Dividing Executive Compensation And Stock Options In Colleyville Divorces
If you are a corporate executive, divorce can involve more than dividing your salary, home and retirement account. Restricted stock units (RSUs), stock options, deferred compensation and executive retirement benefits may remain unvested or unpaid for years. These benefits can represent a significant part of your marital estate and require careful review during property division.
At Teller Law Firm, P.C., we have served clients in Colleyville and throughout Northeast Tarrant County for more than 30 years. We bring personal attention to high-asset and contentious divorces, while attorney Donald Teller’s MBA and business background can be useful when your property division includes executive pay, business interests or other complex assets.
Apportioning Unvested Equity Under Texas Family Code § 3.007
If you have unvested equity, you may have stock or stock-based pay that depends on staying with your employer. Under Texas Family Code § 3.007, a time-rule fraction may help determine the marital share of certain employer stock options and restricted stock. We can review:
- Grant and vesting dates
- Work requirements after divorce
- The time from grant to exercise
- The marital share of each grant tranche
Because each award may have different terms, we can review them as part of your full property division.
Valuing Stock Options And Managing Market Volatility
RSUs generally provide shares when they vest, while stock options give you the right to buy shares at a set strike price. The value of an option can change based on the stock price, strike price, time left before expiration and market volatility.
Financial modeling, including Black-Scholes stock option valuation, can account for these factors and the option’s time value. Depending on your circumstances, we may also consider a present-value offset rather than waiting to divide the benefit when the option vests.
Structuring Constructive Trusts For Nontransferable Shares
Company rules, Securities and Exchange Commission (SEC) requirements or plan-administrator limits may prevent you from transferring some equity awards directly to your spouse. We can address these restrictions in the divorce decree with constructive-trust terms.
These terms can require the spouse who holds the equity to preserve the other spouse’s interest, exercise the options when required and remit the appropriate share of the net proceeds after taxes. We can also specify when and how those payments must be made.
Mitigating Tax Exposures In Deferred Compensation and SERPs
If you have nonqualified deferred compensation (NQDC) or supplemental executive retirement plans (SERPs), taxes can affect the value of the benefit you receive. We can address:
- Tax withholding between spouses
- Clawback terms and payment rules
- Potential double taxation
- Taxes you may owe when you receive benefits
These details can affect the amount each spouse receives and help you avoid an unexpected tax burden when you receive deferred benefits.
Discuss Your Executive Compensation With A Colleyville Divorce Attorney
When your divorce includes executive pay, equity awards or benefits that will not pay out until later, you need a property division that accounts for more than today’s value. We can review these assets as part of your full marital estate and pursue a collaborative, mediated or litigation approach based on your circumstances.
Call us at 817-612-4298 or send us an email to discuss your situation. A Colleyville executive divorce attorney or lawyer can review your compensation and future benefits with you before you agree to a final property division.