscribing to or purchasing securities of the company directly or indirectly". The Securities and Exchange Board of India (Sebi) has conveyed its views in response to an 'informal guidance' sought by Mindtree on an employee benefit scheme, Phantom Stock Scheme, introduced by the company.

Source - http://profit.ndtv.com