Monday, December 23, 2019

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.

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