خيارات الأسهم الطلاق نج

خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
تقسيم خيارات الأسهم في طلاق أريزونا | ينكدين.
خيارات الأسهم غالبا ما تكون جزءا من تعويضات الشركات وخطط الحوافز. إذا كان الموظف في شركتك يملك خيارات الأسهم ونقلها إلى الزوج في.
خيارات الأسهم في الطلاق |
خيارات الأسهم والطلاق - مكاتب القانون في وارن ر. شيل متخصصة في الطلاق والحضانة، وتتناول المسائل المتعلقة بحضانة الطفل وزيارته، الطفل.
5 أشياء يجب معرفتها عن خيارات الأسهم والأسهم المقيدة.
اقترح بعض الممارسين والمعلقين & كوت؛ خط مشرق & كوت؛ حكم لإدراج خيارات الأسهم في العقارات الزوجية.
خيارات الأسهم، الطلاق واستخدام الثقة كالاهان.
27.05.2018 & # 0183؛ & # 32؛ لا أعرف كيفية التعامل مع خيارات الأسهم الخاصة بك و / أو الأسهم المقيدة في الطلاق الخاص بك؟ اقرأ هذه المقالة لمعرفة كيفية المتابعة.
الطلاق - تقييم وتقسيم خيارات الأسهم.
الطلاق: الأسهم والشركات المقفلة. من العمل وانه يرفض المشاركة في الأعمال بعد الطلاق إذا أنا منحت الأسهم؟
خيارات الطلاق الخمسة في نيو جيرسي | الطلاق المحامي نج.
ما هي خيارات الطلاق في نيو جيرسي؟ هناك 5 خيارات الطلاق في نج ولكن ليس كل الخيارات متساوية وبعض قد يثبت أن غير كافية.
الموظفين خيارات الأسهم والطلاق - قانون تف.
يناقش مارك سكروجينز كيف يمكن أن تتأثر خيارات الأسهم خلال حالة الطلاق في محاكم تكساس.
تقسيم خيارات الأسهم في الطلاق - فوربس.
который вы просматриваете، этого не позволяет.
فاميلي لو نيوس موظف الأسهم الخيار شعبة في الطلاق.
آثار ضريبة الدخل الاتحادية على عمليات نقل حقوق أصحاب العمل المكتسبة المتعلقة بالطلاق. ماذا يحدث مع نقل ذات الصلة الأوراق المالية صاحب العمل.
الطلاق وخيارات الأسهم | هامرل فينلي لو فيرم.
من خلال الطلاق في نج؟ البحث عن المشورة والعلاج، ومجموعات الدعم، والموارد للرجال والنساء والمثليين والتكيف على التوالي مع الطلاق أو تفكك.
لا تتغاضى عن خيارات الأسهم في الطلاق | فله | مو، إيل & أمب؛ KS.
يمكن أن تكون الخيارات غير المفهرسة صعبة القيمة، ولكن لا ينبغي إغفالها عندما ينفصل الزوجان عن طرق.
نيو جيرسي الطلاق المصدر: قانون الأسرة، والحضانة، والنفقة.
تجنب الانزعاج وارتفاع تكلفة الطلاق القياسية! اختيار الطلاق التعاوني والحصول على المساعدة من نج الطلاق الوساطة والحلول المالية مقرها في.
divorcesource.
التوزيع العادل لخيارات الأسهم. أما مسألة ما إذا كانت خيارات الأسهم التي تم الحصول عليها بعد تقديم شكوى الطلاق قد حصلت على منح نج 08054 -5016.
كيف تبدأ عملية الطلاق في نيو جيرسي.
تقسيم الممتلكات المعقدة في نيو جيرسي تقسيم الملكية ستكون دائما واحدة من تقسيم خيارات الأسهم في إجراءات الطلاق يعتمد على نج 07960.
الطلاق وخيارات الأسهم - لا-الأسرة.
خيارات أسهم الموظفين والطلاق ما قد تفعله المحكمة العليا نج إذا قررت أن مجموعة من الخيارات التي تم منحها لمزيج من قبل وبعد.
تقسيم خيارات الأسهم والأسهم المقيدة في الطلاق.
2 млн + проверенных поставщиков на Алибаба. Получите выгодное предложение!
خيارات الطلاق غير مكلفة في نيو جيرسي | LegalZoom.
26.02.2018 & # 0183؛ & # 32؛ الطلاق يمكن أن يكون انقطاعا كبيرا في الخطط المالية للأسرة. وقد عمل (إرس) والكونغرس فعلا لجعل الإجراء الصعب أقل.
نقل خيارات الأسهم المكتسبة لصاحب العمل في الطلاق.
19.03.2018 & # 0183؛ & # 32؛ تقسيم خيارات الأسهم والأسهم المقيدة في الطلاق حتى لو كان مجرد المنزل والحسابات التقاعد التي تحتاج إلى تسوية، وتقسيم الأصول.
ديفورس أكونتينغ نج - أورباش & أمب؛ أبراهام، كباس.
07.08.2018 & # 0183؛ & # 32؛ خيارات الأسهم والطلاق في ولاية اريزونا أصدرت محكمة الاستئناف في ولاية أريزونا قرارا بشأن ما إذا كانت خيارات الأسهم التي لم تخلف قبل.
الطلاق في نيو جيرسي: دليل المساعدة الذاتية (2018 - لسنجلاو.
نيو جيرسي الطلاق المصدر هو مصدر معلومات الطلاق لقوانين الطلاق نيو جيرسي، أشكال الطلاق، وتقديم المشورة بشأن الطلاق، حضانة الأطفال، زيارة، النفقة.
خيارات الأسهم والأسهم المقيدة في الطلاق.
20.10.2017 & # 0183؛ & # 32؛ شيري هيل المحامين الطلاق مناقشة الآثار الضريبية لنقل خيارات الأسهم صاحب العمل - قراءة بلوق القانونية بلوق التي تم نشرها من قبل.
تقسيم خيارات الأسهم أثناء الطلاق في كاليفورنيا.
إن قرار بدء عملية الطلاق ليس أبدا أكثر من نصف حالات الطلاق في ولاية نيوجيرسي تنبع من القسوة القصوى مما يجعل هذا أكثر من زوجين لديه خيارين.
إرس انعكاس على خيارات الأسهم والطلاق. - على الانترنت مجانا.
الطلاق - تقييم وتقسيم خيارات الأسهم من قبل سانفورد K. عين، إسكوير داريل A. فلدمان، المحترم عين & أمب؛ بانك 1900 M ستريت، نو، سويت 600.
تقسيم خيارات الأسهم في الطلاق - وسج.
الطلاق قائمة الاختيار. المحاسبة الزوجية. خيارات الأسهم؛ مكتب نج لمناقشة نطاق وتعقيدات حل الزوجية.
محامي الكرز هيل الطلاق مناقشة العواقب الضريبية.
28.11.2006 & # 0183؛ & # 32؛ خيارات الأسهم يمكن أن يكون مصدرا ثروة هائلة، لذلك لا نغفل عنها في الطلاق.
مجمع الممتلكات المعقدة في نيو جيرسي - مقاطعة موريس نج.
الطلاق في نيو جيرسي: دليل المساعدة الذاتية (2018 - لسنجلاو.

خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
خيارات الأسهم، الطلاق واستخدام الثقة كالاهان.
إعلان شركة هامة معلومات الاتصال الجديدة لجميع المحامين. يرجى ملاحظة أن فعالة 31 أكتوبر 2018 كل من المحامين في تونمان، فوتو، إينيس.
توتوا، باسيك، البلد، الجديد، جيرسي، ديفورس، ميدياتيون.
اقرأ هنا لمعرفة المزيد عن تقسيم الأسهم إذا كنت الطلاق وكيفية إثبات أنها ملكية منفصلة.
تقسيم خيارات الأسهم في الطلاق - فوربس.
لا تغفل خيارات الأسهم في الطلاق. لحل الطلاق، يجب تقسيم جميع الممتلكات الزوجية والديون بطريقة عادلة، عند النظر في جميع الأمور ذات الصلة.
فاميلي لو نيوس موظف الأسهم الخيار شعبة في الطلاق.
خيارات الأسهم غالبا ما تكون جزءا من تعويضات الشركات وخطط الحوافز. إذا كان الموظف في شركتك يملك خيارات الأسهم ونقلها إلى الزوج في.
كيف تبدأ عملية الطلاق في نيو جيرسي.
من خلال الطلاق في نج؟ البحث عن المشورة والعلاج، ومجموعات الدعم، والموارد للرجال والنساء والمثليين والتكيف على التوالي مع الطلاق أو تفكك.
وزن الطلاق "خيارات" - المستشار المالي.
آثار ضريبة الدخل الاتحادية على عمليات نقل حقوق أصحاب العمل المكتسبة المتعلقة بالطلاق. ماذا يحدث مع نقل ذات الصلة الأوراق المالية صاحب العمل.
إرس انعكاس على خيارات الأسهم والطلاق. - على الانترنت مجانا.
07.08.2018 & # 0183؛ & # 32؛ خيارات الأسهم والطلاق في ولاية اريزونا أصدرت محكمة الاستئناف في ولاية أريزونا قرارا بشأن ما إذا كانت خيارات الأسهم التي لم تخلف قبل.
خيارات الطلاق غير مكلفة في نيو جيرسي | LegalZoom.
يناقش مارك سكروجينز كيف يمكن أن تتأثر خيارات الأسهم خلال حالة الطلاق في محاكم تكساس.
خيارات الأسهم والأسهم المقيدة في الطلاق.
في العديد من حالات الطلاق في ولاية نيو جيرسي، قام أحد الطرفين أو كلا الطرفين بتقييد خيارات الأسهم أو تقييد وحدات الأسهم. ما هم؟ يجب أن تكون مشتركة في الطلاق؟
نيو جيرسي التوزيع العادل: الجزء 2 | DivorceNet.
تقسيم الممتلكات المعقدة في نيو جيرسي تقسيم الملكية ستكون دائما واحدة من تقسيم خيارات الأسهم في إجراءات الطلاق يعتمد على نج 07960.
نقل خيارات الأسهم المكتسبة لصاحب العمل في الطلاق.
19.03.2018 & # 0183؛ & # 32؛ تقسيم خيارات الأسهم والأسهم المقيدة في الطلاق حتى لو كان مجرد المنزل والحسابات التقاعد التي تحتاج إلى تسوية، وتقسيم الأصول.
الطلاق - تقييم وتقسيم خيارات الأسهم.
06.02.2018 & # 0183؛ & # 32؛ الفيديو المضمنة & # 0183؛ & # 32؛ نيو جيرسي محاسب الطب الشرعي روبرت A. بونافيتو، كبا، يتحدث على الطلاق وخيارات الأسهم. في هذا الفيديو، ونحن نركز أساسا على أنواع مختلفة من.
divorcesource.
خيارات أسهم الموظفين والطلاق ما قد تفعله المحكمة العليا نج إذا قررت أن مجموعة من الخيارات التي تم منحها لمزيج من قبل وبعد.
الموظفين خيارات الأسهم والطلاق - قانون تف.
تجنب الانزعاج وارتفاع تكلفة الطلاق القياسية! اختيار الطلاق التعاوني والحصول على المساعدة من نج الطلاق الوساطة والحلول المالية مقرها في.
خيارات الأسهم في الطلاق |
يمكن أن تكون الخيارات غير المفهرسة صعبة القيمة، ولكن لا ينبغي إغفالها عندما ينفصل الزوجان عن طرق.
مجمع الممتلكات المعقدة في نيو جيرسي - مقاطعة موريس نج.
إن قرار بدء عملية الطلاق ليس أبدا أكثر من نصف حالات الطلاق في ولاية نيوجيرسي تنبع من القسوة القصوى مما يجعل هذا أكثر من زوجين لديه خيارين.
تقسيم خيارات الأسهم في الطلاق - وسج.
هذا هو الجزء الثاني من المادة الأسهم نيو جيرسي التوزيع العادل الجزء الأول الخيارات، وغيرها من التقاعد وإذا كنت الطلاق قبل تلقي.
الطلاق - محامون.
26.02.2018 & # 0183؛ & # 32؛ الطلاق يمكن أن يكون انقطاعا كبيرا في الخطط المالية للأسرة. وقد عمل (إرس) والكونغرس فعلا لجعل الإجراء الصعب أقل.
أحداث الحياة - الطلاق - ميستوكوبتيونس.
07.01.2018 & # 0183؛ & # 32؛ ما هو دور خيارات الأسهم في التفاوض على تسوية الطلاق؟ وبعيدا عن كونه سؤالا أكاديميا، يمكن للإجابة أن تحدد الملكية بالفعل.
الطلاق الوساطة & أمب؛ الحلول المالية: شاثام، نيو جيرسي: نيوجيرسي.
تغطي هذه المقالة طرق أزواج كاليفورنيا يمكن تقسيم خيارات الأسهم في الطلاق.
الطلاق وخيارات الأسهم | هامرل فينلي لو فيرم.
ركز محامو العائلة نج على الطلاق وحضانة الأطفال ودعم الطفل والنفقة في طلاق نيوجيرسي، ما الذي يحدث مع خيارات الأسهم الخاصة بي من صاحب العمل؟
الطلاق في نج | المشورة، مجموعات الدعم للرجال والنساء.
التوزيع العادل لخيارات الأسهم. أما مسألة ما إذا كانت خيارات الأسهم التي تم الحصول عليها بعد تقديم شكوى الطلاق قد حصلت على منح نج 08054 -5016.
ديفورس أكونتينغ نج - أورباش & أمب؛ أبراهام، كباس.
2 млн + проверенных поставщиков на Алибаба. Получите выгодное предложение!

خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
خيارات الأسهم الطلاق نج.
الطلاق وخيارات الأسهم - لا-الأسرة.
مصدر للتعليم والأدوات حول خيارات الأسهم، الأسهم المقيدة، وخطط شراء الأسهم الموظف، وغيرها من أشكال التعويض الأسهم.
نقل خيارات الأسهم المكتسبة لصاحب العمل في الطلاق.
تغطي هذه المقالة طرق أزواج كاليفورنيا يمكن تقسيم خيارات الأسهم في الطلاق.
أهمية خيارات الأسهم المقيدة في نيوجيرسي الطلاق.
который вы просматриваете، этого не позволяет.
الطلاق وخيارات الأسهم | هامرل فينلي لو فيرم.
07.01.2018 & # 0183؛ & # 32؛ ما هو دور خيارات الأسهم في التفاوض على تسوية الطلاق؟ وبعيدا عن كونه سؤالا أكاديميا، يمكن للإجابة أن تحدد الملكية بالفعل.
divorcesource.
اقترح بعض الممارسين والمعلقين & كوت؛ خط مشرق & كوت؛ حكم لإدراج خيارات الأسهم في العقارات الزوجية.
فاميلي لو نيوس موظف الأسهم الخيار شعبة في الطلاق.
19.03.2018 & # 0183؛ & # 32؛ تقسيم خيارات الأسهم والأسهم المقيدة في الطلاق حتى لو كان مجرد المنزل والحسابات التقاعد التي تحتاج إلى تسوية، وتقسيم الأصول.
التوزيع العادل لخيارات الأسهم | Capehart.
إن قرار بدء عملية الطلاق ليس أبدا أكثر من نصف حالات الطلاق في ولاية نيوجيرسي تنبع من القسوة القصوى مما يجعل هذا أكثر من زوجين لديه خيارين.
الطلاق وخيارات الأسهم - إسو و نسو - يوتيوب.
هذا هو الجزء الثاني من المادة الأسهم نيو جيرسي التوزيع العادل الجزء الأول الخيارات، وغيرها من التقاعد وإذا كنت الطلاق قبل تلقي.
تقسيم خيارات الأسهم في الطلاق - فوربس.
الطلاق قائمة الاختيار. المحاسبة الزوجية. خيارات الأسهم؛ مكتب نج لمناقشة نطاق وتعقيدات حل الزوجية.
تقسيم خيارات الأسهم أثناء الطلاق في كاليفورنيا.
اقرأ هنا لمعرفة المزيد عن تقسيم الأسهم إذا كنت الطلاق وكيفية إثبات أنها ملكية منفصلة.
التعويضات المؤجلة - الدخل، الأصول أو كلاهما؟ | NJ.
الطلاق: الأسهم والشركات المقفلة. من العمل وانه يرفض المشاركة في الأعمال بعد الطلاق إذا أنا منحت الأسهم؟
الطلاق، والضرائب، وخيارات الأسهم - العمل الأغنياء.
إعلان شركة هامة معلومات الاتصال الجديدة لجميع المحامين. يرجى ملاحظة أن فعالة 31 أكتوبر 2018 كل من المحامين في تونمان، فوتو، إينيس.
خيارات الأسهم - لا & كوت؛ سيربونيان بوج & كوت؛ في نيو جيرسي | الجديد.
خيارات الأسهم والطلاق - مكاتب القانون في وارن ر. شيل متخصصة في الطلاق والحضانة، وتتناول المسائل المتعلقة بحضانة الطفل وزيارته، الطفل.
الطلاق في نيو جيرسي: دليل المساعدة الذاتية (2018 - لسنجلاو.
يمكن أن تكون الخيارات غير المفهرسة صعبة القيمة، ولكن لا ينبغي إغفالها عندما ينفصل الزوجان عن طرق.
نيو جيرسي التوزيع العادل: الجزء 2 | DivorceNet.
خيارات الأسهم: قضية كبيرة ولكنها لم تحل في "منتدى الماجستير في قانون الأسرة" عام 2000، نيوجيرسي توزيع خيارات الأسهم في وقت الطلاق.

خيارات الأسهم ديفورس نج
مشاركة الأسئلة والأجوبة.
ومع استمرار ارتفاع سوق الأسهم، يشارك محامو الطلاق في المزيد والمزيد من الحالات التي تنطوي على خيارات الأسهم. إن منح خيارات الأسهم للموظفين الرئيسيين أصبح شائعا الآن في شركات التكنولوجيا العالية، وأصبحت شعبية في العديد من الصناعات الأخرى كجزء من استراتيجية شاملة لتعويض الأسهم. الشركات الكبرى، المتداولة علنا ​​مثل بيبسيكو، ستاربكس، مجموعة المسافرين، بنك أوف أميركا، ميرك والفجوة الآن إعطاء خيارات الأسهم لجميع موظفيها تقريبا. العديد من الشركات ذات التكنولوجيا العالية غير المقيدة تنضم إلى صفوفها أيضا (1)
تقليديا، وقد استخدمت خطط خيار الأسهم كوسيلة للشركات لمكافأة الإدارة العليا والموظفين "الرئيسيين" وربط (الأصفاد الذهبية) مصالحهم مع مصالح الشركة والمساهمين الآخرين. ولكن المزيد والمزيد من الشركات تعتبر الآن جميع موظفيها "مفتاح". ونتيجة لذلك، كانت هناك زيادة في شعبية خطط خيار الأسهم ذات القاعدة العريضة، ولا سيما منذ أواخر الثمانينات. ويوجد الآن أكثر من ثلث الشركات الكبيرة في الولايات المتحدة خططا واسعة النطاق لخيارات الأسهم تغطي جميع أو معظم موظفيها - أي أكثر من ضعف المعدل الذي كان قائما في عام 1993. وفي دراسة استقصائية أجريت عام 1997 شملت 100 1 شركة عامة أجرتها شركة " وشركة الجمعية الأمريكية للإلكترونيات، وجد أن 53٪ من المستطلعين يقدمون خيارات لجميع الموظفين. في الشركات التي لديها 500 إلى 999 موظف، وجدت الدراسة أن 51٪ تقدم خيارات لجميع الموظفين، مقارنة مع 30٪ في مسح حصة بيانات عام 1994 و 31٪ في مسح حصة بيانات عام 1991. وتقدم نسبة 43 في المائة من الشركات التي يتراوح عدد موظفيها بين 000 2 و 4 999 موظف خيارات للجميع مقابل 10 في المائة في عام 1994. وتقدم خمسة وأربعون في المائة من الشركات التي لديها 000 5 موظف أو أكثر خيارات للجميع مقابل 10 في المائة في عام 1994.
وبما أن هذا الاتجاه لا يظهر أي دليل واضح على التباطؤ، يجب أن يكون المحامون الزوجيون مستعدين لمعالجة المسائل الفريدة التي تنشأ عنها. هذه المادة سوف تفسر الطبيعة الأساسية لخيارات الأسهم الموظفين، وكيف يتم تقييمها والضرائب وتوزيعها في نهاية المطاف الحادث إلى الطلاق.
وليس هناك شك في أن "خيارات الأسهم" هي أصول خاضعة للتوزيع العادل (2) إلا أن مجرد القول بأن الأصول ليست كافية لتوجيه الخصوم الزوجي. يجب علينا أولا أن نفهم الطبيعة الأساسية وتعريف خيار الأسهم. في الأساس، "خيار الأسهم" هو "الحق في شراء عدد محدد من أسهم الأسهم بسعر محدد في أوقات محددة، وعادة ما تمنح للإدارة والموظفين الرئيسيين" (3) ويسمى السعر الذي يتم توفير الخيار فيه "سعر المنح" وعادة ما يكون سعر السوق في الوقت الذي تمنح فيه الخيارات (4)
عموما، خيارات الأسهم هي حافز لتحفيز جهود الموظفين الرئيسيين وتعزيز رغبة الموظفين في البقاء في توظيف الشركة. ال تنطبق هذه الحوافز على الموظفين المتقاعدين) 5 (يمكن لخطط خيارات األسهم أن تكون وسيلة مرنة للشركات لتبادل الملكية مع الموظفين ومكافأتهم على األداء وجذب الموظفين المحفزين واالحتفاظ بهم. وبالنسبة للشركات الأصغر حجما الموجهة نحو النمو، تعتبر الخيارات وسيلة رائعة للحفاظ على السيولة مع السماح للموظفين بجزء من النمو المستقبلي. كما أنها ذات معنى للشركات العامة التي تكون خطط منافعها راسخة، ولكن الذين يريدون إشراك الموظفين في الملكية. (ملاحظة: من خلال إصدار خيارات الأسهم، فإن الشركة يحتمل أن تضعف قيمة الأسهم القائمة.)
ما إذا كان خيار الأسهم يمنح مقابل المال، أو للخدمات السابقة، أو حافزا للخدمات المستقبلية، أو دون اعتبار على الإطلاق، يجب على حامل الخيار أن يمارس الخيار ضمن شروطه أو أنه يخضع لخسارة حقه في (6) في عقد الخيار "الوقت هو جوهر". (7) عموما، يتم تنفيذ أحكام انتهاء الصلاحية واتفاقات خيار الأسهم بدقة. ترفض المحاكم الخرق الحتمي للعقد والمطالبة بالمصادرة التي يضغط عليها الموظفون والموظفون السابقون وغيرهم من أصحاب خيارات الأسهم عندما يفشلون في ممارسة خياراتهم في الوقت المناسب (8) وعلى الرغم من أن هذا نادرا ما يصبح قضية في دعوى الطلاق، من أجل تجنب الخسائر الاقتصادية الشديدة لأي من الطرفين أو مطالبة محتملة بالممارسات السيئة.
عموما، تأتي خيارات الأسهم في فئتين أساسيتين:
(التي يشار إليها عادة باسم إسو) والتي هي خيارات مؤهلة أو قانونية وخيارات الأسهم غير المؤهلة (والتي يشار إليها عادة باسم نسو).
وببساطة، فإن الفرق بين المنظمة الدولية للتوحيد القياسي (إسو) والمؤسسة الوطنية للأرصاد الجوية (نسو) يتحول إلى التزامها بمتطلبات قانون الإيرادات الداخلية المحددة في وقت المنحة والتي تؤثر في نهاية المطاف على كيفية فرض ضريبة على الخيار (9)
يتم منح خيارات الأسهم الحافزة للأفراد لأسباب تتعلق بعملهم. ونتيجة لذلك لا يجوز منحهم إلا للموظفين. كما يجب أن تتم الموافقة عليها من قبل مساهمي الشركة ومنحها بالقيمة السوقية العادلة.
ومن ناحية أخرى، يجوز منح الهيئة الوطنية للرقابة الوطنية للموظفين والمتعاقدين المستقلين والمستفيدين منها.
لن يدرك الموظف أي دخل خاضع للضريبة عند منح أو إسو. وفي نفس الوقت لا يحق للشركة أن تستقطع من ممارسة الخيار. إذا قام الموظف ببيع السهم في غضون عامين بعد منح الخيار وفي غضون سنة واحدة بعد ممارسة الخيار، سيتم تحقيق الدخل العادي بمبلغ يساوي أقل من 1) الزيادة في القيمة السوقية العادلة للأسهم عند وتاريخ ممارسة سعر الخيار، أو 2) زيادة المبلغ المحقق على التصرف على سعر الخيار. إذا كان الفرد يحتفظ بالأسهم لمدة سنتين بعد منح إسو وبعد عام واحد من ممارسة إسو، فإن الفرق بين سعر البيع وسعر الخيار سيخضع للضريبة ككسب رأسمالي أو خسارة. إذا تم بيع السهم بعد سنتين / سنة واحدة، فإن هذا المكسب سيكون أيضا بديلا الحد الأدنى البديل تفضيل الضريبة تخضع لمعدل الضريبة 26/28 في المئة.
فيما يتعلق بالنظام الوطني لمراقبة الجودة، يجب على حامل "الموظف" من خيار غير قانوني الاعتراف بالدخل في الوقت الذي يتم فيه منح الخيار إذا كان للخيار "قيمة سوقية عادلة يمكن التحقق منها بسهولة" في وقت المنحة (10) إذا كان الخيار غير قابلة للتحويل وليس لها "قيمة سوقية عادلة يمكن التحقق منها بسهولة"، فلن ينتج عن ذلك أي دخل للفرد عند منح الخيار. عندما يتم ممارسة خيار الأسهم غير المؤهل، يتم فرض ضريبة على الفرد بمعدلات دخل عادية على الفرق بين القيمة السوقية العادلة للسهم وسعر ممارسة الخيار. عندما يقوم الفرد ببيع السهم، سيتم تكبد أرباح أو خسائر رأسمالية على الفرق بين المبلغ المستلم للسهم وأساسه الضريبي. وعادة ما يكون الأساس الضريبي مساويا للقيمة السوقية العادلة في وقت ممارسة الخيار. وستكون المكاسب الرأسمالية إما طويلة الأجل أو قصيرة الأجل تبعا لطول فترة الاحتفاظ بالأسهم بعد التمرين.
واذا كان الخيار هو "المتاجرة بنشاط في سوق راسخة" فان المدونة تعتبر خيار الحصول على "قيمة سوقية عادلة يمكن التحقق منها بسهولة". (11) اذا لم تكن هناك "قيمة سوقية عادلة يمكن التحقق منها بسهولة" في وقت المنحة، يقيد أوبتيوني الدخل في وقت الخيار إما:
أو أن تصبح "خاضعة إلى حد كبير" أو لم تعد عرضة "لخطر كبير للمصادرة" (12)
إن أي ربح هو ربح رأسمالي قصير األجل، خاضع للضريبة وفقا لمعدالت الدخل العادية .13 تنص المدونة على أربعة شروط ضرورية لخيار ال "يتم تداوله بنشاط في سوق راسخة" للوفاء بمعيار "القيمة العادلة العادلة القابلة للتحقق بسهولة"
يكون اخليار قابال للتحويل من قبل اخليار الذي يكون اخليار قابال للتنفيذ فورا بالكامل عند منحه ال ميكن أن يكون هناك أي شرط أو تقييد على اخليار الذي سيكون له تأثير جوهري على قيمته السوقية العادلة وميكن التأكد بسهولة من القيمة السوقية امتياز اخليار. (14)
ويجب الوفاء بجميع الشروط الأربعة. وبما أن هذه الشروط نادرا ما تكون راضية، فإن معظم خيارات الأسهم غير المؤهلة وغير القانونية غير المتداولة في سوق راسخة، ليس لها قيمة يمكن التحقق منها بسهولة (15)
وهناك عامل آخر ينبغي النظر فيه يمكن أن ينطبق على خيارات الأسهم المحفزة وغير المؤهلة. بعض الشركات تقدم خيارات مع ميزة إعادة التحميل. يوفر خيار إعادة التحميل للمنح التلقائية من خيارات إضافية كلما يمارس الموظف خيارات منحت سابقا. (16)
إذا كان المخزون الذي يتم تلقيه عند ممارسة الخيار هو العقار المقيد، يتم تأجيل الضرائب حتى انقضاء القيود. وكثيرا ما يحصل الموظفون على مخزون مقيد للخدمات. فالسهم غير قابل للتحويل بحرية ويخضع لخطر المصادرة استنادا إلى أداء الفرد أو استمرار عمله لفترة من الزمن. وبموجب المادة 83 (ب) من قانون الإيرادات الداخلية، يمكن للفرد أن يختار الاعتراف بالقيمة السوقية العادلة للأسهم، متجاهلا القيود، كإيرادات وقت منح الجائزة؛ إذا تم إجراء القسم 83 (ب) الانتخاب، تبدأ فترة الاحتفاظ لأغراض المكاسب الرأسمالية وقت الانتخاب، وإلا ستبدأ فترة الاحتجاز في ختام التقييد.
وبناء على ما سبق، قد يكون من المناسب أن تؤثر خيارات الأسهم التنفيذية على الضرائب لأغراض التوزيع العادل. وذلك لأن خيارات الأسهم التنفيذية لها تاريخ انتهاء محدد، وبالتالي يجب أن تمارس وبيع. والضريبة الناتجة لا مفر منها ولذلك ينبغي النظر فيها.
هناك طرق مختلفة للوصول إلى القيمة الحالية لخيارات الأسهم. والسببان الأكثر شعبية هما "القيمة الجوهرية" وطريقة "بلاك سكولز" (17). وفي عام 1995 اعترفت مهنة المحاسبة رسميا بأن خيارات الأسهم التنفيذية لها قيمة تتجاوز قيمتها الجوهرية. بالإضافة إلى ذلك، تم الاعتراف نموذج التسعير الخيار بلاك سكولز كوسيلة مناسبة لحساب قيمة خيارات الأسهم التنفيذية من قبل مهنة المحاسبة (18) ومن المثير للاهتمام، وقال مجلس معايير المحاسبة المالية (فاسب) على وجه التحديد أن " الخيار عند منحه بغض النظر عما إذا كان الموظف يمارس الخيار في نهاية المطاف ويشتري الأسهم التي تزيد قيمتها على الموظف الذي يدفع ثمنه أو (ب) إذا انتهت صلاحية الخيار في نهاية فترة الخيار (19). )
في طريقة القيمة الجوهرية، قيمة الخيار الأسهم تساوي الفرق بين سعر ممارسة الخيار والقيمة السوقية العادلة للسهم. على سبيل المثال، إذا كان لديك خيار لشراء المخزون "x" مقابل 5 دولارات، وكان السهم يتداول حاليا مقابل 27 دولارا للسهم الواحد، فإن القيمة الفعلية للخيار ستكون 22 دولارا ($ 27 - $ 5 = $ 22). ومع ذلك، فإن طريقة القيمة الجوهرية لا تأخذ في الاعتبار القيمة لحامل الحق في شراء السهم في مرحلة ما من المستقبل بسعر محدد سلفا. كما أنه لا يأخذ في الاعتبار تقلب المخزون الأساسي فضلا عن المزايا والعيوب الحالية لنفسه. وعلاوة على ذلك، فإنه لا ينظر في مزايا وعيوب حامل الخيار عدم تلقي أرباح الأسهم، فضلا عن تكلفة الفرصة البديلة لشراء الأسهم والتخلي عن الفائدة المفقودة على أموال الاستحواذ.
إحدى الطرق التي تعتبر البنود المشار إليها أعلاه هي طريقة بلاك سكولز. وأهم تمييز بين طريقة بلاك سكولز وطريقة القيمة الجوهرية هو عنصر التقلب. وبدون النظر في التقلب في الحساب، يمكن أن تكون للخيارات من شركتين مختلفتين نفس القيمة. على سبيل المثال، على افتراض أن سعر الخيار والقيمة السوقية العادلة هي نفسها، فإن الخيارات من شركة خدمات بطيئة النمو مثل بس و G يمكن أن تكون لها نفس القيمة التي يتمتع بها خيار شركة الكمبيوتر المتنامية بسرعة مثل مايكروسوفت. طريقة بلاك سكولز سوف تفرق بين هذين النوعين من الشركات. إن الأسلوب الجوهري لا.
صيغة بلاك سكولز (المبينة أدناه) معقدة وتحتوي على العديد من المكونات المتغيرة.
تفسير هذه التسميات إلكتروني للمتغيرات في صيغة بلاك سكولز هي:
C = قسط نظري للدعوة.
S = سعر السهم الحالي.
t = الوقت حتى انتهاء الصلاحية.
K = سعر السهم الخيار.
r = معدل فائدة خال من المخاطر.
N = التوزيع العادي القياسي التراكمي.
e = الدالة الأسية.
o الانحراف المعياري لعائدات الأسهم.
لن = اللوغاريتم الطبيعي.
الجزء الأول من الحساب يحدد الفائدة المتوقعة من شراء الأسهم مباشرة. ويحدد الجزء الثاني من الحساب فائدة القيمة الحالية لدفع سعر الممارسة في المستقبل. الفرق هو القيمة السوقية العادلة للخيار.
ومع ذلك، فإن المشكلة الأساسية مع طريقة بلاك سكولز هو أنه يجعل افتراضات بشأن تقلب الأسهم، ومعدلات توزيعات الأرباح في المستقبل، وفقدان الفائدة. يمكن أن يؤثر التغيير في هذه الافتراضات الأساسية على قيمة الخيار المحسوب وفقا لهذه الطريقة.
یقدم الجدول التالي ملخصا عن کیفیة تأثیر التغییر في أحد ھذه الافتراضات علی قیمة خیارات الأسھم المحسوبة تحت طریقة بلاك سكولز:
إن الفكرة الخاطئة الشائعة في تقييم الخيارات طويلة المدى هي أن قيمة الخيار هي أفضل تمثيل لها بقيمته الذاتية. (20) في الواقع، استنادا إلى مختلف عوامل بلاك سكولز، فإن خيارات الأسهم التي هي "خارج المال"، أي ، سعر الإضراب يتجاوز القيمة السوقية العادلة الحالية، يتم تداولها في الواقع مع مختلف قيم الدولار. على سبيل المثال، تداول سهم ديل للكمبيوتر مع سعر إضراب قدره 50.00 دولار وقيمة سوقية تبلغ 37.3125 دولار في 24 مايو 1999 متداولة مقابل 8.75 دولار. هذا هو الحال على الرغم من أن الخيار كان ما يقرب من 13.00 $ من المال عندما كان الخيار قيمة. (21) التفاوت في قيمة ويرجع ذلك إلى تفاؤل المستثمرين أن أسهم ديل سيرتفع وأن تكون قيمتها أكثر من 58.75 $ قبل انتهاء اختيار.
وبصفة عامة، تنقسم طرق توزيع خيارات الأسهم عادة إلى فئتين:
التوزيع المؤجل عند ممارسة الخيارات (الثقة البناءة). التقییم الحالي مع عدم التصنیف مقابل الأصول الأخرى.
(عندما يجادل أحد الأطراف بأن جزءا من خيارات الأسهم غير الزوجية، فإن مسألة تنشأ فيما يتعلق بأي جزء من خيارات الأسهم سواء تم توزيعه من خلال الطريقة 1 أو 2 أعلاه، ينبغي أن يمنح للزوج غير الموظف، وقد تم تناولها بمزيد من التفصيل في القسم التالي من هذه المادة).
ومن المرجح أن طريقة التوزيع المؤجل هي الطريقة الأكثر شيوعا التي يتم فيها توزيع الخيارات واستخدامها في واحدة من أقرب حالات ولاية نيو جيرسي التعامل مع خيارات الأسهم حادث الطلاق، إلى الطرافة: كالاهان ضد كالاهان. وفي هذه القضية، قضت المحكمة الابتدائية بأن خيارات الأسهم التي يكتسبها الزوج أثناء الزواج تخضع لتوزيع عادل على الرغم من أن الخيارات ستنتهي إذا غادر الزوج الشركة في غضون فترة معينة من الوقت، خضعوا لأنظمة مختلفة من المجلس الأعلى للتعليم. وأعربت المحكمة عن ثقتها البناءة للزوج لصالح زوجته لجزء من خيارات الأسهم المملوكة له من أجل تحقيق أفضل تأثير لتوزيع الممتلكات بين الطرفين دون خلق التزامات مالية وتجارية غير ضرورية. وتجدر الإشارة إلى أنه تم منح جميع الخيارات خلال فترة الزواج. ومع ذلك، يبدو أن بعض الخيارات أو جميعها لم تكن مكتملة تماما، رغم أنها لم تذكر على وجه التحديد، لأنها كانت عرضة للتصفية في ظروف معينة. وقد يكون هذا هو السبب في منح الزوجة 25٪ فقط من الخيارات عند نضجها "(22) (انظر القسم أدناه فيما يتعلق بتحديد حصص التوزيع).
الطريقة الثانية للتوزيع هي طريقة التقييم الحالية. وفي هذه الطريقة، يجب تقييم خيارات الأسهم مع تلقي الزوج غير المستخدم حصته من الجزء الزوجي نقدا أو ما يعادلها من النقد. وينبغي أن تستخدم هذه الطريقة تخفيضات في معدلات الوفيات والفائدة والتضخم وأي ضرائب سارية. الجانب السلبي لهذه الطريقة "غير المحددة" هو أنه قد يصبح غير منصف في حالة أن الزوج الموظف إما غير قادر على ممارسة الخيارات أو، في تاريخ أن تصبح قابلة للممارسة، فهي "لا قيمة لها" (أي تكلفة يتجاوز الخيار القيمة السوقية العادلة.)
ويشير استعراض السلطة خارج الولاية إلى أن المحاكم الزوجية تختلف عن طريقة توزيع خيارات الأسهم تبعا لطبيعة الخيارات نفسها سواء كانت مكتسبة أو غير مستحقة أو قابلة للنقل أو قابلة للبيع. إذا كانت الخيارات يمكن نقلها إلى الزوج غير الموظف، وهذا هو الأسلوب المفضل للتوزيع، لأنه يؤثر على كسر نظيفة بين الطرفين. ليست هناك حاجة لمزيد من التواصل بين الطرفين وليس هناك حاجة لاستخدام منهجيات التقييم. ومع ذلك، نادرا ما يسمح بنقل خيارات الأسهم بخطط خيارات الأسهم للموظفين. وقد وضعت بعض المحاكم أساليب أخرى، بما في ذلك على سبيل المثال لا الحصر السماح للأطراف بأن تكون مستأجرين مشتركين، أو السماح للزوج من غير الموظف بأن يأمر الزوج العامل بممارسة الجزء الخاص به من الخيارات، عند توفير رأس المال لنفعل ذلك. وهذا يشبه حل الثقة البناء الذي وضع في قضية كالاهان التي نوقشت سابقا. وتتمتع المحاكم الابتدائية بسلطة تقديرية واسعة في صياغة نهج يتناسب مع وقائع الحالة الفردية. (التحذير: كل هذه الأساليب لا تزال تفترض أنه لا يوجد استبعاد للخيارات استنادا إلى حجة أنها غير مستحقة أو لم تحصل على خلاف ذلك أثناء الزواج).
كنقطة ممارسة، يرجى ملاحظة أنه عند توزيع الخيارات العينية، ينبغي النظر في أن أيا من الطرفين ينتهك أي قواعد التداول من الداخل. فعلى سبيل المثال، قد يكون ذلك انتهاكا إذا أبلغ الزوج المشارك الزوج غير المشارك بأنه يعتزم ممارسة خياراته في المستقبل القريب. وثمة شاغل آخر بشأن توزيع الخيارات العينية هو أنه يمكن أن ينقضي إذا تم إنهاء عمل الفرد مع الشركة إما طوعا أو غير إراديا.
ماذا يحدث عندما يجادل الزوج العامل بأن بعض الخيارات غير مستحقة أو كانت "غير مكتسبة أثناء الزواج"، وبالتالي لا يمكن توزيعها على الزوج الآخر؟
وقد أوضحت محاكم نيوجيرسي أنه من الضروري تحقيق التوازن بين الحاجة إلى التحديدية المتجسدة في تاريخ قاعدة الشكوى (أي تاريخ القطع لتحديد الأصول الخاضعة للتوزيع) مع الحاجة إلى المرونة المتأصلة في التوزيع العادل عند معالجة (23) في حين أن محاكم العديد من الولايات الأخرى استخدمت نهج "قاعدة زمنية" (24) لتحديد ما هو جزء من خيارات الأسهم يجب أن تخضع للتوزيع (انظر أدناه)، وضعت محاكم ولاية نيو جيرسي والأساس بطريقة أكثر عمومية. وبصفة أساسية، فإن الأصول أو الممتلكات المكتسبة بعد انتهاء الزواج، ولكن كمكافأة أو نتيجة للجهود التي أنفقت أثناء الزواج، تكون عادة قابلة للتضمين في ممتلكات الزوجية، وبالتالي، رهنا بالتوزيع العادل (25). القانون الجديد تدرك جيرسي أن األصول التي يتم الحصول عليها عن طريق العمل المربح أثناء الزواج أو كمكافأة على مثل هذا العمل قابلة للتوزيع في حين أن األصول التي يتم الحصول عليها بعد حلها فقط بسبب الجهود التي يبذلها صاحب الشكوى بعد الشكوى تشكل ممتلكات منفصلة للزوج المستخدم.
والحالة الأساسية في ولاية نيوجيرسي فيما يتعلق بتوزيع خيارات الأسهم هي قضية المحكمة العليا في باسكال (27). وفي هذه الحالة، تزوج الطرفان في 19 يونيو / حزيران 1977. وقدمت شكوى للطلاق في 28 أكتوبر / 1990. بدأت الزوجة عملها مع شركة ليبوسوم في 14 أبريل 1987 في الوقت الذي منحت فورا خيار شراء 5،000 سهم من الأسهم في الشركة المذكورة. وحتى تاريخ المحاكمة، كانت الزوجة تملك 20،069 من خيارات الأسهم الممنوحة بين 14 نيسان / أبريل 1987 و 15 تشرين الثاني / نوفمبر 1991. وتم منح 7،300 من خيارات الأسهم بعد تقديم الشكوى للطلاق (28)
وكان هناك مجموعتان من خيارات الأسهم المتنازع عليها (أي 000 4 و 800 1)، وكلاهما منح في 7 تشرين الثاني / نوفمبر 1990. وقد منحت هذه الخيارات بعد عشرة أيام تقريبا من تقديم الزوجة طلبا للطلاق. (لم يكن هناك ما يدل على ما إذا كانت الخيارات مكرسة كليا أو جزئيا، ومع ذلك، يفترض أن هذه الخيارات "غير مستثمرة"). وكان موقفها هو أن هذه الخيارات لم تخضع للتوزيع لأن 1800 صدر في الاعتراف وقد تم منح أربعة آلاف خيارا تقديرا لترقية الوظائف التي فرضت عليها مسؤولية متزايدة في المستقبل. (29) واعتمدت الزوجة على رسائل الإحالة من شركتها لدعم حججها. وخلصت المحكمة إلى أنه لا يمكن استبعاد أي من مجموعتي الخيارين الممنوحين في 7 نوفمبر / تشرين الثاني 1990 من التوزيع العادل وتقسم بالتساوي.
غير أن شعبة الاستئناف وجدت أن أحد مجموعتي الخيارات الممنوحة في 7 تشرين الثاني / نوفمبر 1990 كان ينبغي أن يدرج في ملكية الزوجية في حين كان ينبغي استبعاد الآخر (30) واستندت شعبة الاستئناف إلى ذلك القرار بشأن تفسيرها للاتفاقية وخلصت إلى أن مجموعة ال 4 000 خيار الممنوحة تقديرا للترقية في المسؤولية عن الوظيفة وزيادة في المرتبات هي "الأنسب ..." التي ترمي إلى تعزيز جهود التوظيف في المستقبل "، وينبغي ألا تكون مدرجة في الحوزة الزوجية (31) ) ولكن فيما يتعلق بالكتلة المكونة من 800 1 خيار، خلصت شعبة الاستئناف إلى أن هذه الخيارات قد منحت اعترافا بأداء العمالة في الماضي (32) ولذلك، فإن هذه الخيارات يمكن إدراجها على النحو الواجب في ممتلكات الزوجية بالرغم من تاريخ تقديم الشكوى (33) )
في عكس محكمة الاستئناف، ركزت المحكمة العليا في باسكال على N. J.S. A. 2A: 34-23 والمبادئ التوجيهية المنصوص عليها في الرسام ضد الرسام، أن "الملكية مؤهلة بشكل واضح للتوزيع عندما تنسب إلى إنفاق جهد الزوجين أثناء الزواج". (34) المحكمة العليا في باسكال جعلته من الواضح أن التركيز في هذه الحالات يصبح ما إذا كانت طبيعة الأصل هي نتيجة للجهود التي يبذلها الزوج "أثناء الزواج"، مما يجعله خاضعا للتوزيع العادل. وللدحض على هذا الافتراض، يجب على الطرف الذي يسعى إلى استبعاد الأصل أن يتحمل "عبء إنشاء هذه الحصانة [من التوزيع العادل] على أي أصل معين". (35)
وخلصت محكمة باسكال إلى أن "خيارات الأسهم الممنوحة بعد انتهاء الزواج ولكن الحصول عليها نتيجة للجهود التي بذلت أثناء الزواج ينبغي أن تخضع لتوزيع عادل، وأن عدم الإنصاف الذي يمكن أن ينجم عن تطبيق عدم المرونة في تاريخ تقديم الشكوى هو أمر واضح". (36) لاحظ أنه لم يتم التمييز بين الخيارات المكتسبة أو غير المستأجرة. ولذلك يبدو أن المحكمة العليا وافقت على الأهداف التي تسعى شعبة الاستئناف إلى تحقيقها ولكنها لم توافق على استنتاجاتها استنادا إلى السجل الوارد أدناه. The Supreme Court gave greater weight to the "credible finding" made by the trial court after listening to many days of testimony that the promotion came about as a result of the excellent service that the wife had provided to the company during the marriage.
Query, what would the NJ Supreme Court have done if it determined that a block of options were awarded for a mix of pre and post marital efforts? What if there is no clear indication as to why the options are granted? What if the options are unvested and require future work effort to fully vest? These circumstances often exist and are where things get murky. New Jersey has not adopted a clear and precise method to determine what portion of options which have yet to be fully earned should be distributed. New Jersey's approach provides for a much more subjective analysis (and room for advocacy) than in other states which utilize various formulaic approaches including a coverture factor or time-rule usually taking into account vesting schedules.
Like New Jersey, the majority of states in this country do consider unvested stock options to be property subject to distribution in marital dissolution proceedings.(37) Such was the recent ruling of the appellate court in Pennsylvania in the case of MacAleer.(38) The Pennsylvania Appellate Court addressed the issue of whether stock options granted to a spouse during the marriage, but not exercisable until after the date of separation, constitutes marital property to be divided during the divorce. That court's reasoning parallels, to a large degree, the majority of the other states which hold that unvested stock options are marital property. Analogizing their prior decisions determining that unvested pensions were subject to distribution, the court noted that benefits resulting from employment during marriage are marital, since these benefits are received in lieu of higher compensation which would have been utilized during the marriage to acquire other assets or to raise the marital standard of living.(39) Only a handful of states have specifically held otherwise. These states are Indiana, Colorado, Illinois, North Carolina, Ohio and Oklahoma.(40) North Carolina and Indiana do not divide unvested stock options on the basis of the state's statutory definition of "property."(41) Oklahoma does not consider unvested stock options to be marital property based on the common law foundation of the state's statutory scheme. These states award the unvested stock options to the employee spouse as separate property not to be considered for equitable distribution. These decisions are distinguished upon the fact that they are heavily influenced by statutes which define property in those jurisdictions. However, the remaining states which have addressed the issue, do find unvested stock options to be marital property and generally follow the same procedure for determining how much, if any, of the options constitute marital property.
Many jurisdictions, like New Jersey, view the first consideration to be a determination of whether the options were granted for past, present or future services. However, most courts have learned that employee stock options are not usually granted for any one reason, and could be compensation for past, present and future services. As a result, these courts sought some structure to determining the distributable share.
Most out-of-state courts which have addressed distribution of unvested stock options use a "coverture factor" or "time rule fraction" to determine how much, if any, of the unvested stock options constitute marital property. The most prevalent time rule fraction has evolved from that which was used by the California Court of Appeals in Hug.(43) The trial court in Hug found that the number of options that were community property were a product of a fraction; the numerator was the period in months between the commencement of the spouse's employment by the employer and the date of separation of the parties, and the denominator was the period in months between commencement of employment and the date when the first option is exercisable, multiplied by the number of shares that can be purchased on the date that the option is first exercisable. The remaining options were found to be the separate property of the husband.(44)
The husband in Hug agreed that the options were subject to division according to the time rule; however, he contended that the trial court used an erroneous formula(45). He argued that the proper time rule should begin as of the date of granting the option, not the date of commencement of employment, since the options were not granted as an incentive to become employed(46). He argued further that each annual option was a separate and distinct option which is compensation for services rendered during that year, and as it was to accrue after the date of separation, it was totally his separate property.(47) The court examined the various reasons why corporations confer stock options to employees, and found that no single characterization could be given to employee stock options. Whether they can be characterized as compensation for past, present, or future services, or all three, depends upon the circumstances involved in the grant of the employee stock option.(48). By including the two years of employment prior to the granting of the options in question, the trial court implicitly found that period of service contributed to earning the option rights at issue.(49) The appellate court found that this was supported by ample evidence in the record.(50)
Various versions of coverture factors have evolved as courts addressed different factual circumstances. The recent Wendt case out of Connecticut entails a voluminous decision in which the court surveys the states which addressed the issue of division of unvested stock options, and notes the competing arguments and the most common numerators and denominators in diverse forms of the coverture factors.(51) A brief summary of the Wendt court's decision as to stock options is helpful to understanding the approach of many courts to the issue of unvested stock options.
According to the December 31, 1996 unaudited financial statement prepared by KPMG Peat Marwick, LLP, the husband owned 175,000 shares of General Electric Vested Stock Options and Appreciation Rights in the following amounts: 100,000 units granted November 20, 1992 with a $40 per share exercise price, 70,000 units granted September 10, 1993 with an exercise price of $48.3125 and 5,000 units granted June 24, 1994 with an exercise price of $46.25. The unaudited financial statements used the "intrinsic value" method, with a December 31, 1996 New York Stock Exchange price of G. E. common stock at $98 7/8 per share. On May 12, 1997, G. E. common stock split two for one and, thus, the number of options doubled to conform to the stock split. As of the date of separation, December 1, 1995, G. E. was trading at $72 per share. As of October 7, 1997, G. E. was trading at $72 per share in its split status or $144 per share at the pre-May 12, 1997 stock split number of stock options. Based on the facts found, the court divided the 175,000 vested stock options and appreciation rights based on the date of separation, December 1, 1995. In rejecting a Black-Scholes approach in favor of the "intrinsic value" method, the trial court valued the vested options as follows: 175,000 stock options at $3,200,000 for the November 20, 1992 grant; $1,658,125 for the September 10, 1993 grant and $128,750 for the June 24, 1994 grant for a total 'intrinsic value" of $4,986,875. The court noted that this amount was before taxes. The court additionally noted that the options had no cash value until exercised at which point there would be tax due at short term capital gains tax rates, i. e., ordinary income tax rates. The court assumed maximum rates for the IRS, Medicare and Connecticut tax and calculated the net after tax of the intrinsic value to be $2,804,219. The court distributed one-half of that sum to the wife. The court found that the doubling of the G. E. stock after the date of separation was not due to the efforts of the wife, but that "she should share in the general increase in the investment community."(52)
The Wendt court then proceeded to address the 420,000 unvested stock options differently. The court had already concluded that only a portion of these unvested stock options was marital property. The court had also concluded that the unvested stock options were granted for future services. Therefore, a coverture factor was required. The coverture factor was determined by a fraction as follows:
Number of Months from the Date of Grant to the Date of Vesting and are not Subject to Divestment.
Number of Shares to be Vested at that Date of Vesting.
Since there were eight separate dates of vesting, eight separate coverture factors had to be calculated. For example, the coverture factor utilized for the 70,000 units granted on September 10, 1993 which vested on September 10, 1998 was as follows:
60 = 44.5% x 70,000 units = 31,150 units to be divided.
The court then took the price of the G. E. common stock on the date of separation (i. e. $72 per share) to calculate the intrinsic value and thereby determine the dollar amount owed to the wife for the marital portion of the unvested options. This was represented as follows:
-48.3125 (exercise price)
$23.6875 intrinsic value per share x 31,150 units = $737,866.
The "$737,866" represents the pre-tax dollar value of the marital portion of the unvested shares as determined by the coverture factor.
The court had basically rejected the wife's expert's valuation methodologies (which included "Black-Scholes") and opted to use the "intrinsic value" to obtain the appropriate value. Specifically, the court rejected the wife's expert's use of the Black-Scholes model which actually resulted in a value 10% lower than the "intrinsic value" ultimately used by the court.(54) The court then determined the wife's share of the intrinsic value of the unvested stock options (i. e., $1,626,273). The court noted that this amount was before taxes. The court proceeded to assume current maximum rates for the IRS, Medicare and Connecticut and found that the net after tax value of the gross intrinsic value would be $914,486. The court then proceeded to award the wife half of this sum. The court ordered the husband to pay the sum in cash and not in any portion of the options.
A similar approach was taken in the case of In re Marriage of Short.(55) In this case, the court held that the inclusion of the unvested stock options in the pool of distributable assets depended on whether the options were granted to compensate the employee for past, present or future employment. The court held that unvested options awarded for past and present services were marital property regardless of the continuing restriction on transfer or vesting. Unvested options granted for future services were deemed to be acquired periodically in the future as the options vest and are subject to a time rule division to allocate the shares between marital (community) and non-marital (separate) property. A different time rule than in the Hug case was used to differentiate between vested options that are clearly separate property for which no time rule would be applied, and those which include both a community effort and separate effort.
Just recently, New York joined the substantial majority of states holding that "restricted stock and stock option benefit plans provided by a spouse's employer constitute marital property for the purposes of equitable distribution, where the plans come into being during the marriage but are contingent on the spouse's continued employment with the company after the divorce."(56) New York's highest court, in a seven-judge panel, unanimously joined the majority of jurisdictions that use a time rule to divide such contingent resources. The DeJesus court laid out the following four-step procedure to guide courts in dividing such options:
Trace shares to past and future services; Determine the portion related to compensation for past services to the extent that the marriage coincides with the period of the titled spouse's employment, up until the time of the grant. This would be the marital portion; Determine the portion granted as an incentive for future services; the marital share of that portion will be determined by a time rule; and Calculate the portion found to be marital by adding: that portion that is compensated for past services; and that portion of the future services deemed to be marital after application of the time rule. The sum result will then be divided between the parties using the equitable distribution criteria.
This was the method utilized in Colorado in the case of In re Marriage of Miller. The DeJesus court was persuaded that the Miller type analysis best accommodated the twin tensions between portions of stock plans acquired during the marriage versus those acquired outside of the marriage, and stock plans which are designed to compensate for past services versus those designed to compensate for future services.(57)
However, notwithstanding the complexity of these methods, the danger of rigidity and resulting unfairness from a blind application of a formulaic approach still exists. Such issue was addressed by an Oregon Court which stated that "No one rule will produce a just and proper result in all cases and no one rule will be responsive to many different reasons why stock options are granted."(58) This was, more than likely, the reason that New Jersey's Supreme Court ruled as it did in Pascale.
There is little doubt that stock options constitute a form of compensation earned by the employed spouse during the marriage.(59)
In February of 1999, an Ohio appeals court agreed with Susan Murray, the former spouse of Procter & Gamble Company executive Graeme Murray, that unexercised stock options should be used in calculating the value of child support for the couple's 16-year-old son. This decision was the first by an Appellate Court to say that parents cannot shelter income from their children - intentionally or unintentionally, by postponing the exercise of stock options until the kids are grown.(60) Note that options granted in consideration of present services may also be deemed a form of deferred compensation. (See In Re Marriage of Short, 125 Wash.2d 865, 890 P.2d 12,16 (1995).
A Wisconsin Court of Appeals pointed out that a stock option is not a mere gratuity but is an economic resource comparable to pensions and other employee benefits.(61) The Appellate Court of Colorado held that for purposes of determining child support, income includes proceeds received by father from actual exercise of father's stock options.(62)
The Supreme Court of Colorado held, in the Miller case already referenced above, that "under the Internal Revenue Code, the optionee of a non-statutory employee stock option must recognize income at the time the option is granted if the option has a "readily ascertainable value" at the time of the grant(63). If the option does not have a readily ascertainable value at the time of the grant, the optionee recognizes income at the time the option becomes "substantially vested" or no longer subject to a "substantial risk of forfeiture," which generally does not occur until the option is exercised.(64)
The Miller Supreme Court found that unlike pension benefits, employee stock options may well be considered compensation for future services as well as for past and for present services.(65)
It is clear that there is a growing trend among the courts of this nation to distribute unvested or non-exercisable stock options that were granted during the marriage. The key factor in such distribution is a determination as to the purpose for which the options were granted, i. e., whether the options were granted for past or future performance. Where an option is granted for a mixed purpose and/or requires continued employment past the termination date of the marriage (as determined by local law), many states are employing a time-rule fraction which may be modified by the trial court based upon the particular facts and circumstances of the case. Matrimonial practitioners must be aware of the various forms of time-rule fractions that can be used and the factors that can modify the fraction. Such factors include, but certainly are not limited to the following:
when the option was granted; whether the option was granted for past or future performance (if "past" how far back); whether or not the option was granted in lieu of other compensation; whether or not the option was a qualified incentive stock option or non-qualified stock option; when the options will expire; the tax effect of the grant of the option; the tax effect of exercising the option; whether or not the option has a "readily ascertainable fair market value;" whether or not the option is transferable; whether or not the option is restricted property; the extent to which the option is subject to risk of forfeiture; and any other factors that the parties or court may deem fair and equitable to consider.
Since the majority of employee stock options are non-transferable and cannot be secured as with qualified pensions under federal laws such as ERISA, matrimonial attorneys should specifically tailor their language when drafting agreements concerning such assets. These agreements should include:
a list of all options granted and an explicit description of which options are marital and which are not; if a Deferred Distribution Method is employed, a restoration of whether and under what terms the non-owner can compel the owner to sell options after they are vested; provision for payment of the "strike price" by the non-employed spouse and taxes resulting from the exercise of options; a description of how and when distribution is to be made to the non-owner spouse and precise notification and document exchange provisions.(66)
The matrimonial attorney involved in a case concerning stock options, especially when representing the non-employed spouse, should be sure to obtain the following information and documents:
a copy of the stock option plan; copies of any correspondence or internal memorandum which were issued by the company at the time of the grant of any stock options; a schedule of granted options during the employees period with the company; the date of each option granted; the number of options granted at each date; the exercise price of options granted at each date; the expiration date of each set of options granted; the date of vesting for each set of options granted; the date and number of options exercised; all short term or long term employee incentive plans covering the employed spouse; all Employment Agreements between the employed spouse and his or her employer; all company plans, handbooks and option award letters related to stock options granted; copies of the firm's 10K and 8K for the entire period that the employed spouse is with the company; dates of promotions and positions held by the employee; a brief job description of each position; the salary history of the employee indicating all forms of compensation; the grant date of exercised options and copies of any corporate minutes or proxy statements referencing the award of options.
The information listed herein provides the core information from which option values can be calculated and agreements intelligently reached concerning their distribution.(67)
As we enter the 21st Century, it is clear that matrimonial attorneys will need to become as knowledgeable as possible regarding this unique kind of asset. Hopefully, this article has given some insight into the complexities involved when dealing with Employee Stock Options and Divorce.
1. See Employee Stock Options Fact Sheet, (visited on June 10, 1999).
2. See Kruger v. Kruger, 73 N. J. 464, 469 (1977) distinguished by Weir v. Weir, 173 N. J. Super. 130 (Ch. Div. 1980) (the defendant's pension plan payment had not matured as it was not being distributed); Mey v. Mey, 149 N. J. Super. 188, 196 (App. Div. 1977); Callahan v. Callahan, 142 N. J. Super. 325, 328 (Ch. Div. 1976) distinguished by In the Matter of Pearl, 40 B. R. 860 (Bankr. D. N.J. 1984) (court imposed a constructive trust to avoid unjust enrichment of the defendants)
3. BLACK'S LAW DICTIONARY (5th ed. 1979).
4. See Treas. ريج. Я1.421-7(a)(1) (1978); I. R.C. Я1234(a) (1998) (general discussion of stock options).
5. See Bernard v. IMI Sys., Inc., 131 N. J. 91, 107 (1992).
6. See Gillman v. Bally Mfg. Corp., 286 N. J. Super. 523 (App. Div. 1996).
7. See 1 A CORBIN ON CONTRACT, Я273 (1963 & Supp. 1994), cited in Gilman v. Balley Mfg. Corp., supra at 528.
9. See I. R.C. Я422A (b) (1998).
10. See Treas. ريج. Я1.83-1(a), 1.83-7(8) (1978); 26 C. F.R. Я1.83-7 (1978).
11. Treas. ريج. Я1.83-7 (b)(1) (1978).
12. I. R.C. Я83(a) (1994); Treas. ريج. Я1.83-1 (1978).
13. See I. R.C. Я1234(b)(1) (1998).
14. Treas. ريج. ЯЯ1.83-7(b)(2), 1.83-7 (b)(3) (1978).
15. See 1997 U. S. Master Tax Code, (CCH) Я1923.
16. sfas No. 123 Accounting for Stock-Based Compensation.
17. This valuation methodology developed by Myron Scholes, who received the Nobel Prize in Economics in 1997, has been accepted in the financial community as one method for pricing options.
18. See Statement of Financial Accounting Standards No. 123, ∂75, Financial Accounting Standards Board, October 1995. See also article entitled "Employee Stock Options Valuation Issues" by Les Barenbaum, Ph. D. Dr. Barenbaum is a Vice President at Financial Research, Inc., a Kroll-Linquist Avey company, and a professor of finance at LaSalle University.
19 Statement of Financial Accounting Standards No. 123, ∂78, Financial Accounting Standards Board, October 1995. See also Dr. Barenbaum's article.
20. See Dr. Barenbaum's article.
21. See Dr. Barenbaum's article.
22. Note that the court granted the wife only a 25% ownership of each remaining option with the husband acting as trustee. He was required to exercise her share of the options only at her direction, but the wife was required to supply the husband with the funds necessary to make the purchase. The husband, however, was required to pledge the stock at the wife's request should she wish to utilize it to finance her purchase. Once exercised, the husband was to hold the stock in trust for the wife. Following the exercise of the option, the wife could require the husband to transfer the stock held in trust to her or sell it on the market and turn over the proceeds. There were various restrictions imposed concerning transfers in accordance with SEC "insider trading" rules and potential tax liability.
23. See Reinbold v. Reinbold, 311 N. J. Super. 460 (App. Div. 1998).
24. The "time-rule formula" has been adopted in a number of jurisdictions to divide stock options when the rights under the option agreement were acquired during the marriage. See In re Marriage of Hug, 154 Cal. التطبيق. 3d 780, 201 Cal. Rptr. 676 (1984); Green v. Green, 64 Md. App. 122, 494 A.2d 721 (1985); Smith v. Smith, 682 S. W.3d 834 (Mo. App. 1984); Garcia v. Mayer, 122 N. M. 57, 920 P.2d 522 (1996) (observing that the majority of jurisdictions treat unvested stock options as marital property); In re Marriage of Powell, 147 Or. التطبيق. 17, 934 P.2d 612 (1997); Stachofsky v. Stachofsky, 90 Wash. App. 135, 951 P.2d 346 (1998); but see Hann v. Hann, 655 N. E.2d 566 (Ind. App. 1995). Under this approach, the risk that the employed spouse may lose the right to exercise the options will be shared by the parties. See In re Marriage of Smith, supra.
25. See id. at 469.
26. See id. at 469.
27. See Pascale v. Pascale, 140 N. J. 583 (1995) distinguished by Elkin v. Sabo, 310 N. J. Super. 462 (App. Div. 1998) (distinguished on the issue of whether child support payments should be reduced).
28. However, consider out of state authority which would reduce the amount of unvested stock options subject to distribution based on a coverture fraction.
29. See Pascale v. Pascale, supra, note 21, at 607.
30. See Pascale v. Pascale, 274 N. J. Super. 429, 437-40 (App. Div. 1994).
32. See id. at 440.
33. See Kikkert v. Kikkert, 177 N. J. Super. 471 (App. Div. 1981), aff'd o. b. 88 N. J. 4 (1981); Pascale v. Pascale, supra, note 24, at 440.
35. Landwehr v. Landwehr, 111 N. J. 491, 504 (1988) (quoting Painter v. Painter, 65 N. J. 196, 214(1974)), cited in Pascale v. Pascale, supra, note 21, at 609.
37. See Garcia v. Mayer, 122 N. M. 57 (Ct. App.1996), cited in Wendt v. Wendt, 1998 WL 161165, at *118 (Conn. Super. 1998)
38. MacAleer v. MacAleer, 725 A.2d 829 (Pa. Super. 1999).
39. See Berrington v. Berrington, 409 P. A. Super 355, 598 A.2d 31, 34-35 (1991), affirmed 534 Pa. 393, 633 A.2d 589 (1993).
40. See Hann v. Hann, 655 N. E.2d 566 (Ind. Ct. App. 1995); In re Marriage of Huston, No. 96CA2228, 1998 WL 99187 (Colo. App. March 5, 1998); In re Marriage of Isaacs, 260 Ill. App. 3d 423, 632 N. E.2d 228 (Ill. App. Ct. 1994); Hall v. Hall, 88 N. C. App. 297, 363 S. E.2d 189 (N. C. Ct. App. 1987); Demo v. Demo, 101 Ohio App. 3d 383, 655 N. E.2d 791 (Ohio Ct. App. 1995); Ettinger v. Ettinger, 637 P.2d 63 (Okla. 1981). However, note that only North Carolina, Indiana and Oklahoma clearly hold that unvested stock options are not subject to distribution. In In re Marriage of Huston seems to have been reversed by Colorado Supreme Court in the case of In re Marriage of Miller. The Illinois Appellate Court in the case of In re Marriage of Moody, the trial court could retain jurisdiction to allocate the profits realized from an exercise of the options when the options were exercised after the divorce. Lastly, the Ohio court in Demo v. Demo excluded the options awarded for premarital effort.
41. See Hann v. Hann, 655 N. E.2d 566 (Ind. Ct. App. 1995) (distinguished by Wendt v. Wendt, supra pp. 8-10); Hall v. Hall, 88 N. C. App. 297 (1987) (distinguished by Wendt v. Wendt, supra, pp. 8-10); Boger v. Boger, 103 N. C. App. 340 (1991); Ettinger v. Ettinger, 637 P.2d 63 (Okla. 1981) (distinguished by Wendt v. Wendt, supra, pp. 8-10).
42. See In re Marriage of Miller, 915 P.2d 1314 (Colo. 1996).
43. In re Marriage of Hug, 154 Cal. التطبيق. 3d 780 (Cal. Ct. App. 1984).
48. "Treatises which describe employee stock options in the context of general corporations law strongly suggest that contractual rights to such benefits vary so widely as to preclude the accuracy of any but the most general characterization of them. Thus, there is no compelling reason to require that employee stock options must always be classified as compensation for past, present, or future services. Rather, since the purposes underlying stock options differ, reference tot he facts of each particular case must be made to reveal the features and implications of a particular employee stock option." هوية شخصية. at 679.
51. See Wendt v. Wendt, 1998 WL 161165 (Conn. Super. 1998).
52. Wendt v. Wendt, 1997 W. L. 752374, at *7 (Conn. Super. 1997).
55. See In re Marriage of Short, 890 P.2d 12, 16-17 (1995).
56. DeJesus v. DeJesus, 90 N. Y.2d 643 (1997).
58. In re Powell, 147 Or. التطبيق. 17 (1997) distinguished by In re Matter of Marriage of Gohlman, 151 Or. التطبيق. 93 (Or. App. 1997) (court held that the increased value of the wife's stock did not warrant modification or termination of support payments and wife was allowed to hold the stock for investment purposes).
59. See Callahan v. Callahan, 142 N. J. Super. 325, 328 (Ch. Div. 1976).
60. See Margaret A. Jacobs, Stock Options Spur New Battles in Many Child Support Cases, WALL ST. J., Mar. 17, 1999, at B1.
61. See Chen v. Chen, 416 N. W.2d 661, 663 (Wis. Ct. App. 1987).
62. See In re Marriage Campbell, 905 P.2d 19 (Colo. Ct. App. 1995).
63. Treas. ريج. Я1.83-7 (1978); see 2A Benefits Coordinator Par. 31, 146.
64. See I. R.C. Я83(a) (1994); Treas. ريج. Я1.83-1,-7 (1978). See also 2A Benefits Coordinator Par. 31, 146; In re Marriage of Miller, supra, note 33, at 1314.
65. In re Marriage of Miller, supra, note 33, at 1318.
66. See Dr. Barenbaum's article.
67. See Dr. Barenbaum's article.
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Divorce article.
E mployee S tock O ptions A nd D ivorce.
R OBERT J. CHALFIN, CPA, JD AND PAUL GAZALEH, CPA.
Today, more than ever, divorce attorneys must be proficient in recognizing, understanding and resolving disputes arising from the distribution of employee stock plans. This need results from companies' increasing reliance on option plans to compensate, reward and retain employees of all levels. The popularity of stock option plans is evident from the vast array of corporations implementing them. [1] For example, businesses ranging from high technology companies, to large publicly traded corporations to non-high tech closely held companies all grant stock options. In effect, stock options are replacing typical cash based compensation packages. Such broad-based implementation of this compensation scheme has obvious implications for asset distribution and support awards incident to divorce proceedings.
Companies are issuing stock option plans more often and to a greater diversity of employees than ever before. Traditionally, stock option plans were used to reward top management and “key” employees while simultaneously linking (golden handcuffing) those employees' interests to the interests of the company and other shareholders. An increasing number of companies, however, now consider all of their employees “key.” As a result, the popularity of broad-based stock option plans has grown significantly since the late 1980’s. Such plans now apply to all or a majority of employees in more than a third of large United States companies. This more than doubles the rate in existence in 1993. A 1997 survey of 1,100 public companies [2] found that 53% of the respondents provided options to all employees. Further, the study reported that 51% of companies with an employment force of 500 to 999, offered options to all employees as opposed to 30% in a similar 1994 survey [3] and 31% in 1991 [4] . In addition, 43% of companies with a workforce of 2,000 to 4,999 offered options to all employees compared to 10% in 1994. Forty-five percent of companies with 5,000 or more employees also reported offering options to all workers compared to 10% in 1994. See Employee Stock Options Fact Sheet, (visited June 10, 1999) <http:\\nceo\library\optionfact. html). [5]
This trend shows no significant signs of slowing; therefore, matrimonial attorneys must be ready to address the unique issues arising from the ownership and distribution of broad-based stock option plans. This article will explain the basic nature of employee stock options, how they are valued, taxed and ultimately distributed in divorce proceedings.
What is an Employee Stock Option?
There is no question that “stock options” are assets subject to equitable distribution. However, to simply say that they are assets does not provide sufficient guidance to the matrimonial litigator. We must first understand the basic nature and definition of a stock option. Basically, a “stock option” is “the right to purchase a specified number of shares of stock for a specified price at specified times, usually granted to management and key employees.” The price at which the option is awarded is called the “grant” price; this is usually the market price at the time the options are granted. Black’s Law Dictionary (5 th ed. 1979). See also Treas. ريج. §1.421-7(a)(1) (1978); I. R.C. §1234(a) (1998) [6]
Generally, stock options are incentives to stimulate the efforts of key employees as well as attempts to retain such employees.
An option holder may lose his/her right to exercise the option regardless of whether the stock option is granted for money, past services, as an incentive for future services, or for no consideration at all. This rare occurrence results when the option holder attempts to exercise outside of the option's terms. This rarely becomes an issue in divorce litigation; however, it is nonetheless something to keep in mind to avoid severe economic loss to either party and/or a potential attorney malpractice claim.
If the option (whether an NQSO or ISO) is "actively traded on an established market" the code considers the option to have a "readily ascertainable fair market value." [7] If there is no "readily ascertainable fair market value" at the time of the grant, the optionee recognizes income at the time of the option either: (1) becoming "substantially vested" or (2) is no longer subject to a "substantial risk of forfeiture." [8] Any profit is a short term capital gain, taxable at ordinary income rates. [9] The code establishes four conditions necessary for an option that is not "actively traded on an established market" to meet the "readily ascertainable fair market value" standard: (1) the option is transferable by the optionee (2) the option is exercisable immediately in full when granted (3) there can be no condition or restriction on the option that would have a significant effect on its fair market value, and (4) the market value of the option privilege is readily ascertainable. [10] All four conditions must be met. Because these conditions are seldom satisfied, most non-qualified, non-statutory stock options not traded on an established market, do not have a readily ascertainable value. [11]
Are there different kinds of stock options and how are they taxed?
Generally, there are two basic categories of stock options: (1) incentive stock options (commonly referred to as “ISO’s”) which are qualified or statutory options and (2) non-qualified stock options (which are commonly referred to as “NQSO’s”). Simply put, the difference between the two types of options results from their Internal Revenue Code compliance requirements at the time of the grant. These requirements ultimately affect how the options are taxed. انظر I. R.C. §422A (b) (1998). [12]
An employee will not realize any taxable income upon the grant or exercise of an ISO. Rather, tax is only owed when the stock resulting from an exercised ISO is sold. If the employee sells the stock within two years after the option is granted and within one year after the option is exercised, income will be realized in an amount equal to the lesser of (1) the excess of the fair market value of the shares at the date of exercise over the option price, or (2) the excess of the amount realized on the disposition over the option price. If the individual holds the shares for two years after the grant of the ISO and one year after exercise of the ISO, the difference between the sale price and the option price will be taxed as a capital gain or a loss. If the stock is sold after the two-year/one-year period, that gain will also be an alternative minimum tax preference item subject to the 26/28 percent tax rate.
NQSO’s are treated differently. The holder “employee” of a non-statutory option will recognize income at the time of the grant if the option has a “readily ascertainable fair market value.” The individual will not realize income at the time of the grant, however, if the option is not transferable and does not have a “readily ascertainable fair market value.” When the non-qualified stock option is exercised, the individual is taxed at ordinary income rates on the difference between the fair market value of the stock and the exercise price of the option. When the individual sells the stock, a capital gain or loss will be incurred on the difference between the amount received for the stock and its tax basis. Typically the tax basis is equal to the fair market value at the time of the exercise of the option. The capital gain will be either long term or short term depending on the length of the time for which the shares are held after the exercise.
It may, therefore, be appropriate to tax effect executive stock options for purposes of equitable distribution. Executive stock options must be exercised and sold because they have a fixed expiration date. The resulting tax is, therefore, inevitable and should be considered when determining how assets should be distributed. Further, there may be situations where the transfer of restricted stock options to a non-employed spouse may result in tax liability incident to a transfer pursuant to a Judgment of Divorce. [13]
How Are Stock Options Valued?
Various methods are recognized as valuable tools in alleviating the difficulty of determining stock options' present value. In 1995, the accounting profession formally recognized that executive stock options have value beyond their intrinsic value. At or about the same time, the Financial Accounting Standards Board (FASB) also stated that, “an employee’s stock option has value when it is granted regardless of whether, ultimately (a) the employee exercises the option and purchases stock worth more than the employee pays for it or (b) the option expires worthless at the end of the option period." See Statement of Financial Accounting Standards No. 123, ¶75, Financial Accounting Standards Board, October 1995; see also Les Barenbaum, Ph. D., Employee Stock Options Valuation Issues . [14] Therefore, the profession acknowledged the Black-Scholes Option Pricing Model as an appropriate method by which to calculate the value of executive stock options. Therefore, the two most popular valuation modes are the “intrinsic value” and the “Black-Scholes” methods. See Statement of Financial Accounting Standards No. 123, ¶78, Financial Accounting Standards Board, October 1995. See also Barenbaum supra p. 4.
The intrinsic value method calculates the stock option's value by determining the difference between the option exercise price and the fair market value of the stock. For example, if you have an option to purchase stock “x” for $5, and the stock is currently trading at $27 per share, the intrinsic value of the option is $22 ($27 - $5 = $22). This method, however, fails to consider the value of the holder's right to purchase the stock at a later date for a predetermined price. It also does not consider the volatility of the underlying stock as well as the incumbent advantages and disadvantages of such volatility. In addition, the intrinsic value method fails to account for the advantages and disadvantages resulting from the option holder's inability to receive the stock’s dividends. Lastly, this method does not calculate or consider the difference in value between the cost of purchasing the stock and the cost of forgoing lost interest on the acquisition funds.
The Black-Scholes Method takes into account the financial and market considerations that are ignored by the intrinsic value method. The most important distinction between the two methods, therefore, is that the Black-Scholes Method accounts for market volatility. If volatility is excluded from the calculation, options from two very different companies, with varying growth rates, may result in the same value. For example, assuming that the option prices and fair market values are the same, options from a slower growing utility company, such as PSE&G, may result in the same value as options from a faster growing computer company, such as Microsoft. It does not require a leap of the imagination to realize that omitting market volatility from value determinations may be misleading. The Black-Scholes Method differentiates between these types of companies and, therefore, avoids such misperceptions, while the intrinsic method does not.
The Black-Scholes formula (shown below) is complex and contains many variable components. الصيغة هي:
The explanation of these letter designations for the variables in the Black-Scholes formula are:
C = theoretical call premium.
S = current stock price.
t = time until option expiration.
K = option stock price.
r = risk free interest rate.
N = cumulative standard normal distribution.
e = exponential function.
o = standard deviation of stock returns.
ln = natural logarithm.
The initial part of the calculation determines the expected benefit resulting from an outright purchase of the stock. The latter part of the calculation determines the present value of paying the exercise price in the future. The difference between the two is the fair market value of the option.
An underlying problem with the Black-Scholes Method, however, is that it requires assumptions regarding the volatility of the stock, future dividend rates, and lost interest. Thus, a change in any of the underlying assumptions will affect the value of the option as calculated pursuant to this method.
The following table provides a summary of how a change in one of the assumptions will affect the value of the stock options calculated under the Black-Scholes Method.
A common misconception in the valuation of long-term options is that an option's value is best represented by its intrinsic value. See id. In fact, based on the various Black-Scholes factors, stock options which are “out of the money,” meaning that the strike price exceeds the current fair market value, are actually traded with various dollar values. For example, a Dell Computer stock option with a strike price of $50.00 and a market value of $37.3125 as of May 24, 1999 traded for $8.75. This is so even though the option was almost $13.00 out of the money when the option was valued. The disparity in the value is due to investors' optimism that a rise in the Dell shares would occur so that the shares' worth would exceed $58.75 prior to the option's expiration. See id.
How Are Stock Options Distributed In Matrimonial Matters?
Generally, the methods implemented to distribute stock options fall into one of two categories:
1. Deferred Distribution Upon Exercise of Options (Constructive Trust);
2. Present Valuation with off-set against other assets.
(What portion of options should be granted to the non-employee spouse when the employee-spouse asserts that a portion of the options is non-marital property is an issue that often arises in either distribution method. This issue, however, is addressed in the next section of this article.)
Deferred Distribution Method.
The Deferred Distribution Method is the most commonly implemented method for distributing options. Moreover, this method was utilized in one of the earliest New Jersey cases dealing with stock options incident to divorce. See Callahan v. Callahan , 142 N. J. Super. 325, 328 (Ch. Div. 1976). The Callahan court ruled that options acquired during a marriage were subject to equitable distribution even though (1) the options were potentially terminable; (2) the husband had to make an expenditure to exercise the options; and (3) the options were subject to various SEC regulations. [15] See id. at 327-29. In so holding, the court impressed a constructive trust on the husband, in favor of the wife, for a portion of the options. See id. at 329. The court reasoned that imposition of a constructive trust would result in the most equitable outcome to the parties without creating undue financial and business liabilities. See id. It should be noted that all of the options were granted during the course of the marriage. See id. at 327. Although not specifically stated, however, it appears that some or all of the options were not fully vested because they were subject to divestiture under certain circumstances. See id. at 330. This may be why the wife was awarded only 25% of the options at their maturation. See id. ن. 1. (See section below regarding determining distributive shares.)
Present Valuation Method.
The Present Valuation Method is another commonly-used mode of distribution. Under this method, the non-employed spouse must receive his or her share of the current value of the options in either cash or a cash equivalent. This method should account for mortality discounts, interest, inflation and any applicable taxes. The Present Valuation Method's shortcoming, however, is that such distribution may potentially become inequitable if the employee spouse is either unable to exercise the options or the options are “worthless” (the cost of the option exceeds the fair market value) on the date they become exercisable.
Out-of-state matrimonial courts differ on the preferred method of stock option distribution depending on the nature of the options. For example, a different method may be implemented depending on whether the options are vested or unvested and/or transferable or salable. Transfer to the non-employee spouse, if available, is the preferable distribution method because it effects a clean break between the parties. This method negates any need for further communication between the parties and eradicates the need to implement valuation methodologies. Transfer of stock options, however, is rarely permitted by employee stock option plans. Therefore, some courts have devised alternative distribution methods. One such method allows the parties to hold the options as tenants-in-common. Another alternative allows the non-employee spouse, upon furnishing the requisite capital, to order his or her portion of the options exercised. This latter option is similar to the constructive trust solution devised in the Callahan decision. The aforementioned alternatives are not an exhaustive list of distribution methods devised by courts. In fact, trial courts are accorded and often use broad discretion in tailoring approaches to the facts of individual cases. [16]
As a practice point, please note that when distributing options in kind, parties should be advised against violating insider trading rules. For example, it may be a violation if the participating spouse makes known his/her intention to exercise options to the non-participating spouse. Another concern regarding distribution of options in kind is that they may lapse if the individual’s employment is terminated, either voluntarily or involuntarily.
Determining the non-employed spouse’s distributive share.
What happens when the employed spouse argues that some or all of the options are unvested or were otherwise “not acquired during the marriage” and therefore not distributable to the other spouse?
The New Jersey Approach.
New Jersey courts, when addressing stock options incident to divorce, emphasize the necessity to balance the "need for definitiveness embodied in the date-of-complaint rule [17] with the need for flexibility inherent in equitable distribution." See Pascale v. Pascale , 140 N. J. 583, 612 (1995). Whereas the majority of other state courts which have addressed this issue determine the portion of stock options subject to distribution by employing the “time-rule formula” approach (explained below), New Jersey courts have laid the groundwork in a more general fashion. Basically, New Jersey courts hold that assets or property acquired after the termination of the marriage, but as a result of efforts expended during the marriage, will generally be included in the marital estate and are, therefore, subject to equitable distribution. See id. at 469. However, New Jersey law recognizes that assets acquired after a marriage's dissolution, resulting solely from the earner’s post-complaint efforts, constitute the employed spouse’s separate property. See id. at 470. The problem is telling the difference.
Pascale v. Pascale is the seminal New Jersey case regarding stock option distributions. In Pascale , the parties were married on June 19, 1977; a divorce complaint was filed on October 28, 1990. See id. at 588. In 1987, while still married, Mrs. Pascale was granted the option to purchase 5,000 shares of her new employer's stock. See id. at 607. As of the trial date, Mrs. Pascale had acquired and owned 20,069 stock options, all of which were awarded by her employer between April 14, 1987 and November 15, 1991. See id. Seven thousand, three hundred of those options were granted subsequent to the filing of the divorce complaint. See id.
The dispute arose in response to two sets of options granted on November 7, 1990, one for 4,000 shares and another consisting of 1,800 shares. The disputed options were awarded approximately ten days after the wife filed for divorce. [18] See id. Mrs. Pascale argued that the 1,800 options were not subject to distribution because they were "issued in recognition of past performance." هوية شخصية. In addition, she asserted that the remaining 4,000 shares were also excluded from the marital estate because they were issued in anticipation of increased employment responsibilities resulting from a promotion. See id. Mrs. Pascale relied on her company's transmittal letters to support her arguments. See id. The trial court, however, held that neither of the two blocks of options could be excluded from the marital estate. Therefore, both were subject to equitable distribution. [19] See id. at 608.
However, the Appellate Division found that only one of the two sets of options constituted part of the marital estate. See id. (citing Pascale v. Pascale , 274 N. J. Super. 429, 437-40 (App. Div. 1994)). The appellate court opined that the 4,000 shares granted in recognition of the promotion were “'more appropriately . . . designed to enhance future employment efforts' and should not have been included in the marital estate." هوية شخصية. at 603 (citing Pascale , 274 N. J. Super. at 439). However, the Appellate Division found that the remaining 1,800 options were granted in recognition of past employment performance and were, therefore, properly included in the marital estate notwithstanding the date of complaint rule. See id.
In reversing the appellate court, the Supreme Court focused on N. J.S. A. 2A:34-23 and the principle that “[p]roperty 'clearly qualifies for distribution' when it is 'attributable to the expenditure of effort by either spouse' during the marriage.” Id. at 609 (quoting Painter v. Painter , 65 N. J. 196, 214 (1974)). The Supreme Court's holding made it clear that the determining factor, in stock option distribution cases is whether the assets result from the parties' joint efforts put forth “during the marriage.” See id. To refute the presumption that the options result from a joint effort, the party seeking exclusion of the asset bears “'the burden of establishing such immunity [from equitable distribution] as to any particular asset.'” Id. (citing Landwehr v. Landwehr , 111 N. J. 491, 504 (1988)).
Consequently, the Pascale court concluded that stock options granted after the marriage's termination "but obtained as a result of efforts expended during the marriage should be subject to equitable distribution." هوية شخصية. at 610. The court further noted that obvious inequity [. . .] may result from inflexible applications of the date of complaint rule. See id. [20] The Supreme Court apparently concurred with the trial court's determination that the wife's promotion and compensation awards were attributable, in part, to the parties' joint efforts during their marriage. See id. at 610.
How would the New Jersey Supreme Court have held if it determined that a block of options resulted from both pre and post marital efforts? How should courts hold if the purpose for the options' grant is unclear or indeterminable? What should guide court's decisions if the options are unvested and require future employment to fully vest? These circumstances often exist; however, New Jersey’s courts have not yet developed clear standards by which to resolve such disputes. Thus, such common problems often result in murky dilemmas for litigants and their attorneys.
Although New Jersey has only two reported decisions regarding stock options, to wit, Callahan and Pascale , there has been one unreported New Jersey Appellate Division Case which has also addressed the issue. Namely, the case of Linda Klein v David Klein Docket No. A-5019-97T1 argued June 3, 1999 and decided on June 24, 1999. In this case, the defendant husband appealed the trial court’s award of 50% of all of his stock options to the plaintiff. The Appellate Division rejected the defendant’s arguments and affirmed the Trial Court’s decision. The defendant had obtained a senior staff attorney position with Warner-Lambert in 1979 where he continued to be employed up to the date of the Appellate Court’s decision. The Klein court addressed the 1992 stock option award which was made two months after the Complaint for Divorce was filed. The Appellate Court found that the Trial Judge had “sufficient basis….to find that the grant was based upon defendant’s service provided to the company during the marriage”. This conclusion was supported by the text of the Warner-Lambert Grant Letter, which stated that the grant “reflects your extremely valuable contributions to the success of this corporation”. (page 4,5).
The defendant argued that the Trial Court’s award related to the options granted in 1989,1990, and 1991 (prior to the filing of the complaint for divorce) were “unmatured” because they were not exercisable by the complaint date. The Appellate Court noted that at the complaint date, 25% of 1989 options granted, 50% of the 1990 options granted and 75% of the 1991 options granted could not be exercised. The defendant further argued that he had to remain employed at Warner-Lambert in order to exercise the options. By the time of the trial in 1996, however, all but the last 25% of the options granted in October 1992 were exercisable, and that last 25% was exercisable by the time the judge read his decision into the record in November 1996. The Klein Appellate Court then went on to address the most prevalent issues when distributing equitable distribution of stock options, to wit, the distribution of unvested stock options. In support of the affirmance of the Trial Court’s decision, the Appellate Court in Klein reiterated the well established premise that “the right to receive benefits accruing to a spouse subsequent to a divorce or subject to equitable distribution if they are related to the joint efforts of the parties”. Moore v Moore 114 NJ 147,154(1989). The Klein Court noted that there were no reported decisions in New Jersey applying this concept to unmatured stock options, but note that the cases related to pension benefits are analogous. (Id. pg. 6) As many out of state courts have done, the Klein Appellate Court went on to analogize the concept of distributing unvested stock options with the concept of distributing pension benefits.
However, as with the other New Jersey cases, it is this writer’s opinion that the court failed to adequately consider the post complaint efforts which the employed spouse was required to expend when distributing the options. This writer agrees with the analogy to distribution of retirement benefits, but emphasizes such retirement benefits are only divided after applying an appropriate coverture fraction to assure that only the marital portion of the retirement benefit is distributed. Although the Klein Court concluded that “there can be little doubt from the Grant Letter, the plan’s terms giving a range of possible grants. and the annual ward of a grant, that the options were intended to reward the defendant’s work for the year proceeding the grant, the fact that they were presumably subject to divestiture if the defendant did not continue to work after the complaint for divorce meant that the court did not consider a key factor in distributing these assets. The court’s conclusion that “the fact that the benefits could not be received unless additional years of employment were completed does not make a difference in the includability of the stock options in the marital estate” (page 8) is a significant departure from the conclusion of the majority of other states in this nations that have addressed this issue.
In essence, the defendant received no relief either by way of the distributable portion of the options subject to distribution, the valuation of those options, or his spouses entitlement therein based upon the fact that these options were not exercisable as of the date of the complaint and his continued post complaint employment was required for these options to continue to exist. There would seem to be some inequity in this result. It is the writer’s opinion that the coverture fraction that has been adopted by the majority of states is the most appropriate and fair method of resolving this inequity.
To date, New Jersey has not yet adopted a bright-line rule to determine how unvested options should be distributed. Instead, New Jersey’s analysis, unlike other states, [21] rests almost entirely on subjective determinations.
The majority of states, like New Jersey, treat unvested stock options as property that is subject to distribution in marital dissolution proceedings. See Garcia v. Mayer, 122 N. M. 57 (Ct. App. 1996), cited in Wendt v. Wendt , 1998 WL 161165, at *119 (Conn. Super. 1998); see also, MacAleer v. MacAleer , 725 A.2d 829 (Pa. Super. 1999) In MacAleer , the Pennsylvania appellate court determined that stock options granted during the marriage, but not exercisable until after the date of separation, constituted marital property subject to distribution in divorce proceedings. See id. at 831. The court noted that benefits resulting from employment during marriage are marital because those benefits, like pension benefits were "received in lieu of additional compensation which would have" been utilized during the marriage to either acquire additional assets or raise the marital standard of living. هوية شخصية. at 832 (quoting Berrington v. Berrington , 598 A.2d 31, 34-35 (1991)). The court’s rationale, to a large degree, parallels the rationale and holdings of a majority of other state courts. See id. at 833.
Many jurisdictions first consider whether the options were granted for past, present or future services. However, most courts have learned that employee stock options are usually not granted for any one reason. Instead, the majority of courts have realized that options are often granted for a conglomeration of reasons including compensation for past, present and future services. As a result, when dealing with unvested options, many courts sought to develop or adopt a structured scheme useful to determining the distributable share of such options. [22]
“Coverture Factor” or “Time-Rule Fractions”
As stated previously, most out-of-state courts use either a “coverture factor” or “time rule fraction” to determine how much, if any, of the unvested stock options constitute marital property. The most prevalent time rule fraction evolved from a formula implemented by the California Court of Appeals in In re Marriage of Hug , 154 Cal. التطبيق. 3d 780 (Cal. Ct. App. 1984). In Hug , the trial court expressed the options that were part of the marital estate in terms of a fraction. See id. at 782. For example, the court stated that the numerator represented the difference in months between the spouse's commencement of employment with the company and the date of the parties' separation. See id. The denominator was established by first determining the difference, in months, between commencement of employment and the date when the first option was exercisable. See id. This factor was then multiplied by the number of shares that could be purchased on the date that the option was first exercisable. The remaining options were determined to be the separate property of the husband, the employed spouse. See id. at 782-83. [23]
The husband in Hug agreed that the options were subject to division according to the time rule; however, he contended that the trial court used an erroneous formula. See id. at 784. He argued that the proper time rule should incorporate the date when the option was granted rather than the date that he commenced employment because the options were not granted as an incentive to accept such employment. See id. He further argued that each annual option was a separate and distinct option granted as compensation for services rendered during that year. See id. Thus, he argued that the options were his own separate property because they each accrued after the date of separation. See id.
The Hug court examined the various reasons why corporations confer stock options to employees and found that no single characterization could be given to employee stock option grants. See id. at 786. Thus, the court determined that whether they are properly characterized as compensation for past, present, or future services, or all three, is fact specific. See id. Therefore the trial court concluded that, given the facts of that particular case, the two-year period of employment preceding the company's distribution of options contributed, at least in part, to the underlying reasons for the grant at issue. [24] See id. The appellate court held that the lower court's determination was supported by ample evidence in the record. See id. at 789.
Various versions of coverture factors have since evolved as courts addressed different factual circumstances. A recent Connecticut case, Wendt v. Wendt , undertakes a lengthy analysis of the competing arguments and most commonly used coverture factors. See generally Wendt , 1998 WL 161165.
Interestingly, the Connecticut court rejected the wife’s expert’s valuation methodologies, the Black-Scholes Method, in favor of the “intrinsic value” method. See id. at 249. The Wendt court noted that the "intrinsic value" methodology resulted in the wife receiving a 10% increase in distribution over the distribution granted under the Black-Scholes model. See id.
New York recently joined the majority of states holding that “stock option benefit plans provided by a spouse’s employer constitute marital property for the purposes of equitable distribution, where the plans come into being during the marriage but are contingent on the spouse’s continued employment with the company after the divorce.” See DeJesus v. DeJesus , 90 N. Y.2d 643 (1997). Therefore, New York’s highest court unanimously joined the majority of jurisdictions that use a time rule to divide such contingent resources. The DeJesus court laid out the following four-step procedure to guide courts in dividing such options:
1. Determine the portion of shares issued for past and future services; [25]
2. Determine the shares related to compensation for past services to the extent that the marriage coincides with the period of the titled spouse’s employment, up until the time of the grant. This would be the marital portion;
3. Determine the portion granted as an incentive for future services; the marital share of that portion will be determined by a time rule; و.
4. Calculate the portion found to be marital by adding:
أنا. that portion that is compensated for past services; و.
ثانيا. that portion of the future services deemed to be marital after application of the time rule.
The sum result will then be divided between the parties using the equitable distribution criteria. See id. at 652-53.
This method was borrowed from Marriage of Miller , a Colorado Supreme Court case. The DeJesus court was persuaded that the Miller type analysis best accommodated the tensions that often arise when attempting to determine how options should be distributed in lieu of unclear or competing reasons for the grant. See id. at 651. For example, the highest court of New York found that the Miller analysis properly distinguished between portions of stock plans acquired during the marriage versus those acquired outside of the marriage. See id. In addition, the court found that the Miller analysis also sufficiently differentiated between stock plans designed to compensate for past services and those designed to compensate for future services. See id.
However, notwithstanding the complexity of these methods, the danger of rigidity and resulting unfairness from a formalistic application of such approaches still exists. This issue was addressed by an Oregon court in In re Powell , 934 P.2d 612 (Or. Ct. App. 1997). Powell emphatically stated that “no one rule will produce a just and proper result in all cases and no one rule will be responsive to the many different reasons why stock options are granted.” Id. at 615. This reasoning echoes the earlier New Jersey Supreme Court's rationale in Pascale .
Can Stock Options Be Viewed As Income To The Employee For Support Purposes?
In general, in a divorce proceeding, stock options may be classified by courts as either an asset subject to equitable distribution or qualified as an income stream for the purpose of calculating spousal support and child support Michael J. Mard & Jorge M. Cestero, Stock Options in Divorce: Assets or Income? , 74 Fla. Bar J. 62 (2000). The question of which classification is most appropriate is one which courts are grappling with at present with increasing frequency as stock options become a standard means of reward and incentive for many executives in the United States. Id .
The difficulty in reaching a judicial determination of the unexercised stock option as a property asset versus an income asset lies in the fundamentally difficult nature of valuing stock options. First, “at the time of its grant, the stock option does not have a readily ascertainable value.” Jack E. Karns & Jerry G. Hunt, Should Unexercised Stock Options Be Considered “Gross Income” Under State Law For Purposes Of Calculating Monthly Child Support Payments? , 33 Creighton L. Rev. 235 (2000). The most common valuation methodologies were set forth in the preceding sections of this article. Second, stock options have a dual nature. Maard, supra at 62. As previously noted, options have some characteristics of a property asset because the options represent the right to purchase an ownership interest in the underlying corporation’s stock. Id . This ownership interest under certain circumstances is alienable. Id . On the other hand, options also have characteristics of income because by definition as well as by intent, options permit the owner to earn the appreciation in value of the stock before its actual purchase. Id . Also, in most instances, options are paid out to employees as a form of compensation. Id . The options may take the form of deferred compensation for past services, current compensation for present services, or compensation advanced for future services. Id . citing Seither v. Seither , 24 Fla. Law Weekly D2816 (Fla.2d DCA.1999).
Nevertheless, in dissolution proceedings today courts must answer the question of whether stock options are “gross income” subject to income tax, thereby included in alimony and child support calculations versus “personal property” subject to capital gains treatment and equitable distribution Strong arguments exist for both types of classifications. Precedent favors the property classification. Yet, a new trend has begun to emerge in this country whereby some courts are classifying stock options as income for support purposes. The following will synopsize the classification trend among the courts in the United States broken down by circuit.
State courts in the First Circuit continue to abide by the more common approach of treating unvested stock options as property subject to division. No cases have been published construing stock options as income for calculating support State appellate courts in the Second Circuit have likewise held that stock options, both exercisable and nonexercisable, owned on the date of dissolution were property subject to distribution. Taylor v. Taylor , 57 Conn. App. 528 (2000); Bornemann v. Bornemann , 245 Conn. 508 (1998). Interestingly, however, on the trial level, courts have considered as income the funds received through the redemption of stock options awarded at the time of dissolution for purposes of assessing whether there had been a substantial change in circumstances in a post judgement application to modify alimony and child support. Denley v. Denley , 38 Conn. App. 349 (1995). On appeal however, the plaintiff argued that the funds received from the exercise of stock options was simply a conversion of an asset. Id . The appellate court agreed. Id . The Denley Court explained that “the mere exchange of an asset awarded as property in a dissolution decree, for cash, the liquid form of the asset, does not transform the property into income.” Id .
In the Third Circuit however, some state supreme courts have held that profits realized from the exercise of the employee stock options, unexercised at the time of dissolution, but taxed as ordinary income when exercised, were properly treated as income when calculating a post judgment modification of a child support obligation. Kenton v. Kenton , 571 A.2d 778 (1990). The Supreme Court of Delaware analogized the profits realized from the exercise of stock options to a "bonus” properly included in a parent’s net income for support purposes. Id . Additionally, the Superior Court of New Jersey, Appellate Division held that employee payments to deferred annuity plans and other similar types of deferred compensation should be included in determining a party’s adjusted gross taxable income for purposes of calculating child support. Schwartz v. Schwartz, 328 N. J. Super. 275 (App. Div. 2000) citing Pressler, Current N. J. Court Rules , comment on Appendix IX-B at 2108; Connell v. Connell , 313 N. J. Super. 426, 433-43 (App. Div. 1998).
State court cases in the Fourth Circuit are following the more traditional approach holding that both unvested and vested options whether exercised or not are property subject to equitable distribution. Chimes v. Chimes , 131 Md. App. 271 (2000). These courts treat stock options similar to “a pension that has not yet vested.” Moreover, legislatively, deferred compensation plans which may include stock option plans have been codified as requiring treatment as a pension or retirement benefit subjecting same to division as marital property. Dietz v. Deitz , 17 Va. App. 203, 213-14 (1993).
No state court cases in the Fifth Circuit have been reported wherein stock options were treated as income for purposes of calculating child support or spousal support. In Brewer v. Brewer , the court articulated the rule of law in Texas with regard to the treatment of stock options in dissolution matters. Brewer v. Brewer , 20000 Tex. App. Lexis 3546 (2000). The Brewer Court quoting Bodin v. Bodin , explained that “Unvested stock options [are] a community asset subject to consideration along with other property in the division of the community estate. “ Id . quoting Bodin v. Bodin , 955 S. W.. App. 1997).
The Sixth Circuit is making legal headlines however, due to the case of Murray v. Murray , 128 Ohio App. 3d 662 (1999). The Murray case is thought to be the first case in the United States deliberately treating an executive’s unexercised stock options as income for child support purposes. Debra Baker, Stock Options Declared Income to be Factored into Child Support Calculations , 85 A. B.A. J . 32 (Oct. 1999). In the Murray case, the wife moved to modify child support on the ground that her ex-spouse’s income had increase, in part from the increase in value of his stock options. Id . citing Murray v. Murray , 128 Ohio App. 3d 662 (1999). The husband argued that the appreciation in value of his options should not be considered because it was nonrecurring income. Id . The court held that where employees have complete discretion to exercise the options, the appreciation in stock value should be included as gross income even if the employee chooses not to exercise the options in each year. Id .
The Murray Court rejected the argument that the appreciation was non-recurring because the employee can exercise the option on an annual basis. Id . The ABA Family Law Section’s position is that this decision extends the theory that executives may not reduce child support payments using business decisions as a shield or by refusing to exercise stock options. Id . The Murray Court reasoned that since the employee had complete discretion to exercise the options, “the option then becomes an investment choice, and its value may be imputed as part of appellant’s “gross income”.” Murray v. Murray , 128 Ohio App. 3d 662 (1999) citing Sizemore v. Sizemore , 1994 Ohio App. Lexis 4596 (Oct. 14, 1994). The court in Murray continued to explain, “If we were to hold that executive stock options were not to be included in “gross income” …, an employee receiving such options would be able to shield a significant portion of his income from the court, and deprive his children of the standard of living they would otherwise enjoy. This would be in direct contradiction with the very purpose of the child support statute, the child’s best interest. Murray v. Murray , 128 Ohio App. 3d 662, 669 (1999) Thus, parents in the state of Ohio, and perhaps other states before long, may not shelter income from their children, intentionally or unintentionally, by postponing the exercise of stock options until the children are grown. See Id . It should be noted however, that some legal scholars believe the result in Murray is wrong. Jack E. Karns & Jerry G. Hunt, Should Unexercised Stock Options Be Considered “Gross Income” Under State Law For Purposes of Calculating Monthly Child Support Payments? , 33 Creighton L. Rev. 235 (Feb. 2000).
At present, however, the trend in the Sixth Circuit is to consider the value of stock options as income for support purposes. In fact, in Tennessee, in Stacey v. Stacey , 1999 Tenn. App. Lexis 668, the court held that stock options represented potential income and the value of the options should have been treated as income and factored into the original support obligation. Id . The Stacey Court reasoned “It is clear that Husband received a substantial increase in the amount of his disposable income as a result of the [eventual] exercise of his stock options, and there is nothing in the record to suggest that he will not continue to receive this in the future.” Id . Thus, this circuit leads the movement in the options as income trend.
With respect to state court cases in the Seventh Circuit, no cases construing stock options as income have been reported. The court in Hahn v. Hahn , 655 N. E.2d 566 (1995) explained the posture of the Indiana courts. Indiana construes “…[O]nly those stock options granted to an employee by his or her employer which are exercisable upon the date of dissolution or separation which cannot be forfeited upon termination of employment as marital property.” Hahn v. Hahn , 655 N. E.2d 566 (1995)
Likewise, in the Eighth Circuit, the Supreme Court of Nebraska recently held that stock options are a form of deferred compensation, vested or unvested, which constitute property subject to distribution in a dissolution matter if determined to be marital. Michael J. Mard & Jorge M. Cestero, Stock Options in Divorce: Assets or Income? , 74 Fla. Bar J. 62 (2000) citing Davidson v. Davidson , 578 N. W.2d 848 (1998).
On the other hand, the state courts in the Ninth Circuit are following the new trend. California courts have made clear that spousal support and child support obligations should be based in part on income from the exercise of future stock options. Kerr v. Kerr , 77 Cal. App.4 th 87 (1999). “In fashioning an order for additional spousal support, based on compensation from the exercise of future stock options, the court properly intended to address the disparity in the parties’ present financial positions. contrary to Richard’s argument, Deedee will not be receiving a portion of his separate property if he exercises a stock option. Rather, any income Richard receives upon exercising an option is properly considered for purposes of setting [spousal] support. Id . at 94. “This additional income is part of his overall employment compensation and must be used to calculate child support.” Id . at 96 citing In re Marriage of Ostler & Smith , 223 Cal. التطبيق. 3d 33 (1990). Thus, courts are making clear that as stock options become a more common form of compensation so too must support awards encompass a wide variety of income streams.
Similarly, recent state court cases in the Tenth Circuit have held that the proceeds from a non-custodial parent's exercise of his/her options constitutes income for purposes of determining child support. See In re Marriage Campbell , 905 P.2d 19, 20 (Colo. Ct. App. 1995). The Campbell Court explained however, that “for purposes of child support, the father’s income, as derived from the exercise of the stock options, is limited to the difference between his purchase price of the optioned stock and the price at which he then sold it.” Id . Also, in the case of In re Marriage of Zisch , 967 P.2d 1999 (Colo. app. 1998), the court followed Campbell , and held that when presented with a motion to modify child support, a court “should initially include the amount of the gain as a component of the recipient’s gross income for the year in which the gain was received.” In re Marriage of Zisch , 967 P.2d 1999 (Colo. app. 1998).
Moreover, a recent state court case in the Eleventh Circuit held that it was not error for the trial court to treat the husband’s stock options as income for both alimony and child support purposes. Seither v. Seither , 1999 Fla. App. Lexis 16816 (Dec. 15, 1999). That same court earlier suggested that stock options can be considered as income for alimony purposes. Id . citing Milo v. Milo , 718 So. 2d 343 (Fla.2d DCA 1998).
Whether a court will consider stock options awarded to an employed spouse as income for purposes of fixing of support should be viewed as a function of regularity of past awards and confidence in expected future awards. For example, a spouse who has been employed by a company for 15 years and has only received one award of stock options, should not have those options included in his pool of income upon which support should be fixed. However, another spouse who has been employed for a similar period of time and routinely, year after year, received option awards, can likely expect to receive future awards, and therefore, expect same to be included in is available pool of income for purposes of fixing support. In such an analysis it would be critical to determine how the parties treated prior option awards when the vested. Did they exercise the options, sell the stock and utilize the funds to pay ongoing lifestyle expenditures or did they keep the options, stock or proceeds thereof for investment purposes? In other words, it is necessary to determine what funds the parties actually relied upon in maintaining their lifestyle. However, remember that even “savings” is a component of lifestyle.
In short, opinions analyzing the treatment of stock options recognize that the circumstances under which options are granted and the particular nature of the options themselves may vary so widely that no single formula or set of factors can effectively deal with them under all circumstances. Seither v. Seither , 1999 Fla. App. Lexis 16816 (Dec. 15, 1999). See DeJesus , 665 N. Y.S.2d 36; In re Marriage of Hug , 154 Cal. التطبيق. 3d 780. Nevertheless, a number of decisions have emerged from around the United States with interesting, yet inconsistent results. Thus, over the next decade, as family law litigation focuses more on the treatment of stock options so too will the courts focus on achieving a more evenhanded approach that aims to eliminate manipulation of the system, intentional or otherwise.
There is unquestionably a growing trend among the courts of this nation to subject unvested or non-exercisable stock options granted during a marriage to distribution. Further, options are also being viewed as income for purposes of fixing support obligation. As this trend continues, it is critical that matrimonial attorneys become familiar with these unique types of assets and tailor their discovery demands accordingly.
The key factor in determining how such assets should be distributed focuses on an inquiry as to the purpose for which the options were granted, i. e., whether the options were granted for past, present or future performance.
Since an accepted method of dividing unvested options is a form of coverture or time rule formula, matrimonial practitioners must be aware of the various forms of such fractions and the factors that can modify the fraction. Such factors include, but certainly are not limited to, the following: (1) when the option was granted, (2) whether the option was granted for past or future performance (if “past” how far back), (3) whether the option was granted in lieu of other compensation, (4) whether the option was a qualified incentive stock option or non-qualified stock option, (5) the options' expiration date, (6) the tax effect of the grant of the option, (7) the tax effect of exercising the option, (8) whether or not the option has a “readily ascertainable fair market value,” (9) whether or not the option is transferable, (10) whether or not the option is restricted property, (11) the extent to which the option is subject to risk of forfeiture, and (12) any other factors that the parties or court may deem fair and equitable considerations.
The majority of employee stock options are non-transferable and cannot be secured; therefore, matrimonial attorneys should specifically tailor their language when drafting agreements concerning such assets. These agreements should include: (1) a list of all options granted and an explicit description of which options are marital and which are not, (2) if a Deferred Distribution Method is employed, a description of whether and under what terms the non-owner can compel the owner to sell options after they vest, (3) provisions for payment of the “strike price” by the non-employed spouse and taxes resulting from the exercise of the options, (4) a description of how and when distribution is to be made to the non-owner spouse, and (5) precise notification and document exchange provisions. See Barenbaum supra p. 4.
The matrimonial attorney involved in a case concerning stock options, especially when representing the non-employed spouse, should be sure to obtain the following information and documents: (1) a copy of the stock option plan, (2) copies of any correspondence or internal memoranda issued by the company at the time of the grant of any stock options, (3) a schedule of granted options during the employee's period with the company, (4) the date of each option granted, (5) the number of options granted at each date, (5) the exercise price of options granted at each date, (6) the expiration date of each set of options granted, (7) the date of vesting for each set of options granted, (8) the date and number of options exercised, (9) all short term or long term employee incentive plans covering the employed spouse, (10) all Employment Agreements between the employed spouse and his or her employer, (11) all company plans, handbooks and option award letters related to stock options granted, (12) copies of the firm’s 10K and 8K for the entire period that the employed spouse is with the company, (13) dates of promotions and positions held by the employee, (14) a brief job description of each position, (15) the salary history of the employee which indicates all forms of compensation, (16) the grant date of exercised options, and (17) copies of any corporate minutes or proxy statements referencing the award of options. These documents provide the core information from which option values can be calculated and agreements intelligently reached concerning their distribution. See Barenbaum supra p. 4.
As we proceed in the 21 st Century, it is clear that matrimonial attorneys will need to become as knowledgeable as possible regarding this unique kind of asset. Hopefully, this article has given some insight into the complexities involved when dealing with Employee Stock Options and Divorce.
[1] Recognize, however, that some business and financial experts have criticized the growing prolific use of stock options in today’s economy. See “What You Need To Know About Stock Options” by Brian J. Hall published in the March-April 2000 issue of Harvard Business Review.
[2] Study conducted by Share Data, Inc. and the American Electronics Association.
[3] 1995 Share Data, Inc. survey.
[4] 1991 Share Data, Inc. survey.
[5] According to Mr. Hall’s article cited above, last year, Jack Welch’s unexercised GE options were valued at more than $260 million dollars. Intel CEO, Craig Barrett’s were worth more than $200 million. Michael Eisner exercised 22 million options on Disney stock in 1998 alone, netting more than a half billion dollars. IN total, U. S. Executives hold unexercised options worth tens of billions of dollars.
[6] A small minority of options are granted “out of the money”, with an exercise price higher than the stock price, these are premium options. And even a smaller minority are granted “in the money”, with an exercise price lower than the stock price, these are discount options. (See Mr. Hall’s article cited above.)
[11] See 1997 U. S. Master Tax Code, (CCH) §1923.
[12] Incentive stock options are employment-related. Accordingly, they may only be granted to employees. In addition, they must also be approved by the shareholders of the corporation and granted at the stock’s fair market value. NQSO’s, on the other hand, may be granted to employees, and independent contractors, as well as their beneficiaries.
[13] See IRS letter ruling 200005006. In this case the issued addressed by the IRS was whether a husband is taxed under IRC Section 83 when stock options are transferred to his ex-wife pursuant to a divorce decree or when they are exercised by his wife. The conclusion was that the husband was taxed under Section 83 at the time of the transfer of options to his ex-wife. The ex-wife receives a carry over basis in the options under Section 1041(b). The ex-wife'’ tax consequences upon the ultimate disposition of the stock would be governed by Section 1001. Thus, neither husband or ex-wife is taxed under Section 83 when the options are exercised by the ex-wife.
[14] Dr. Barenbaum is a Vice President at Financial Research, Inc., a Kroll-Linquist Avey company, and a professor of finance at LaSalle University.
[15] Certain SEC regulations required the employee option holder to forfeit "any profits [. . .] from the sale of stock within a specified period from the date of purchase." هوية شخصية.
[16] One caveat is, however, that all of these methods still assume that there is no exclusion of options based upon the argument that they are unvested or were otherwise not earned during the marriage.
[17] The cutoff date for determining which assets are subject to distribution.
[18] There is no indication of whether the options were vested in whole or in part, however, it is assumed that these options were “unvested”.
[19] The trial court "opined that it would be unfair to allow" Mrs. Pascale to retain benefits derived from joint efforts of the marriage merely because of her choice of dates for filing the divorce complaint. See id. at 608.
[20] The court stated that any different holding would result in the denial of benefits to Mr. Pascale that accrued during his marriage and that were, at least, partially attributable to him. The court noted that underhanded individuals could use such a rule, which distributes assets only actually granted during the marriage period, to the detriment of their spouses by filing for divorce before receiving expected options. See id.
[21] Other states utilize various formulaic approaches, including but not limited to, a coverture factor or time-rule which usually taking into account vesting schedules.
[22] It should be noted that options clearly given to the employee spouse as compensation or incentive for future services are wholly non-marital property. Similarly, options obviously granted exclusively for past or present services are fully marital property. Thus, there is no need for the court to utilize a coverture factor or time rule fraction for either category to determine the marital interest since they are entirely either marital or non-marital property. Problems arise when: (1) the reasons for the options' grant are unclear; (2) when the options are unvested; or (3) when the options include an indiscernible mass of pre and post marital efforts. See generally In re Marriage of Miller , 915 P.2d 1314 (Colo. 1996).
[23] The court was careful to note, however that courts have broad discretion when determining the distribution of marital assets and are not, therefore, bound by this formulation.
[24] The court noted the trial court's finding that stock options were standard corporate practice used to attract and retain certain key employees. See id.
[25] (i) Considerations to keep in mind when making this determination, include but are not limited to.
(a) “whether the [options] are offered as a bonus or as an alternative to a fixed salary[;]
[(b)] whether the value or quantity of the employee’s shares is tied to future performance[;]
[(c)] whether the plan is being used to attract key personnel from other companies.”
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