In a high-income or high-net-worth Florida divorce, a spouse’s salary may represent only part of the financial picture. Stock options, restricted stock units, performance shares, bonuses, and deferred compensation can be worth hundreds of thousands—or even millions—of dollars.
These benefits are also easy to overlook. Some have not vested, cannot yet be transferred, or depend on future employment. That does not necessarily prevent them from being considered in a Florida divorce.
Quick answer: Stock options and restricted stock units may be marital assets even when they are unvested. The critical questions are when the benefits were earned, why they were awarded, and how much of the award resulted from work performed during the marriage.
What Are Stock Options and Restricted Stock Units?
A stock option gives an employee the right to purchase company stock at a specified price. Its value generally depends on the difference between the exercise price and the stock’s market price.
A restricted stock unit, commonly called an RSU, is an employer’s promise to deliver shares of stock or their cash equivalent after specified vesting conditions are satisfied.
Vesting may depend on:
- Remaining employed for a particular period;
- Meeting individual or company performance targets;
- Completing a corporate transaction;
- Reaching a specified retirement date; or
- Satisfying several conditions at the same time.
The fact that an award is contingent or unvested does not automatically make it nonmarital.
Are Unvested Stock Options and RSUs Marital Property in Florida?
Under Florida Statute § 61.075, assets acquired during the marriage are generally presumed to be marital. The statute also includes vested and unvested rights accrued during the marriage in deferred-compensation and similar benefit plans.
Florida courts look beyond the label placed on an award. They examine the purpose of the compensation and the period of employment it was intended to reward.
An award may be intended to:
- Compensate the employee for work already performed;
- Reward present performance;
- Encourage the employee to remain with the company;
- Incentivize future performance; or
- Accomplish a combination of these objectives.
An award based on work performed during the marriage may contain a marital component even if it will not vest until after the divorce case begins.
Why the Purpose of the Award Matters
In Parry v. Parry, the Second District Court of Appeal explained that the ultimate issue is how much of the award resulted from marital labor.
When an award compensates an employee for past service performed during the marriage, it is more likely to be marital. When an award is solely intended to encourage future employment after the marital cutoff date, it may be nonmarital.
Many awards serve both purposes. In those cases, a Florida court may use a time-based formula, sometimes called a coverture fraction or time rule, to determine the marital portion. The appropriate calculation depends on the grant terms and facts of the case.
What Is the Marital Cutoff Date?
Florida’s marital-classification cutoff date is generally the earliest of:
- The date stated in a valid separation agreement;
- Another date expressly established by that agreement; or
- The date the divorce petition was filed.
The cutoff date is important, but it does not necessarily resolve the entire issue. An award that vests after filing may still partly compensate the employee for work performed before filing.
Grant agreements, compensation-committee materials, employment contracts, and employer testimony may be necessary to determine what the award was intended to compensate.
What Documents Should Be Reviewed?
A complete executive-compensation analysis may require more than tax returns and pay stubs. Relevant documents can include:
- Stock-option and RSU grant agreements;
- Vesting schedules;
- Equity-plan summaries;
- Employment and compensation agreements;
- Online plan statements;
- Performance-award calculations;
- Compensation-committee communications;
- Annual bonus plans;
- W-2 forms and pay statements;
- Securities transaction records;
- Tax returns;
- Employment termination provisions; and
- Documents explaining what happens after retirement, disability, termination, or a corporate acquisition.
Every outstanding grant should be listed separately. Different awards may have different purposes, vesting conditions, exercise prices, expiration dates, and marital percentages.
How Are Stock Options and RSUs Valued?
Valuing equity compensation can be more complicated than valuing ordinary publicly traded stock.
Vested RSUs may be valued using the applicable market price. A vested stock option may have readily identifiable intrinsic value when the company’s stock price exceeds the exercise price.
Unvested or performance-based awards present additional questions:
- Will the award actually vest?
- How likely is the employee to satisfy the conditions?
- What happens if employment ends?
- Is the company publicly traded or privately held?
- Should future taxes be considered?
- Should the award be discounted for risk or delayed receipt?
- Which valuation date should be used?
In some cases, a financial expert may be necessary. In others, postponing distribution until the award actually vests may be more reliable than attempting to calculate its present value.
How Can Equity Compensation Be Divided?
Employer plans frequently prohibit transferring an unvested award to a former spouse. That does not mean the nonemployee spouse cannot receive a marital share.
Common approaches include:
Immediate offset: The employee keeps the equity awards, while the other spouse receives a greater share of cash, investments, or other marital property.
Deferred distribution: The employee retains the award and pays the former spouse an agreed percentage if and when it vests, is exercised, or is sold.
Division of vested shares: Shares that have already vested may be divided or transferred when the plan permits it.
A settlement agreement should address:
- The specific grants being divided;
- The marital percentage of each grant;
- Whether the division is based on gross or after-tax proceeds;
- Responsibility for withholding and transaction costs;
- Deadlines for notice and payment;
- Decisions concerning when options will be exercised;
- What happens if an award is modified, replaced, or accelerated;
- The effect of termination, retirement, disability, or death; and
- Access to future plan statements and supporting records.
Vague provisions can create years of enforcement disputes.
Can Equity Compensation Affect Support?
Executive compensation may also affect alimony or child support. Florida’s child-support statute expressly includes bonuses, commissions, and similar payments within gross income. It also includes certain gains from property. See Florida Statute § 61.30.
The analysis is fact-specific. Counsel must determine whether an award represents property, income, or both—and whether the same economic benefit risks being counted more than once.
Common Mistakes in Cases Involving Equity Compensation
Frequent problems include:
- Assuming unvested awards have no marital value;
- Reviewing only the employee’s current account balance;
- Treating all grants as though they have identical terms;
- Ignoring awards made for past marital work;
- Failing to obtain the full compensation plan;
- Using an incorrect valuation date;
- Overlooking tax withholding and cost basis;
- Forgetting option expiration dates; and
- Drafting a settlement that does not address future vesting events.
These mistakes can materially affect the final financial outcome.
Frequently Asked Questions
Are unvested RSUs divided in a Florida divorce?
They may be. An unvested RSU can have a marital component when it was earned, at least partly, through work performed during the marriage.
Does the employee spouse automatically keep stock options held in that spouse’s name?
No. Account ownership does not determine whether the award is marital. The purpose of the grant and the period of employment it rewards are more important.
What happens if the employee leaves the company before the award vests?
The award may be forfeited, depending on the plan. A properly drafted settlement should explain how forfeiture will affect both parties and prohibit intentional conduct designed to defeat the other spouse’s interest.
Can an employer transfer RSUs directly to a former spouse?
Often, unvested awards cannot be transferred under the employer’s plan. The employee spouse may need to retain the award and pay the other spouse after vesting.
How is the marital portion calculated?
A court may use a time-based formula comparing the marital period during which the award was earned with the total period required to earn or vest in the award. There is no single formula appropriate for every compensation plan.
Are annual bonuses marital assets?
A bonus earned through work performed during the marriage may be marital even if it is paid later. Bonuses may also be considered income for support purposes, depending on the circumstances.
Speak With a Florida High-Net-Worth Divorce Attorney
Stock options, RSUs, performance awards, and deferred compensation require careful analysis. The value shown on a current statement may not reflect the complete marital interest, future tax consequences, or benefits that remain unvested.
If your Florida divorce involves executive compensation or other complex assets, contact Weiner & Weiss, LLC to discuss how those benefits should be discovered, valued, and addressed.
This article provides general information and is not legal, financial, or tax advice. The treatment of any compensation award depends on its governing documents and the specific facts of the case.