Equitable Distribution of Stock Options in Divorce

M.G. v. S.M. is a post-judgment divorce matter where the marital coverture share of a stock award vesting after the filing of the divorce complaint was sought by the Defendant. The parties married in 1998. Every August, from 2003 through 2010, the Plaintiff received a stock award from his employer which would vest in stages thereafter, beginning in 2011. On July 28, 2014, Plaintiff filed the divorce complaint. By that time, M.G. had been granted eight stock awards but only three had fully vested with the remainder to vest annually thereafter, each August. The company’s policy was reviewed and specifically stated that employees were granted stock to compensate them for long-term contributions to the company’s success and that the stock awards “represent the future right to receive shares…when a vesting requirement is satisfied.” According to the Plaintiff, the stock awards are a way for the employer to retain employees and give them reason to drive the stock higher through personal performance. Plaintiff did agree to share the vested stocks with the Defendant but maintained that any non-vested stock would vest only if he continued to perform at higher levels following the filing of the divorce complaint. The trial judge found that S.M. was entitled to one-half of all stocks awarded before or near the date of the complaint. In his opinion, the trial judge found Plaintiff to be credible and Defendant non-credible. In his written opinion, the judge went on to include that the stock awards of 2014 were based on the Plaintiff’s past performance, which was rendered during the marriage. The Plaintiff filed a motion for reconsideration with which he submitted documents from his employer spelling out the fact that post-award changes in employment status, hours, leaves, disability, and otherwise “shall” affect the employee’s rights in stock awards in support of his argument that the non-vested options did not belong, in part, to the Defendant. The motion was denied. Plaintiff appealed to the New Jersey Appellate Division. In Pascale v. Pascale, 140 N.J. 583 (1995) and Reinbold v. Reinbold, 311 N.J. Super. 460 (App. Div. 1998), the court held that options and other incentives earned during the marriage, even if distributed later, are subject to equitable distribution. The trial judge misapplied these cases to stock awards that would be earned after the marriage. In Slutsky v. Slutsky, 451 N.J. Super. 332, 344 (App. Div. 2017), the court held that “reversal is warranted when the trial court’s factual findings are ‘so manifestly unsupported by or inconsistent with competent, relevant and reasonably credible evidence as to offend the interests of justice.” In Clark v. Clark, 429 N.J. Super. 61, 71 (App. Div. 2012), the court determined that a family judge has wide discretion in the distribution of assets which are subject to equitable distribution, however, in the within case, the trial judge’s findings were not supported by credible evidence and controlling legal principles pursuant to the terms of Gonzalez-Posse v. Ricciardulli, 410 N.J. Super. 340, 354 (App. Div. 2009). In Pascale, the Supreme Court upheld its earlier decision from Landwehr v. Landwehr, 111 N.J. 491, 504 (1988), wherein the court held that when equitable distribution is sought for assets received post complaint, the touchstone becomes whether the asset was acquired as a result of efforts during the marriage, in which case the asset is subject to equitable distribution, or post-complaint in which case it belongs to the spouse who still must earn the asset. The N.J. Appellate Division panel determined that the trial judge was incorrect in his decision. The matter was reversed and remanded to the trial judge for findings pursuant to applicable case law and N.J.S.A. 2A:34-23.1. If you are considering divorce or have been served with divorce papers, you should consult with an experienced family law attorney in order to insure that your rights are protected. For more information about divorce, post-judgment motions, equitable distribution or other family law matters, visit DarlingFirm.com. To schedule a consultation, call us today at 973-584-6200. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Post Judgment Salary Jump for Wife

K.S. v D.J.S. is a post-judgment family matter. In November 2012, the parties divorced with a Marital Settlement Agreement (MSA). The Defendant acknowledged that after twenty-one years of marriage, the Plaintiff would need financial support and agreed to pay the amount of $3,400 monthly as support for the Plaintiff. The Defendant also agreed to pay one-third of any additional income over and above $139,000 to Plaintiff, to a maximum of $12,000 annually. The parties left the MSA open to modification by agreement of the parties or as permitted under the laws of the state of New Jersey. Plaintiff filed a motion to enforce litigant’s rights when the Defendant failed to comply with the terms of the MSA and the Plaintiff cross-moved for a reduction in alimony based upon “materially changed circumstances” which included the Plaintiff’s significantly changed earning capacity wherein she was making well over $100,000 and also more than Defendant made after his alimony was taken out of his income. The Defendant blamed the arrearages on the fact that his earning potential with his law firm had decreased and he was unable to meet his financial obligations without an alimony reduction. The court found nothing warranting a downward modification in alimony from the documents submitted by the Defendant. The court refused to grant the alimony modification and ordered the Defendant to pay all sums outstanding to Plaintiff. On appeal, the court found that the Defendant was a partner in the same law firm he had been with at the time of the divorce and his base salary had increased. The appellate division cited Lepis v. Lepis, 83 N.J. 139 (1980) and its progeny which dictate that alimony is based largely on the parties’ standard of living during the marriage and the fact that alimony modification may occur, under the factors of N.J.S.A. 2A:34-23, upon the demonstration of “changed circumstances.” The appellate division further cited to Crews v. Crews, 164 N.J. 11 (2000) regarding the changed circumstances significantly impairing the ability of the supporting spouse to maintain a reasonably comparable standard of living during the marriage and Stamberg v. Stamberg, 302 N.J. Super. 35 (App. Div. 1997) which sets forth the consideration of the significant improvement in the supported spouse’s economic situation. The appellate division also found that the court below made no findings as to the Plaintiff’s improved earning capacity and remanded for findings as to the Plaintiff’s independent financial circumstances. If you are considering filing a post-judgment motion, or your former spouse has done so, you should consult with an experienced family law attorney to learn your rights. For more information about divorce, alimony or post-judgment motions, visit DarlingFirm.com or, to schedule a consultation, call us now at 973-584-6200. This blog is for informational purposes only and not intended to replace the advice of an attorney.