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Dividing Stock Options and Executive Compensation in a Divorce

All marital property is subject to division upon divorce, but some items of property are much more difficult to divide than others. For instance, it is fairly easy to divide a bank account or a vehicle, or even real estate. However, stock options and executive compensation are much more complex to both value and divide.

Stock options are often a popular form of compensation start-up companies that do not have a great deal of assets. Stock options give an employee the right to purchase company stock at a certain price, at a certain date. These options may be vested, meaning that the employee can purchase the options at the present time, or unvested/restricted, meaning that the employee cannot purchase the options until a future date. Whether stock options are vested depends on when the spouse received them, how long the spouse has worked for the company, and the company policies concerning stock options. Vested stock options are easier to divide, as the spouse is already entitled to the full value of the options and can exercise them at any time. Therefore, a vested stock option has a certain value that easily can be determined and divided. Under Georgia law, vested stock options are clearly marital property that is subject to all of the normal equitable distribution rules.

Unvested stock options are more difficult to both value and divide. The reality is that there is no guarantee that these stock options are worth anything at all. If the spouse’s employer is a publicly-traded company, it is relatively easy to determine the current share value of a stock option. With a privately-traded company, however, this task is almost impossible. For these reasons, in the state of Georgia, the law is not settled as to whether an unvested or restricted stock option is subject to division as marital property. As a result, disputes over the valuation of these stock options and whether they should be subject to equitable distribution in Georgia divorces are quite common.

Dividing marital property in the midst of a divorce is a complex process that involves many different legal issues. Therefore, it is best for anyone in this situation to consult with a qualified Georgia divorce lawyer who can guide him or her throughout the process. Contact us or call today to learn how Shaw Law can work with you to achieve the best outcome possible for you and your children.

Scott Shaw is founder and principle of Shaw Law Firm LLC, founded in 1995 and dedicated solely to divorce, family law and child custody matters that must be addressed and decided in the state of Georgia. Shaw Law Firm serves the greater Metro Atlanta area, particularly the counties of Fulton, Gwinnett, Cobb, Cherokee, Forsyth, Paulding, Henry, Fayette, Coweta, Newton, Walton, Bartow and Douglas. Schedule a consultation today at 770-594-8309.