Am I Entitled to My Spouse’s Stock Options?

Stock options are a form of compensation issued to employees that allows the employee to buy stock in the company at a set price regardless of the value of the stock. Normally, the option price is lower than the actual value of the stock allowing the employee receive an economic benefit from the exercise of the option. For instance, if the employee is granted an option to purchase 100 shares of stock at a price of $1 per share and the stock is valued at $100 per share, the employee could exercise the option to purchase by paying $100 and would receive stock worth $10,000.

Stock options usually vest over a period of employment maintained by the employee. It is important to understand the date of grant and the vesting schedule in order to determine whether the community has an interest in the stock options. If the options were granted during the marriage and fully vested prior to the date of separation, then 100% of the options are community property. If the options were granted during the marriage, but only a portion vested during the marriage, the community has a proportional interest in the options. Often, a Nelson formula is applied to determine the community interest in the options. It is important to work with an attorney who understands division of stock options as part of the resolution of your divorce.