If your marriage is dissolving and you or your spouse are entitled to executive compensation, it may be difficult for you to understand how it will be impacted by your divorce. At issue may be employee stock options, such as non-qualified stock options (NQs). Other aspects of executive compensation may include restricted stock, an employee stock purchase plan, or a deferred compensation plan.
Restricted stock for example, is one of the most popular forms of executive compensation. With restricted stock, the employee receives shares of the company stock for past or future performance. With restricted stock, it’s critically important to obtain the grant documents and determine how many shares are part of the marital estate and are therefore subject to division under New York’s equitable distribution laws.
Restricted stock falls into two categories: RSAs or actual shares of stock and right to acquire shares at vesting (RSUs). RSAs are less risky than RSUs, but at the same time they are worth something. Factors such as date of marriage and separation, award dates and vesting schedules determine how much restricted stock is marital and subject to division. Since calculating this is a complex process, it must be done by a certified divorce financial analyst (CDFA).
My Divorce Involves Executive Compensation
If your divorce involves executive compensation on your behalf or your spouse’s, our advice is to get our firm and a CDFA involved as early as possible. If you can bring on a CDFA before the discovery phase, even better. The CDFA will help you determine exactly what is marital and what is separate property. Preparation is key because it will prevent you from having to scramble last minute if you end up in litigation.
It also helps to have the CDFA available in case he or she is needed for any depositions. This way, they can act as a qualified expert early in the process. Sometimes, this is just what you need to encourage a satisfactory settlement!