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PILIHAN SAHAM DAN MANFAAT TERTULIS LAINNYA SEBAGAI PROPERTI DIVERSIAL PADA TINDAKAN DIVORIF 1997 Kelompok Penelitian Hukum Nasional, Inc. Suatu saat, ketika dunia masih muda, pengusaha hanya menarik satu jenis manfaat: gaji. Karyawan yang berkualifikasi dan diinginkan menerima upah lebih tinggi sehingga karyawan yang kurang diminati menerima upah yang lebih rendah. Dimana upah adalah cara utama dimana semua karyawan diberi kompensasi, tidak perlu pengadilan memperlakukan keuntungan lain seperti harta perkawinan. Dengan demikian, hanya ada sedikit undang-undang kasus pra-1940 dari negara bagian manapun, bahkan yurisdiksi properti masyarakat, yang memperlakukan segala manfaat dari pekerjaan sebagai properti yang dapat dibagi. Seiring berjalannya waktu, struktur kompensasi sederhana ini mulai rusak. Sistem berbasis gaji bekerja dengan baik untuk mengkompensasi karyawan saat ini, namun tidak memberikan jaminan pensiun bagi karyawan. Ketika karyawan mulai hidup lebih lama dan pensiun pada usia dini, mereka semakin menekankan keamanan pensiun. Dengan demikian, pengusaha mulai menawarkan tunjangan pensiun sebagai kompensasi tambahan untuk menarik dan mempertahankan karyawan. Populasi pensiunan cukup kecil, bagaimanapun, dan sebagian besar terdiri dari mantan karyawan lama yang telah memberikan pelayanan yang substansial kepada perusahaan. Dengan demikian, sebagian besar pensiun selama tahun 1950an dan 1960an murah jumlahnya, dan tidak memiliki persyaratan vesting yang berat. Banyak negara bagian tidak memiliki sistem pembagian properti pada saat itu, tetapi negara-negara yang memiliki sistem semacam itu bereaksi terhadap perubahan tersebut dengan memperlakukan manfaat pensiun yang diberikan sementara sebagai properti yang dapat dibagi. Lihat umumnya Brett R. Turner, Equitable Distribution of Property 1.01, 6.09 (2d ed 1994 Supp. 1996). Selama dua puluh tahun terakhir, saat generasi baby boom telah mencapai tempat kerja dengan kekuatan penuh dan para pengusaha mulai mempersiapkan para baby boomer untuk pensiun, jumlah metode yang tersedia untuk kompensasi karyawan telah berkembang dengan eksplosif. Sejumlah faktor telah mendorong ledakan ini. Manfaat pensiun tradisional kurang efektif karena, seiring bertambahnya usia penduduk, pengusaha telah mengurangi paket manfaat pensiun mereka. Pengurangan ini telah sejalan dengan perubahan program publik lainnya, yang lebih dipublikasikan, seperti Jaminan Sosial. Dalam menghadapi pengurangan rencana pensiun ini, pengusaha memilih sejumlah program tunjangan lainnya, yang menawarkan manfaat pensiun dan pasca pensiun. Kompleksitas program manfaat individu juga meningkat pesat, didorong oleh meningkatnya kompleksitas Kode Pajak dan dengan penambahan Undang-Undang Keamanan Pendapatan Pensiun Karyawan (Employee Retirement Income Security Act - ERISA), skema perundang-undangan baru yang sama rumitnya yang mengatur manfaat pensiun. Akhirnya, pengusaha hanya menjadi lebih canggih dalam mengembangkan tunjangan tunjangan yang sesuai dengan kebutuhan individu perusahaan terhadap keinginan karyawan tertentu. Kami mengalihkan perhatian kami dalam masalah ini ke keuntungan yang mungkin paling cepat berkembang dari pekerjaan di tingkat manajemen: pemberian opsi saham. Opsi saham menawarkan beberapa keuntungan yang sama seperti rencana pensiun tradisional, karena saham perusahaan dapat digunakan untuk menghasilkan arus pendapatan yang akan mendukung karyawan setelah pensiun. Selain itu, dan mungkin yang lebih penting lagi, opsi saham memberi karyawan itu saham dalam kesejahteraan pengusaha, sehingga memotivasi karyawan untuk berkinerja lebih baik. Karena manfaat itu meningkat secara bertahap dari waktu ke waktu, karyawan juga didorong untuk tetap bersama perusahaan untuk jangka waktu yang lebih lama, sebuah manfaat yang penting dalam dunia mobilitas kerja yang belum pernah terjadi sebelumnya. Karena kelebihan ini, banyak pengusaha menawarkan rencana opsi saham yang nilai ekonominya riil mendekati nilai gaji pegawai mereka yang sebenarnya. Meningkatnya ketersediaan, keragaman, dan kompleksitas rencana opsi saham telah menimbulkan tantangan besar bagi pengadilan dalam kasus perceraian. Artikel ini akan bergantung secara bergantian pada kasus-kasus yang diputuskan di bawah sistem distribusi dan sistem properti masyarakat yang adil. Prinsip-prinsip hukum yang dipermasalahkan di sini tidak berbeda antara dua jenis sistem, dan pengadilan yang mengikuti satu sistem sering mengandalkan hukum kasus yang diputuskan di bawah yang lain. Meskipun kami menyadari bahwa beberapa kasus yang dirujuk diputuskan di yurisdiksi properti komunitas, pertimbangan mendasar yang umum terjadi pada valuasi rencana saham dan perselisihan distribusi yang adil sangat mirip. DeJesus v. DeYesus, No. 161, 1997.NY.153, 17 (versus hukum) (N.Y. 31 Oktober 1997). Seperti manfaat pensiun, opsi saham sering ditetapkan dalam bahasa teknis yang menakutkan bagi nonspesialis. Dengan risiko mulai dari yang sudah jelas, sangat membantu untuk memiliki definisi yang jelas tentang berbagai jenis pilihan yang umum ditawarkan. Opsi saham adalah kontrak yang memberi pemilik hak untuk membeli saham di perusahaan tertentu (biasanya pemilik perusahaan) dengan harga tertentu. Lihat umumnya Richardson v. Richardson, 280 Ark 498, 659 S.W.2d 510 (1983) Miller kembali, 915 P.2d 1314 (Kolo 1996). Karena nilai sebagian besar saham naik dari waktu ke waktu, sementara harga opsi tetap konstan, nilai ekonomi riil opsi saham meningkat dari waktu ke waktu. Dalam beberapa tahun terakhir, dengan pertumbuhan yang stabil di pasar saham, nilai beberapa opsi saham bisa sangat besar. Harga yang tercantum dalam kontrak opsi umumnya dikenal sebagai harga opsi. Beberapa pilihan menetapkan harga rendah untuk memberikan keuntungan langsung. Pilihan lain menetapkan harga pada nilai pasar untuk mendorong karyawan tersebut untuk membantu perusahaan tumbuh. Masih pilihan lain menetapkan harga di atas nilai pasar untuk memberikan bonus atas kinerja luar biasa. Sebagian besar opsi saham harus dilakukan dalam jangka waktu tertentu. Jika opsi dapat dilakukan segera setelah pemberian, itu dikenal sebagai pilihan langsung. Jika opsi tidak dapat dilakukan sampai beberapa periode berlalu setelah diberikan, opsi ini dikenal sebagai pilihan yang ditangguhkan. Pilihan yang ditangguhkan lebih sering terjadi, karena karyawan diberi insentif lebih kuat untuk tetap tinggal di perusahaan tersebut dalam jangka waktu yang lebih lama. Seperti manfaat pensiun, opsi saham juga dapat diklasifikasikan sebagai hak atau tidak terealisasi. Pilihan yang diberikan adalah salah satu yang diizinkan untuk dijaga karyawan bahkan jika dia meninggalkan perusahaan sebelum opsi tersebut dilakukan. Dalam Miller kembali, 915 P.2d 1314 (Kolo 1996). Pilihan pribadi yang telah dieksekusi terkadang dikenal sebagai pilihan matang. Semua opsi jatuh tempo telah ditentukan, namun opsi tersebut tidak jatuh tempo sampai karyawan tersebut dapat menjalankannya. Pilihan yang tidak teralihkan adalah salah satu yang kehilangan karyawan jika ia meninggalkan perusahaan sebelum opsi tersebut dilakukan. Id. Pada 1317-18 In re Short, 125 Wash 2d 865, 890 P.2d 12 (1995). Beberapa pilihan yang tidak terelakkan hilang jika karyawan tersebut meninggalkan majikan sebelum pilihan tersebut benar-benar dilakukan orang lain hilang hanya jika karyawan tersebut meninggalkan majikan sebelum opsi tersebut dapat dieksekusi. Pilihan juga bisa diklasifikasikan sebagai terlarang atau tidak terbatas. Dalam arti luas, pilihan terbatas adalah pilihan yang tidak bisa langsung dieksekusi. Beberapa pilihan terbatas tidak diinvasi, namun opsi yang ditangguhkan juga dibatasi sebelum bisa dieksekusi. Dalam pengertian yang lebih sempit, pilihan terbatas adalah pilihan yang harus dikembalikan ke pemberi kerja jika karyawan tersebut meninggalkan perusahaan. Penggunaan yang lebih sempit ini sangat mirip dengan konsep pilihan yang tidak teruji. Perbedaan utama, bagaimanapun, adalah bahwa pilihan yang tidak teruji tidak pernah benar-benar dimiliki, sementara pilihan terbatas dimiliki namun harus dikembalikan. Pembedaan ini serupa dengan perbedaan hukum properti riil antara sisa yang belum terealisasi dan sisanya yang menjadi hak, namun tunduk pada divestasi. Secara ekonomi, perbedaan antara keuntungan yang dibatasi dan yang tidak ditawar minimal, dan kebanyakan pengadilan memperlakukan persyaratan tersebut sebagai saling dipertukarkan. AKU AKU AKU. KLASIFIKASI PILIHAN SAHAM TERAKHIR Seperti disebutkan di atas, opsi saham matang adalah opsi yang dimiliki pasangan tanpa kualifikasi. Seperti manfaat pensiun vested, opsi saham matang jatuh tempo adalah pengganti gaji: Karyawan akan menerima gaji yang lebih tinggi, atau mungkin lebih tinggi manfaat pensiun, jika opsi tersebut tidak ditawarkan. Lihat Green v. Green, 64 Md. App. 122, 494 A.2d 721 (1985) Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (Bab IV 1976). Sementara beberapa pilihan pribadi tidak dapat dipindahtangankan, banyak jenis opsi yang diberikan oleh orang lain dibeli dan dijual secara reguler di pasar sekuritas. Lihat Richardson v. Richardson, 280 Ark 498, 659 S.W.2d 510 (1983) Dalam re Hoak, 364 N.W.2d 185 (Iowa 1985). Selain itu, pilihan matang tidak bisa menjadi pengganti gaji di masa depan, karena karyawan memiliki pilihan secara mutlak, walaupun karyawan tersebut tidak memberikan layanan masa depan kepada atasan. Karena opsi saham matang jatuh tempo merupakan pengganti gaji di masa lalu yang lebih tinggi, mereka secara konstruktif dibeli dengan gaji itu, dan mereka memiliki klasifikasi yang sama. Dengan demikian, di mana opsi saham matang jatuh tempo diterima selama pernikahan, mereka adalah harta perkawinan, bahkan jika tidak akan dilaksanakan sampai setelah para pihak bercerai. Lihat Richardson v. Richardson Pascale v. Pascale, 140 NJ 583, 660 A.2d 485 (1995) (pilihan pribadi diberikan kepada istri sebagai hadiah untuk layanan terdahulunya selama pernikahan adalah harta perkawinan) Demler v. Demler, 836 SW 2d 696 (Tex App 1992) Donohue v. Donohue, No. 2675-96-2 (Va. Ct App 8 Juli 1997) (pendapat yang tidak dipublikasikan). Pilihan pribadi dapat berupa properti perkawinan bahkan jika tidak dapat dijual atau dipindahkan. Lihat Richardson v. Richardson. Pembatasan transfer mencegah pemilik untuk segera menyadari nilai opsi, namun kemungkinan besar pemiliknya pada akhirnya akan menerima beberapa keuntungan dari opsi tersebut. Kurangnya pemindahan langsung tidak menghalangi pengadilan untuk memperlakukan banyak jenis manfaat lainnya seperti harta perkawinan, termasuk manfaat pensiun yang paling utama dan tidak dipulihkan. Lihat Callahan v. Callahan (mencatat kesamaan umum antara tunjangan pensiun dan opsi saham, dan menyarankan agar peraturan tersebut diatur oleh peraturan klasifikasi dan pembagian yang serupa). Layanan Masa Depan. Pengadilan pada umumnya skeptis terhadap klaim bahwa opsi saham diberikan dengan imbalan jasa masa depan. Misalnya, di Pascale v. Pascale, istri menerima seperangkat pilihan kedua sehubungan dengan promosi yang substansial. Istrinya berargumen bahwa pilihan ini dipertimbangkan untuk usaha di masa depan, namun pengadilan tersebut tidak setuju. Masalahnya dengan argumennya adalah bahwa pilihan tersebut sama sekali tidak bergantung pada kualitas layanan masa depan, sang istri akan menyimpan pilihan ini bahkan jika dia berhenti pada hari setelah dikeluarkan. Karena pemilik memiliki hak segera dan tidak dapat dibatalkan untuk kepemilikan mutlak atas opsi yang diberikan, sulit untuk membantah bahwa pilihan tersebut adalah pertimbangan untuk layanan masa depan. IV. KLASIFIKASI PILIHAN SARAN YANG TIDAK TERSEDIA Seperti pilihan yang diberikan, opsi yang tidak teruji jelas merupakan pengganti gaji, karena karyawan tersebut akan menerima gaji yang lebih tinggi jika tidak ada opsi saham yang tersedia. Pilihan yang belum dipulihkan kembali ke majikan, bagaimanapun, jika karyawan tersebut meninggalkan perusahaan sebelum masa vesting. Dengan demikian, pilihan tidak akan rampung kecuali karyawan tersebut memberikan layanan substansial. Memang, seluruh alasan pemberian opsi yang tidak terelakkan adalah mendorong karyawan untuk tetap tinggal bersama perusahaan sampai opsi rompi. Lihat di Re Hug, 154 Cal. Aplikasi. 3d 780, 201 Cal. Rptr. 676 (1984) Dalam Miller kembali, 915 P.2d 1314 (Kolo 1996). Karena pilihan yang tidak teruji adalah pengganti masa depan daripada gaji di masa lalu, mereka lebih sulit untuk mengklasifikasikan daripada opsi yang diberikan. Sebagian besar negara bagian memperlakukan pilihan yang tidak termanfaatkan dengan cara yang serupa dengan perlakuan terhadap manfaat pensiun yang belum dipulihkan. Karena pilihannya adalah pertimbangan untuk layanan masa depan, klasifikasi harus bergantung pada apakah pihak-pihak tersebut telah menikah selama tahun-tahun di mana layanan tersebut diberikan. Minat perkawinan ditentukan oleh pecahan yang sama dengan jumlah total tahun dalam periode vesting dimana partai-partai tersebut menikah, dibagi dengan periode vesting total. Misalnya, jika opsi rompi dalam lima tahun, dan partai-partai tersebut bercerai setelah dua tahun, dua per lima atau 40 pilihan akan menjadi milik perkawinan. Prinsip umum yang sama berlaku untuk opsi yang tidak terelakkan yang diperoleh sebelum menikah. Misalnya, jika opsi rompi dalam enam tahun, dan para pihak menikah setelah tahun keempat (dan pernikahan mereka berlangsung lebih dari dua tahun), dua per enam atau 33 pilihannya adalah properti perkawinan. Untuk kasus tertentu yang mengadopsi formula di atas untuk mengklasifikasikan opsi saham yang tidak teral, lihat In re Isaacs, 260 Ill App. 3d 423, 632 N.E.2d 228 (1994) Di dalam Frederick, 218 Ill App. 3d 533, 578 NE2d 612 (1991) Salstrom v. Salstrom, 404 NW2d 848 (Minn .Ct App. 1987) DeJesus v. DeJesus, No. 161, 1997.NY.153 (versus hukum) (NY 31 Oktober , 1997) (kesalahan untuk memperlakukan pilihan yang tidak termanfaatkan sebagai properti perkawinan hanya karena pilihan telah diterima selama pernikahan, di mana layanan purnawirawan penting diperlukan untuk pilihan yang harus dilalui) Di Powell, 147 Atau. 17, 934 P.2d 612 (1996) dan Dietz v. Dietz, 17 Va App. 203, 436 S.E.2d 463 (1993). Cf. Chen v. Chen, 142 Wis 2d 7, 416 NW2d 661 (1987) (menyetujui formula dalam teori, namun menemukan fakta tidak mencukupi untuk menerapkannya) Miller Miller, 915 P.2d 1314 (Colo 1996) (formula Akan berlaku jika pilihan menjadi pertimbangan untuk layanan masa depan, namun berdasarkan fakta, pilihannya adalah pertimbangan untuk layanan masa lalu) Klingenberg v. Klingenberg, 342 Md 315, 675 A.2d 551 (1996) (opsi saham hanyalah properti perkawinan hanya untuk Sejauh mana mereka merupakan kompensasi untuk usaha perkawinan yang tidak membahas formula spesifik untuk mengalokasikan opsi saham antara usaha perkawinan dan usaha tidak menikah) Kapfer v. Kapfer, 187 W. Va 396, 419 SE2d 464 (1992) (opsi saham dapat merupakan pengarsipan properti perkawinan Dengan instruksi untuk mengklasifikasikan dengan analogi dengan kasus manfaat pensiun). Satu keputusan menerapkan pendekatan yang berbeda untuk mengklasifikasikan beberapa rangkaian pilihan yang tidak terverifikasi. Dalam In Short, 125 Wash 2d 865, 890 P.2d 12 (1995), suami menerima hibah reguler opsi saham. Pengadilan mengakui bahwa pilihan tersebut adalah pertimbangan untuk layanan masa depan, namun diadakan bahwa setiap rangkaian opsi dipertimbangkan hanya untuk layanan yang diberikan selama periode sebelum hibah berikutnya. Pengadilan mencapai hasil ini meskipun periode vesting untuk opsi lebih lama dari periode antara berbagai hibah. Dengan demikian, pengadilan memberikan karakter hibrida hanya pada satu set opsi yang diperoleh selama tahun perceraian. Semua rangkaian pilihan di luar set tersebut sepenuhnya merupakan kompensasi untuk usaha pasca melahirkan dan karenanya merupakan properti terpisah. Beban pembuktian. Beban pembuktian dalam menerapkan rumus di atas bersandar pada pihak yang berusaha menunjukkan bahwa sebagian pilihan properti terpisah. Hal ini merupakan hasil logis dari aturan tradisional bahwa semua aset adalah harta perkawinan kecuali terbukti merupakan properti terpisah. Jadi, di mana catatan tidak mengandung bukti yang cukup untuk menghitung kepentingan terpisah, pilihannya harus diperlakukan sebagai properti perkawinan sepenuhnya. Lihat DeJesus v. DeYesus, No. 161, 1997.NY.153, 26 (versus hukum) (N.Y. 31 Oktober 1997) Chen v. Chen, 142 Wis 2d 7, 416 N.W.2d 661 (1987). Aturan Minoritas. Di sebagian besar yurisdiksi, fakta bahwa manfaat tidak diinvestasikan tidak secara otomatis mencegah pengadilan untuk membaginya. Namun, di sebagian kecil negara bagian, pengadilan tidak dapat membagi keuntungan yang tidak diraih. Hasil dari aturan ini adalah membuat semua opsi saham yang tidak terelakkan memisahkan properti. Lihat Hall v. Hall, 88 N.C. App. 297, 363 SE2d 189 (1987) (di mana negara hanya membagi pilihan pensiun, bukan kontingen, pensiun hanya dapat dibagi hanya jika mereka dapat dieksekusi atau tidak dapat dicabut pada tanggal perceraian) Hann v. Hann, 655 NE2d 566 (Ind Ct Aplikasi 1995). Kasus-kasus ini jelas merupakan nilai persuasif yang kecil di negara-negara bagian yang menerapkan pendekatan yang lebih modern terhadap klasifikasi manfaat yang tidak terpenuhi. Sebagai tambahan, satu kasus berangkat dari konsensus umum di ujung spektrum yang berlawanan, dengan memegang opsi saham yang tidak termanfaatkan benar-benar diperoleh begitu pasangan memiliki hak legal, terlepas dari kontinjensi di masa depan. Smith v. Smith, 682 S.W.2d 834 (Mo. Ct. App 1984). Smith benar-benar tidak konsisten dengan tren nasional yang seragam untuk mengklasifikasikan opsi saham yang tidak diinvestasikan dengan cara yang sama seperti pensiun yang belum dibayar. Selain itu, ada argumen kuat bahwa Smith bukanlah hukum yang baik lagi mengingat Hoffmann v. Hoffmann, 676 S.W.2d 817 (Mo. 1984). Hoffmann membalikkan garis panjang kasus pengadilan menengah yang menyatakan bahwa properti diperoleh saat judul hukum diterima, alih-alih menerapkan peraturan nasional secara umum bahwa properti diperoleh secara bertahap karena harga pembeliannya dibayarkan atau nilai ekonominya sebenarnya dibuat. Smith sangat mirip dengan keputusan yang Hoffmann dibalik, dan logika yang digunakan dalam keputusan dari negara lain pada dasarnya adalah logika yang sama yang digunakan dalam Hoffmann. Mengingat kenyataan ini, Smith adalah otoritas yang sangat dipertanyakan. Pilihan yang Tidak Dikelola dan Layanan Sebelumnya Untuk lebih memperumit gambaran, tidak dapat diasumsikan secara otomatis bahwa semua opsi yang tidak teruji adalah kompensasi murni untuk layanan masa depan. Karena semua pilihan yang tidak terverifikasi hilang jika karyawan tersebut tidak memberikan layanan di masa depan, pilihan yang tidak terungkap tampaknya hanya terkait dengan layanan masa depan. Tapi properti terpisah hanya mencakup manfaat yang sebenarnya merupakan kompensasi untuk usaha non-pernikahan, dan bukan keuntungan yang tampaknya atau diberi label sebagai manfaat tersebut. Misalnya, di mana sang suami menjual bisnisnya pada malam perceraian untuk setengah dari nilai pasar dan tanda-tanda pada saat bersamaan sebuah kesepakatan konsultasi yang menguntungkan yang sedikit menimbulkan tugas nyata, pengadilan dapat memperlakukan sebagian pertimbangan untuk perjanjian konsultasi. Sebagai milik perkawinan. Petugas yang terpisah dari suami hanya mencakup pertimbangan sebenarnya untuk layanan konsultasi pasca-pernikahan, dan pengadilan tidak terikat oleh pertimbangan pertimbangan antara kedua perjanjian tersebut. Prinsip umum yang sama berlaku untuk opsi saham. Dalam In Short, 125clean 2d 865, 890 P.2d 12 (1995), sang suami meninggalkan majikannya dan mulai bekerja untuk Microsoft Corporation. Dia menerima satu set opsi saham terbatas segera sebagai kompensasi untuk menerima pekerjaan, dan dia menerima beberapa perangkat lain untuk mendorongnya tinggal bersama perusahaan di masa depan. Pengadilan mengadopsi peraturan dua bagian untuk mengklasifikasikan opsi saham yang tidak terpakai: Opsi saham karyawan yang belum dipastikan diberikan saat menikah untuk layanan pekerjaan saat ini. Diperoleh saat diberikan Opsi saham karyawan yang belum dipulihkan yang diberikan untuk layanan pekerjaan masa depan diperoleh dari waktu ke waktu sebagai opsi saham rompi. 890 P.2d di 16. Menerapkan peraturan ini pada fakta-fakta, pengadilan menyatakan bahwa opsi saham pertama adalah properti komunitas. Semua opsi lainnya dipertimbangkan untuk layanan masa depan dan diklasifikasikan sesuai dengan waktu di mana layanan diterima. Jadi, fakta bahwa opsi saham tidak ada kecuali layanan masa depan disediakan tidak berarti semua opsi Adalah pertimbangan untuk layanan masa depan. Sebaliknya, jika tujuan opsi tersebut sebagian untuk memberikan penghargaan atas layanan sebelumnya, atau jika nilai opsi tersebut berlebihan dibandingkan dengan layanan masa depan yang akan diberikan, ada kemungkinan sebagian opsi mungkin dipertimbangkan untuk masa lalu. jasa. Dalam acara ini, pertimbangan untuk layanan masa lalu akan diklasifikasikan sesuai dengan apakah pihak-pihak tersebut telah menikah saat layanan diberikan, dengan prinsip yang sama yang mengendalikan klasifikasi pilihan pihak ketiga. Pertimbangan untuk layanan masa depan akan dibagi menurut fraksi yang biasanya digunakan untuk opsi yang tidak terverifikasi. Keputusan singkat menerapkan aturan klasifikasi yang sama sekali berbeda untuk opsi yang diperoleh dengan imbalan layanan sebelumnya dan masa depan. Pendekatan lain yang mungkin dilakukan ketika sebagian pilihan adalah pertimbangan untuk layanan masa lalu adalah menerapkan formula tradisional untuk pensiun yang tidak diinvestasikan, namun untuk memperluas jangka waktu ke masa lalu ke masa lalu. Dalam In Hug, 154 Cal. Aplikasi. 3d 780, 201 Cal. Rptr. 676 (1984), sang suami mengubah posisi di midcareer. Tak lama setelah suami bergerak, majikan barunya memberinya serangkaian pilihan saham terbatas. Beberapa tahun kemudian, para pihak bercerai. Pengadilan memutuskan bahwa opsi tersebut diberikan sebagian sebagai pengganti pensiun dan tunjangan lainnya yang hilang oleh suami ketika dia meninggalkan majikan pertamanya, dan sebagian lagi sebagai kompensasi tambahan untuk para suami di awal tahun dengan perusahaan tersebut, ketika kemampuannya untuk membayar kompensasi Dalam bentuk gaji pun terbatas. Pengadilan juga menemukan, bagaimanapun, bahwa pilihan tersebut dimaksudkan sebagai kompensasi bagi suami untuk melanjutkan layanan masa depan dengan perusahaan tersebut. Menyeimbangkan berbagai tujuan ini, pengadilan menerapkan formula tradisional namun mencakup keseluruhan masa kerja suami dengan perusahaan. Dengan demikian, pangsa masyarakat sama dengan waktu yang dihabiskan dengan majikan kedua selama pernikahan dibagi dengan total waktu antara tanggal kerja dan tanggal dimana opsi tersebut dapat dilakukan terlebih dahulu. Pengadilan melipatgandakan jumlah ini dengan total pilihan yang dimiliki dan membagi bagian komunitas sejenis di antara para pihak. Lihat jugaGarcia v. Mayer, 122 N.M. 57, 920 P.2d 522 (Ct App. 1996) (mengakui kemungkinan pembagian tipe Hug, namun pada akhirnya menemukan pertanyaan yang tidak diajukan mengenai fakta-fakta tersebut). Dalam DeJesus v. DeYesus, No. 161, 1997.NY.153 (versus hukum) (N.Y. 31 Oktober 1997), pengadilan tertinggi di New York membalikkan sebuah penahanan bahwa opsi saham yang tidak terelakkan yang diterima selama perkawinan sepenuhnya merupakan barang perkawinan. Pilihannya adalah sebagian kompensasi untuk layanan pasca-pernikahan, pengadilan diadakan, dan karena itu sebagian merupakan properti terpisah. Untuk membimbing pengadilan pada saat pengunduran diri, pengadilan memberikan daftar faktor berikut untuk dipertimbangkan dalam membedakan antara kompensasi untuk layanan masa lalu dan masa depan: Kami menyadari, seperti juga pengadilan lainnya, bahwa daftar pertimbangan terkait hanya dapat bersifat ilustratif dan tidak lengkap. ) Kutipan dihilangkan. Namun, faktor yang relevan akan mencakup apakah rencana saham ditawarkan sebagai bonus atau sebagai alternatif dari gaji tetap, apakah nilai atau kuantitas saham karyawan terkait dengan kinerja di masa depan dan apakah rencana tersebut digunakan untuk menarik personil kunci dari pihak lain. Perusahaan. DeJesus, 1997.NY.153, 27. Daftar faktor ini mungkin diperluas untuk mencakup tidak hanya apakah nilai kuantitas saham bergantung pada kinerja masa depan, tetapi juga apakah itu tergantung pada kinerja masa lalu. Misalnya, jika serangkaian karyawan pada tingkat yang sama menerima opsi, tetapi mereka yang memiliki kinerja masa lalu yang lebih baik menerima penghargaan yang lebih besar, fakta tersebut akan menjadi indikasi bahwa pilihan tersebut setidaknya merupakan sebagian kompensasi untuk usaha sebelumnya. Dalam kasus terisolasi, opsi saham mungkin Pertimbangkan untuk sesuatu selain layanan masa lalu atau masa depan yang disediakan. Misalnya, di In re Isaacs, 260 Ill App. 3d 423, 632 N.E.2d 228 (1994), istri dianugerahi opsi saham tertentu sebagai kompensasi atas penurunan nilai saham tertentu. Karena saham tersebut merupakan properti perkawinan, pengadilan menyatakan bahwa opsi saham tersebut juga merupakan perkawinan, meskipun mereka bergantung pada pekerjaannya yang terus berlanjut dengan perusahaan tersebut. Kekhawatiran Kebijakan. Kasus di atas jelas benar dalam menahan bahwa pilihan yang tidak terverifikasi dapat dipertimbangkan untuk layanan masa lalu. Fakta bahwa pilihan bergantung pada layanan masa depan tidak berarti bahwa seluruh nilainya adalah kompensasi untuk layanan tersebut. Sebaliknya, terutama bila jumlah pilihan yang diberikan bergantung pada layanan sebelumnya, atau jika nilai opsi lebih besar daripada insentif yang masuk akal untuk melakukan layanan yang bersangkutan, pilihannya sebagian dapat dipertimbangkan untuk layanan terdahulu. Namun, sama salahnya, untuk memperlakukan opsi yang tidak terelakkan sebagai pertimbangan eksklusif untuk layanan sebelumnya. Bila ada opsi yang tidak dipulihkan, pemilik harus melakukan layanan masa depan yang substansial agar dapat menerima opsi tersebut. Jika layanan tersebut tidak tersedia, pilihannya akan hilang. Memang, tujuan untuk menempatkan pembatasan pada saham yang tidak diinvestasikan adalah untuk mendorong usaha masa depan. Fakta ini tidak berarti bahwa pilihan yang tidak teruji hanya pertimbangan untuk layanan masa depan, namun ini berarti bahwa pilihan yang tidak terverifikasi sebagian dipertimbangkan untuk layanan masa depan. Sebagai alternatif, ini harus menjadi kasus yang sangat jarang dimana pilihan yang tidak terelakkan dipertimbangkan untuk layanan masa lalu saja. Sayangnya, beberapa kasus tidak cukup mementingkan layanan masa depan dalam mengklasifikasikan opsi yang tidak terverifikasi. Misalnya, di Goodwyne v. Goodwyne, 639 Jadi. 2d 1210 (La Ct App) 1994), pengadilan menyatakan bahwa opsi yang tidak terpenuhi sepenuhnya dipertimbangkan untuk layanan masa lalu. Penangguhan ini mengabaikan fakta yang tak terbantahkan bahwa opsi diberikan hanya setelah pekerjaan di masa depan. Persyaratan ini tidak mencukupi untuk membuat pilihan properti sepenuhnya terpisah, namun tentunya persyaratan layanan masa depan seharusnya menghasilkan setidaknya beberapa kepentingan yang berbeda. Demikian juga, dalam In Isaacs, 260 Ill App. 3d 423, 632 N.E.2d 228 (1994), dimana istri memperoleh opsi saham sebagai kompensasi atas penurunan nilai saham perkawinan tertentu, pengadilan dengan benar berpendapat bahwa ada kepentingan perkawinan yang kuat. Tetapi mengingat bahwa pilihan hanya diberikan setelah pekerjaan di masa depan, seandainya tidak ada kepentingan parsial dan Keputusan di masa depan harus terus mengakui kemungkinan adanya kepentingan perkawinan parsial terhadap persediaan yang tidak diinvestasikan, namun di mana persyaratan opsi memerlukan kerja pascabencana lanjutan , Harus ada kepentingan parsial terpisah juga. Formula standar yang ditetapkan pada awal bagian ini, sebagaimana dimodifikasi oleh kasus-kasus seperti Hug and Short, adalah metode yang baik untuk mengalokasikan opsi semacam ini secara adil antara perkebunan perkawinan dan perkebunan terpisah. Pilihan Saham yang Belum Terpercaya Dalam Miller, 915 P.2d 1314 (Colo 1996), pengadilan menarik perbedaan antara opsi saham yang dimiliki dengan batasan masa depan dan opsi saham yang tidak pernah benar-benar dimiliki. Opsi akan masuk dalam kategori pertama jika memberi hak kepada karyawan untuk membeli saham dengan harga opsi, namun mengizinkan penggunaan hak itu hanya jika kondisi tertentu (misalnya melanjutkan pekerjaan untuk jangka waktu tertentu) terpenuhi. Pilihan akan jatuh ke kelas kedua jika sama sekali tidak memberi hak kepada karyawan sama sekali, seperti opsi yang dapat dicabut atasannya sesuka hati. Pengadilan menunjukkan bahwa jenis opsi pertama sebagian atau seluruhnya adalah properti perkawinan, namun jenis pilihan kedua adalah harapan yang tidak dapat dilaksanakan. Tidak ada kasus lain yang pernah mencoba membedakan antara berbagai jenis pensiun yang tidak diinvestasikan, dan Miller dicta pada titik ini tidak beralasan dengan baik. Tujuan pemerataan adalah mengalokasikan secara adil antara semua pihak yang properti yang merupakan hasil usaha perkawinan. Apakah pemberi kerja memiliki hak tanpa syarat untuk menghentikan rencana opsi saham tidak berpengaruh terhadap tujuan ini. Jika pasangan karyawan tidak pernah melakukan pilihan, maka tidak ada buah yang bisa dibagi, dan pasangan yang tidak terpakai karenanya tidak menerima apapun. Tetapi jika pilihan itu benar-benar dilakukan, dan jika opsi tersebut benar-benar setidaknya merupakan sebagian kompensasi untuk usaha perkawinan, maka harus ada kepentingan perkawinan terhadap keuntungan yang dihasilkan. Fakta bahwa pilihan itu mungkin tidak dilakukan, atau bahkan kemungkinan besar opsi itu tidak akan dilakukan, tidak relevan. Jika pilihan itu benar-benar dilakukan, keuntungan harus dibagi antara kedua belah pihak. Miller dapat dengan mudah dibedakan dengan kasus Louisiana, Goodwyne v. Goodwyne, 639 Jadi. 2d 1210 (La Ct. App 1994). Pada tanggal klasifikasi di Goodwyne, suami tidak memiliki opsi saham. Setelah tanggal klasifikasi, suami dianugerahi pilihan sebagai kompensasi atas usaha masa lalu. Pengadilan memiliki sedikit masalah karena opsi ini adalah milik komunitas. Goodwyne adalah kasus yang lebih ekstrem daripada situasi yang diantisipasi oleh Miller, karena dalam situasi itu karyawan tersebut memiliki sebuah pilihan (walaupun opsi yang sangat tidak terelakkan) pada saat perceraian. Di Goodwyne, sang suami tidak memiliki pilihan sama sekali pada tanggal perceraian, namun pengadilan tetap berpendapat bahwa ada pilihan perkawinan yang diberikan setelah kompensasi sebagai kompensasi untuk usaha perkawinan. Goodwyne benar, dan dicta dalam Miller salah. Tidak ada yang harus dipaksa untuk membayar dolar aktual saat ini untuk kepentingan perkawinan manapun dalam opsi saham perkawinan yang sangat tidak terungkap, namun jika opsi tersebut benar-benar dilakukan, keuntungan harus dibagi antara pasangan. Ini adalah prinsip yang sama persis yang digunakan di Colorado, Louisiana, dan banyak negara bagian lainnya untuk membagi semua jenis manfaat pensiun yang belum dibayar. Karena opsi saham serupa dalam banyak hal untuk manfaat pensiun, peraturan tersebut mungkin tunduk pada peraturan khusus hukum yang biasanya berlaku untuk klasifikasi dan pembagian pensiun. Lihat Dietz v. Dietz, 17 Va App. 203, 436 SE2d 463 (1993) (opsi saham yang tidak diinventarisasi tunduk pada undang-undang yang menyatakan bahwa pasangan yang tidak memiliki hubungan istimewa tidak dapat menerima lebih dari 50 dari bagian perkawinan dari setiap pensiun atau imbalan kompensasi lainnya) Klingenberg v. Klingenberg, 342 Md. 315, 675 A.2d 551 (1996) (dalam keadaan yang biasanya menyelesaikan pemerataan dengan cara pemberian uang, opsi saham tunduk pada undang-undang yang mengatur bahwa pengadilan dapat mengalihkan hak atas kompensasi kompensasi yang ditangguhkan di antara para pihak). V. NILAI DAN PEMBAGIAN OPSI Secara teori, penilaian opsi saham adalah masalah sederhana untuk mengurangkan harga opsi dari nilai wajar pasar saham yang terlibat. Lihat Richardson v. Richardson, 280 Ark 498, 659 S.W.2d 510 (1983) Green v. Green, 64 Md App. 122, 494 A.2d 721 (1985). Pengadilan juga dapat mengurangi dari keuntungan pajak yang akan timbul saat opsi dieksekusi. Goodwyne v. Goodwyne, 639 Jadi. 2d 1210 (La Ct. App 1994) Everett v. Everett, 195 Mich App. 50, 489 N.W.2d 111 (1992). Pengurangan tersebut mungkin tunduk pada peraturan normal bahwa konsekuensi pajak harus dibuktikan dengan kepastian yang wajar. Lihat umumnya Brett R. Turner, Equitable Distribution of Property 8.10 (2d ed 1994 Supp. 1996). Dalam prakteknya, valuasi opsi saham jauh lebih rumit, karena nilai pasar wajar tidak diketahui sampai opsi dieksekusi. Ketidakpastian ini sama dengan ketidakpastian yang ada dalam menilai manfaat pensiun, dimana persyaratan penuh dari setiap imbalan kerja tidak akan diketahui sampai tanggal pensiun yang sesungguhnya. Dalam konteks pensiun, sebagian besar negara bagian memberikan pertimbangan pengadilan untuk mengadopsi satu dari dua metode penilaian dan pembagian. If the court uses the immediate offset approach, the pension is valued using the best projections available on the date of the hearing, and the nonowning spouse is awarded cash or other property equal in value to his or her interest. If the court uses the deferred distribution approach, the nonowning spouse is awarded a specific percentage of each benefit payment actually received by the owning spouse. This method avoids a difficult valuation issue, and it ensures that neither party will receive an unjust windfall if the actual facts develop differently than an experts projections. The spouses must continue to deal with one another for many years to come, however, and there is an increased risk of future litigation. See generallyBrett R. Turner, Equitable Distribution of Property 6.11-6.12 (2d ed. 1994 Supp. 1996). The same two general methods apply to the valuation and division of stock options. A majority of the cases make a deferred distribution, ordering the owning spouse to pay the nonowning spouse a certain percentage of any future profit from exercising the option. See In re Hug, 154 Cal. Aplikasi. 3d 780, 201 Cal. Rptr. 676 (1984) In re Isaacs, 260 Ill. App. 3d 423, 632 N.E.2d 228 (1994) In re Moody, 119 Ill. App. 3d 1043, 457 N.E.2d 1023 (1983) (noting specifically that husbands financial and health circumstances made it unlikely that the options would ever be exercised) Green v. Green, 64 Md. App. 122, 494 A.2d 721 (1985) Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (Ch. Div. 1976) (ordering the husband to hold the wifes share of the options in constructive trust for her benefit). Most of these cases establish the percentage at the time of divorce, but a few cases hold that the court can reserve jurisdiction to establish the percentage at the time the option is exercised. Lihat, mis. Moody. This difference in approach is similar to the difference between the deferred distribution and reserved jurisdiction methods of dividing retirement benefits. See Turner, supra, 6.11. The division must be based upon profit (value less option price) and not absolute value, of course, as the owning spouse is entitled to credit for any postmarital funds used to exercise the option. A similar but somewhat simpler option is to divide the options themselves between the parties, although some stock option plans prohibit this option by limiting the ownership of options to employees. If the court does not divide the options in kind, it cannot order the owning spouse to exercise the options it can only provide that the profit be allocated in a specific manner. Green v. Green. A minority of cases make an immediate distribution, valuing the option at the current value of the stock minus the option price. See Richardson v. Richardson, 280 Ark. 498, 659 S.W.2d 510 (1983) In re Hoak, 364 N.W.2d 185 (Iowa 1985) (considering options as one factor in dividing marital estate, without making a specific offsetting award) Green v. Green. VI. PREEMPTIVE STOCK OPTIONS A preemptive stock option gives the owner the right to purchase stock at a certain price, if the present owner attempts to convey his stock to a third party. Preemptive options are commonly contained in certain types of buy-sell agreements, and their purpose is ordinarily to ensure that the stock of a small corporation remains in the hands of a small group of approved owners. Can a preemptive stock option constitute marital property The court held to the contrary in Ross v. Ross, 90 Md. App. 176, 600 A.2d 891 (1992). The present owner of the stock in Ross had no apparent intention to sell his shares, and the court held that the preemptive option was too speculative to be given a reasonable value. Indeed, it was entirely possible that the current owner would never sell his shares. It is possible that a different result might be reached where there is evidence that the present owner will sell his shares in the immediate future, but no reported case has yet considered this situation. VII. OTHER RESTRICTED BENEFITS Stock options are the most common type of non-pension property which employers award as a fringe benefit of employment. Some employers, however, will use tangible assets, bank accounts, and other types of property as a device to attract and retain employees. These other benefits are generally classified by analogy to the stock option cases. Thus, where the employee is given absolute ownership of tangible property a situation similar to the granting of vested stock options the property is generally treated as consideration for prior services. Lihat, mis. In re Rickard, 818 S.W.2d 711 (Mo. Ct. App. 1991) (funds were withdrawn by husband from partnership account) Sclafani v. Sclafani, 178 A.D.2d 830, 577 N.Y.S.2d 711 (1991) (gifts of stock from employer were consideration for past services and were thus marital property) Lawing v. Lawing, 81 N.C. App. 159, 344 S.E.2d 100 (1986) (stock in husbands individual name was purchased with corporate funds) Marshall v. Marshall, 735 S.W.2d 587 (Tex. App. 1987) (partnership property was used to pay husbands individual income taxes community property jurisdiction). A harder situation is presented when the benefits are restricted in some manner. The most common type of restriction provides that an employee must work for the employer for a certain amount of time in order to receive full ownership of the property involved. In Mestayer v. Williams, 569 So. 2d 1102 (La. Ct. App. 1990), a stock plan gave selected key employees a chance to purchase a limited amount of stock for an artificially low price. The stock could not be conveyed or pledged, however, and if the employee left the company during his lifetime before normal retirement age he had to return the stock to the company at the original purchase price. If the employee remained with the company, however, the company would waive the transfer restrictions on 10 of the employees stock each year, so that he would own all of the stock after ten years of employment. A company document clearly stated that the purpose of the plan was to reward employees for staying with the firm: It is intended by management that the Plan, by offering such employees an ownership interest in the Company, will offer incentives in addition to those of current compensation and future pensions which will encourage valuable employees to continue in the service of the Company and its subsidiaries. Id. at 1103.The husband in Mestayer made purchases under the plan during the marriage, but he was divorced less than ten years later, before the restrictions had expired upon all of the stock. The trial court held that the incentive plan constituted compensation to the employee, just like a pension, insurance package, or other fringe benefit. Accordingly, it was entirely community property. The Louisiana Court of Appeal affirmed the trial courts decision. The court found the case before it to be clearly distinguishable from those situations presenting deferred disbursement or delay in vesting of rights. Id. at 1106. While the restrictions upon the stock were substantial, the court held, the existence of the restrictions does not affect ownership. The restrictions merely qualify the privilege of dealing with the stock. Id. There was accordingly no difference between the plan at issue and a plan in which the shareholder must offer his stock to the corporation or to other shareholders before he can offer it to a third party. Because the restricted shares at issue were awarded to the husband during the existence of the community, they were entirely community property. Id. at 1107 (emphasis added) see also Vollmer v. Vollmer, 187 Mich. App. 688, 468 N.W.2d 236 (1990) (likewise holding that restricted shares received during the marriage were marital property placing no importance whatsoever upon the restrictions). The Mestayer decision ignored the economic reality of the situation. To begin with, the court entirely misconstrued the basic nature of the restrictions involved. The purpose of those restrictions was to deny the employee effective ownership of the stock until the designated time for waiver arrived. The restrictions filled this purpose well, preventing any transfer, conveyance, or pledging of the stock while the restrictions applied. The first-purchase restrictions referred to by the court are entirely different, because they limit only the right to convey the stock to certain people and not the right to convey the stock at all. Unless the husband had dividend or voting rights (a fact not stated in the courts opinion), he received absolutely no substantial benefit from the stock while it was restricted. He owned it in theory, but it gave him absolutely no real economic benefit. A better approach to the classification of restricted benefits is to look at the economic substance of the transaction. In In re Joiner, 766 S.W.2d 263 (Tex. App. 1988), the court faced an incentive plan similar to the plan in Mestayer. On his fifth anniversary with his employer, the husband received a substantial interest in a profit-sharing plan. If he should leave the company, however, he would not receive the entire interest. Instead, he would receive only the amount which had vested. The benefits vested at a rate of 20 per year, beginning on the employees sixth anniversary. The parties in Joiner were married after the sixth year of the husbands employment, and they remained married throughout the plans duration. The court had little trouble holding that 80 of the entire plan was community property, even though the husbands interest had been acquired in an unvested sense before the marriage. Thus, the court held that the benefits were acquired gradually as the restrictions lapsed and not all at once when nominal legal title was obtained. Likewise, in ONeal v. ONeal, 55 Ark. App. 57, 929 S.W.2d 725 (1996), the husband accepted new employment after the parties separation. As an incentive to accept this position, the husbands new employer gave him 35,000. If the husband should leave the employer with less than four years of service, however, he would be required to pay back 25 of the 35,000 for each year of service less than four. The court perceptively realized that this benefit was in substance a loan, 25 of which was forgiven for each year of service. The funds were therefore acquired after the marriage, as consideration for future services. ONeal showed a commendable willingness to look at the economic reality of the situation rather than at the nominal fact of title ownership. Where the restriction involves something other than future services, the court must determine how much real burden the restriction places upon the employee. Where the restriction is minimal, the benefit is effectively vested and is therefore compensation for prior services. For instance, in Guinn v. Guinn, 35 Ark. App. 199, 816 S.W.2d 629 (1991), the husbands employer gave him a major needs account which he could use after the marriage to pay for real estate, automobiles, or further education. The restriction on use did not significantly reduce the value of the benefit, since almost everyone purchases a home or a car or pursues education at some point. The funds in the account were therefore acquired when they were added to the account and not when they were withdrawn from it. VIII. PERCENTAGE DIVISION Can the court award the nonowning spouse a smaller share of the marital interest in stock options than in other divisible property In Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (Ch. Div. 1976), the court expressly awarded the wife only a 25 interest, which it noted was less than her percentage of other assets. The court specifically cited, first, the fact that the husband bore the risk that the stock options would have no value, and, second, the fact that the price of the stock might increase in value after the divorce because of the husbands postmarital efforts. On the first point, it is hard to see why the husband bore any degree of unfair risk. When options are divided on a deferred basis, as the options in Callahan essentially were, the nonowner receives only a set fraction of what the owner receives. The risk of loss is thus divided fairly between the parties. It would seem that a reduced division on account of risk should be made only when the court makes an immediate division of the present value of the options with an award of money or other property. On the second point, the courts logic makes sense. It could be argued, however, that the husbands post-marital efforts are already considered when the court computes the marital share under the standard formula discussed above for classifying unvested stock options. The retirement benefit cases are deeply divided as to whether the marital interest attaches to postdivorce increases caused by the owning spouses efforts, and there is no reason why the same split might not carry over into the stock option cases. At present, however, Callahan is the only case which addresses the issue. On the whole, the reported case law addressing stock options is well-reasoned. The hardest issues are those involving unvested options, and the courts have generally been sensitive to the need to allocate such options fairly between the marital and separate estates. Isolated decisions overstate the separate interest by refusing to divide such options or overstate the marital interest by attaching insufficient weight to vesting requirements. The great majority of decisions, however, have resolved the issues in a fair and consistent manner. The wide range of disparity between different option programs limits the degree of uniformity which one can expect as regards the final result of the cases, but the reasoning of the decisions is clear, and they can generally be applied to new fact situations without undue difficulty. This state of affairs is much better than the state which prevails in other problem areas of property division law.Methods for Dividing Stock Options in State Court Divorce Cases Provided by the National Legal Research Group Almost all states now agree that stock options are marital property to the extent that they were earned during the marriage. As a result, in most cases in which stock options are present, the court and the parties will need to find some way to transfer part of the value of the options to the non-owning spouse. Federal law has not made the process of division any easier indeed, a good case can be made that federal law has materially contributed to the problem. If federal law were to be clarified to permit direct assignment of stock options without prohibitively adverse tax consequences, division of stock options in state court divorce cases would be a much easier process. The primary purpose of this article is to discuss federal and state law on mechanics of dividing stock options between the parties. Before reaching this issue, however, we will briefly review the nature of stock options themselves, and then discuss the manner in which stock options are classified and divided. I. STOCK OPTIONS IN GENERAL A stock option is a legal right to purchase one share of stock for a specific price (the strike price), regardless of the price at which the stock is actually trading. The stock need not be publicly traded, but in most of the reported cases, a regular market does exist for the stock at issue. Under almost all stock option plans, an option given to the employee is unvested when it is received. It cannot be exercised it is lost if the employee stops working for the employer. After a specific period of time passes, the stock option vests. After vesting, the stock option can be exercised, and it is not lost if the employee leaves the company. Most vesting periods are in the two-to-five-year range. After a much longer period, often 10 years, the stock option expires and cannot be exercised. II. CLASSIFICATION OF STOCK OPTIONS Stock options fall into the general category of deferred compensation rights, a category which also includes such commonly discussed assets as retirement benefits, bonuses, and intellectual property rights. For purposes of property division, deferred compensation rights are generally acquired when they are earned, not when value is actually received. For example, if the husband earns retirement benefits during the marriage, the benefits so earned are marital property, even if no money is actually received until long after the marriage ends. Deferred compensation rights are most often classified by determining the period over which they are earned. A defined benefit retirement plan, for example, is usually acquired as compensation for a specific period of creditable service rendered to the employer. The amount received per month depends upon the total creditable service rendered, with some function of the employees highest annual salary often being worked into the formula as well. To determine the marital share, the court divides the total time married during the earning period by the total earning period. See In re Marriage of Benson, 545 N.W.2d 252 (Iowa 1996) Koziol v. Koziol, 10 Neb. App. 675, 636 N.W.2d 890 (2001) Workman v. Workman, 106 N.C. App. 562, 418 S.E.2d 269 (1992). See generally Brett R. Turner, Equitable Distribution of Property 6:25 (3d ed. 2005). Time married, in this context, means time between the date of commencement (almost always the date of marriage) and the date of classification. Id. The latter date varies by jurisdiction it is usually either the date of final separation, the date of filing, or the date of divorce. Id. Section 5:28. To take an example, assume that a military service member acquires retirement benefits as compensation for 30 years of military service. The divorce occurs in New York, where the date of classification is normally the date of filing. Of the 30 years, 12 occurred between the date of marriage and the filing of the divorce. The marital share of the pension is 1230, or 40. In the specific case of stock options, the earning period always includes the vesting period. The purpose of the vesting period is to encourage the employee to continue working for the employer that is why the employee loses unvested options if he voluntarily terminates his employment. See generally In re Marriage of Hug, 154 Cal. Aplikasi. 3d 780, 201 Cal. Rptr. 676 (1984). When future employment is a condition of vesting, it is very difficult to argue that the option is not consideration for future service. The hard question in classifying stock options is whether the option is consideration for past service as well. Some unvested stock options are awarded pursuant to a regular plan which awards an equal amount of stock options to all employees at a given level, primarily as a device for encouraging them to remain with the company. These sorts of options are generally consideration only for future services. See In re Marriage of Harrison, 179 Cal. Aplikasi. 3d 1216, 225 Cal. Rptr. 234 (1986) Wendt v. Wendt, 59 Conn. App. 656, 757 A.2d 1225 (2000) Hopfer v. Hopfer, 59 Conn. App. 452, 757 A.2d 673 (2000) (where husband started with employer only one month before the divorce) Otley v. Otley, 147 Md. App. 540, 810 A.2d 1 (2002) In re Marriage of Valence, 147 N.H. 663, 798 A.2d 35 (2002). See generally Turner, supra, 6:49. Under other option plans, however, more unvested options are awarded to employees who performed better in the past, or a committee may even have discretion to make extraordinary grants of unvested options to employees who made extraordinary contributions to the company. These options are consideration for both past and future services. Id. Section 6:49. A related fact situation occurs when options are used to attract an employee to switch employers. These options are normally used to attract employees only after they have substantial skills, so that the options are in a sense acquired with the skills. In addition, employees who make this sort of job change often lose unvested stock options with their previous employer, options which were at least partly earned through marital effort. The general rule is therefore that stock options to change jobs are also acquired in exchange for both past and future services. In re Marriage of Hug, 154 Cal. Aplikasi. 3d 780, 201 Cal. Rptr. 676 (1984) Salstrom v. Salstrom, 404 N.W.2d 848 (Minn. Ct. App. 1987). AKU AKU AKU. DIVISION OF RETIREMENT BENEFITS Because deferred compensation rights are earned before they are received, their division poses unique problems. These problems first arose in the context of retirement benefits, and the law on division of other deferred compensation rights is generally a specific application of general rules established in the retirement benefits cases. In general, retirement benefits can be divided in two ways. Under the immediate offset method, the court determines a present value for the benefits. To do this, the court must measure the string of future payments which the employee is likely to receive discount those benefits by the likelihood that each benefit will not be received (e.g. by the likelihood of early death) and then reduce the benefits to present value. This is a difficult process which usually requires expert testimony. After determining a present value, the court multiplies that value by the marital share to determine the marital interest, and applies the statutory division factors to determine the nonowning spouses percentage interest in the marital share. The nonowning spouse then receives his or her interest in cash or other property, while the owning spouse receives the entire pension. Turner, supra, Section 6:31. Immediate offset requires significant expert testimony at the outset, so it is a more expensive method. It can be applied only when the marital estate has sufficient cash or other assets to permit payment of the offset. The accuracy of the method depends upon the accuracy of actuarial projections, which are almost never exactly accurate, so that one spouse or the other is bound to be hurt if both do not live to their exact life expectancies. But immediate offset allows the entire pension to be divided at the time of divorce, without requiring the parties to have an ongoing connection with each other for many years to come. After the divorce is over, it is by far the easiest method to implement. Under the deferred distribution method, the court does not need to determine a present value for the benefits at the time of divorce (although some states require the court to do so for other purposes). Instead, the court measures the marital share and determines the non-owning spouses equitable interest in that share. For example, if the marital interest is 40 and an equal division is equitable, the non-owning spouses interest would be 20. The court then orders the owning spouse to pay the non-owning spouse 20 of every future payment received from the retirement plan. Turner, supra, Sub Section 6:32-6:33. Because no present division is made, deferred distribution does not depend upon the accuracy of present value calculations or actuarial projections. The amount payable will be exactly correct, regardless of who dies when. But the parties must continue to deal with each other for many years to come, and the non-owning spouse must bear the burden of enforcing the obligation if the owning spouse refuses to pay. There are also a variety of innocent and not-so-innocent ways in which the future events can influence the distribution. To take just one example, many defined benefit plans are encountering significant financial problems, which may ultimately reduce the amount payable. If the loss arises from market conditions, it should be shared but what if the owning spouse was CEO of the company and failed, negligently or even deliberately, to fund the plan sufficiently after the divorce Deferred distribution creates a significant potential for future litigation it does not lead to a clean break between the parties. The administrative problems of deferred distribution are less severe where the plan administrator can be directed to provide benefits directly to the non-owning spouse, Turner, supra, 6:18-6:20, or perhaps even to make the non-owning spouse an independent participant in the plan. Id. Section 6:34. Most private retirement plans are regulated by federal law, and there was initially some concern that federal law might not permit direct assignment of pension rights. The federal government eliminated this uncertainty in 1984 by making major modifications to ERISA, the federal statute governing retirement plans. The modified statute allows direct assignment of benefits only if the assignment is made in a qualified domestic relations order (QDRO). A domestic relations order (DRO) is an order of the state court, made under the law of domestic relations, directing the plan administrator to assign benefits to a former spouse (the alternate payee). 29 U.S.C. Section 1056(d)(3)(A) (Westlaw 2006). It must contain certain basic identifying information, and more importantly it can only divide those benefits which are actually available to the employee under the plan. After the state court makes a DRO, the DRO is then submitted to the plan administrator, who determines whether the order meets the requirements of ERISA. If the administrator determines that the order meets those requirements, the order is qualified and the administrator must follow it. If the order is rejected, it is not qualified, and federal law prevents its enforcement. The administrators decision can then be reviewed in either state or federal court. See generally Turner, supra Section 6:18-6:19. IV. DIRECT TRANSFER OF STOCK OPTIONS Federal Tax Treatment Before discussing the mechanics of dividing stock options, it is necessary to make a brief digression into federal income tax law. That law has had a significant impact upon the process by which stock options are divided. As a general rule, when an employer pays compensation to an employee, two tax consequences follow. The compensation is taxed as income to the employee, and it is treated as a business expense of the employer. This general rule applies to property as well as to direct salary. For instance, if an employer gives a share of stock to an employee, the value of the share is taxable income to the employee, and a business expense deduction for the employer. In the specific case of stock options, the tax treatment is different. When stock options are granted under a qualified plan, no income is recognized when the option itself is awarded or exercised, and the employer receives no business expense deduction. I.R.C. Section 421(a). The employee is liable for tax only when the share of stock acquired with the option is sold, and the tax can be paid with proceeds from the sale of the stock itself. Federal law recognizes two different types of qualified stock option plans: incentive stock option plans under I.R.C. 422, and employee stock purchase plans under I.R.C. 423. If a stock option plan does not meet the requirements for either type of qualified plan, it is said to be a nonqualified plan. Stock options given under such a plan are treated as income to the employee, and an equivalent business expense deduction is permitted for the employer. These rules take effect at the time when the option is granted if the value of the option can readily be determined otherwise, they take effect when the option is exercised. I.R.C. Section 83 Amelia Legutki, Mertens Law of Federal Income Taxation 6.01 (Westlaw 2006) hereinafter Mertens. When a share of stock acquired with a stock option is sold, the employee recognizes income equal to the sale price minus his or her basis in the stock. If the stock option plan was qualified, the employees basis is the amount paid under the option. If the plan was unqualified, the employees basis is the amount paid, plus any amount previously recognized as income ordinarily, the value of the option when awarded. If the option was held for a minimum period of time, the income is taxed at capital gains rates otherwise, it is taxed at normal tax rates. Mertens Section 6.01. Federal Securities Law Just as the easiest method to implement deferred distribution of stock options is direct assignment of benefits through a QDRO, the easiest method to implement deferred distribution of stock options is direct transfers of the options themselves. Like all publicly traded securities, stock options are regulated by the Securities and Exchange Commission (SEC). Before 1996, former SEC Rule 16b-3 positively prohibited any direct transfer of stock options. Annual Review of Federal Securities Regulation, 52 Bus. Law. 759, 766 (1997). Thus, direct assignment was not a permissible method for implementing a state court division of marital property. In 1996, the SEC revised Rule 16b-3 to remove the prohibition on direct transfer. 17 C.F.R. Section 240.16b-3 (Westlaw 2006). It also adopted Rule 16a-12, 17 C.F.R. 240.16a-12 (Westlaw 2006), which provides that certain transfers meeting the ERISA definition of a DRO (qualified or otherwise) need not be reported. If an express rule provides that direct transfers need not be reported, those transfers are obviously no longer barred by the SEC. Thus, after 1996, federal securities law no longer prohibits direct assignment of stock options. If stock options were regulated by ERISA, federal law would require plan administrators to permit direct transfer of stock options by means of QDROs. But stock option plans are clearly not within ERISA. ERISA applies only to benefit plans, which are subdivided into welfare plans and retirement plans. 29 U.S.C. 1002(3) (Westlaw 2006). Since a stock option is not a benefit payable only upon retirement, a stock option plan is not retirement plan. The definition of welfare plans includes plans intended to provide medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, 29 U.S.C. 1002(1)(A) a list which conspicuously excludes stock options. Employee stock option plans are generally not covered under the Employee Retirement Income Security Act (ERISA), as they are not considered welfare or retirement plans. Matthew T. Bodie, Aligning Incentives with Equity: Employee Stock Options and Rule 10b-5, 88 Iowa L. Rev. 539, 547 (2003). See generally Oatway v. American International Group, Inc. 325 F.3d 184, 187 (3d Cir. 2003) (most courts have uniformly held that an incentive stock option plan is not an ERISA plan citing the cases). Thus, the QDRO provisions of ERISA do not apply to stock option plans. Federal Tax Law One might think that the decision by the SEC to tolerate divorce-related transfers would make such transfers permissible. Unfortunately, the SEC is only one of the federal agencies with the power to limit divorce-related transfers. The IRS, and federal tax law in general, continue to make direct transfer difficult. The core of the problem is in the requirements for the two different forms of qualified stock option plans. The requirements for an incentive stock option plan provide: (b) Incentive stock option. For purposes of this part, the term incentive stock option means an option granted to an individual for any reason connected with his employment by a corporation, if granted by the employer corporation or its parent or subsidiary corporation, to purchase stock of any of such corporations, but only if (5) such option by its terms is not transferable by such individual otherwise than by will or the laws of descent and distribution, and is exercisable, during his lifetime, only by him. I.R.C. Section 422(b)(5) (emphasis added). The requirements for an employee stock purchase plan provide: (b) Employee stock purchase plan. For purposes of this part, the term employee stock purchase plan means a plan which meets the following requirements. (9) under the terms of the plan, such option is not transferable by such individual otherwise than by will or the laws of descent and distribution, and is exercisable, during his lifetime, only by him. I.R.C. 423(b)(9) (emphasis added). Thus, both forms of qualified stock option plans provide that any stock option awarded can be exercised only by the employee. There is no exception permitting exercise by a spouse, present or former. It should be stressed that neither of the above-quoted statutes absolutely prevents a stock option plan from allowing transfer of stock options. The federal courts have refused to construe either statute to prevent transfer absolutely, in the same manner as the antiassignment provision of ERISA. Misalnya. DeNadai v. Preferred Capital Markets, Inc. 272 B.R. 21, 40 (D. Mass. 2001) (DeNadai fails to point to any evidence that Congress intended I.R.C. 422(b)(5) to serve as a general exemption from creditor process). This refusal is highly consistent with the fact that such transfers are implicitly permitted by SEC Rule 16a-12. The effect of Sub Scetion 422(b)(5) and 423(b)(9) is not to prohibit direct transfers under a DRO, but rather to change the tax treatment of options which are so transferred. It is highly desirable to employees that stock options awarded under a qualified plan be taxed under the special rules set forth in Section 421(a). The above language suggests, at a minimum, that any option exercised by a nonemployee loses the favorable tax treatment it would otherwise enjoy. It would be taxed as income when received or exercised, not when the share of stock acquired was sold. If a plan is already nonqualified, the conditions set forth in Sub Section 422 and 423 do not apply to begin with, and there is apparently no reason why federal tax law would require or even suggest that the options not be transferable. Revenue Ruling 2002-22 Concerns regarding the tax treatment of stock options directly transferred from one spouse to the other were strengthened by the IRS decision in Rev. Rul. 2002-22, 2002-1 C.B. 849. This ruling focused primarily upon whether direct transfers of stock options are a taxable event. The general rule is that divorce-related transfers generally are not such an event, I.R.C. 1041, but the IRS had previously made informal statements that it might try to argue that transfers of stock options were somehow outside 1041. Rev. Rul. 2002-22 recedes from these suggestions, and constitutes an admission by the IRS that the general principles of Section 1041 apply. But the ruling comes loaded with provisos and qualifications. The overall effect of the qualifications is to remove a significant portion of the practical benefit of the admission. The fact pattern directly addressed in the ruling arose from a divorce-related transfer of stock options awarded under a nonqualified plan. The Service ruled that Section 1041 applied: The term property is not defined in Section 1041. However, there is no indication that Congress intended property to have a restricted meaning under 1041. To the contrary, Congress indicated that 1041 should apply broadly to transfers of many types of property, including those that involve a right to receive ordinary income that has accrued in an economic sense (such as interests in trusts and annuities). Id. at 1491. Accordingly, stock options and unfunded deferred compensation rights may constitute property within the meaning of 1041. The greater problem for the taxpayers was not the applicability of Section 1041, but rather the common-law assignment-of-income doctrine. Under that doctrine, income is ordinarily taxed to the person who earns it, and that the incidence of income taxation may not be shifted by anticipatory assignments. Id. See generally Lucas v. Earl, 281 U.S. 111 (1930). If the doctrine applied, the husband would be liable for the entire tax due, regardless of the anticipatory assignment to the wife. But the assignment-of-income concept is fundamentally incompatible with Section 1041, which was intended to allow unlimited tax-free transfers of property between spouses incident to divorce: Applying the assignment of income doctrine in divorce cases to tax the transferor spouse when the transferee spouse ultimately receives income from the property transferred in the divorce would frustrate the purpose of Section 1041 with respect to divorcing spouses. That tax treatment would impose substantial burdens on marital property settlements involving such property and thwart the purpose of allowing divorcing spouses to sever their ownership interests in property with as little tax intrusion as possible. Further, there is no indication that Congress intended 1041 to alter the principle established in the pre-1041 cases such as Meisner that the application of the assignment of income doctrine generally is inappropriate in the context of divorce. Rev. Rul. 2002-22. The Service therefore ruled that nonqualified options could be transferred between divorcing spouses without any change in tax consequences. The problem with Rev. Rul. 2002-22 began when the Service departed from the facts presented and addressed qualified stock options: The same conclusion would apply in a case in which an employee transfers a statutory stock option (such as those governed by Section 422 or 423(b)) contrary to its terms to a spouse or former spouse in connection with divorce. The option would be disqualified as a statutory stock option, see Sub Section 422(b)(5) and 423(b)(9), and treated in the same manner as other nonstatutory stock options. Section 424(c)(4), which provides that a Section 1041(a) transfer of stock acquired on the exercise of a statutory stock option is not a disqualifying disposition, does not apply to a transfer of the stock option. See H.R. Rep. No. 795, 100th Cong. 2d Sess. 378 (1988) (noting that the purpose of the amendment made to Section 424(c) is to clarify that the transfer of stock acquired pursuant to the exercise of an incentive stock option between spouses or incident to divorce is tax free). Id. (emphasis added). Thus, the Service expressly confirmed that a qualified option becomes a nonqualified stock option when transferred by a DRO, because Sub Section 422(b)(5) and 423(b)(9) (both quoted previously in this article) expressly forbid any transfer of a qualified stock option, even one made incident to divorce. This conclusion is not changed by Section 1041, which provides that transfers incident to divorce are not taxable events, because the problem is not that the transfer itself is taxable. The problem is that the transfer strips the option of the preferential tax treatment given to qualified options, because Sub Section 422(b)(5) and 423(b)(9) make absolute nontransferability a condition upon qualified status. As a result, while Rev. Rul. 2002-22 benefits holders of nonqualified options, it provides very cold comfort to holders of qualified options. Moreover, the Service added a second troublesome condition to its ruling: This ruling does not apply to transfers of property between spouses other than in connection with divorce. This ruling also does not apply to transfers of nonstatutory stock options, unfunded deferred compensation rights, or other future income rights to the extent such options or rights are unvested at the time of transfer or to the extent that the transferors rights to such income are subject to substantial contingencies at the time of the transfer. See Kochansky v. Commissioner, 92 F.3d 957 (9th Cir. 1996). Id. (emphasis added). On its face, therefore, the ruling applies only to vested stock options. It is very possible that the Service might attempt to apply different rules when unvested stock options are transferred. Moreover, the nature of those different rules is logically suggested by the case cited, Kochansky v. Commissioner, 92 F.3d 957 (9th Cir. 1996), which held under the assignment-of-income doctrine that an attorney was liable for all tax due on a contingent fee, even though part of the fee had been assigned to his spouse pursuant to divorce. In short, the Service is holding the door open for arguing that the employee must pay all tax due upon an unvested stock option, regardless of any deferred distribution to a former spouse. See David S. Rosettenstein, Options on Divorce: Taxation, Compensation Accountability, and the Need to Look for Holistic Solutions, 37 Fam. L.Q. 203, 207 n.13 (2003) (It is not clear what purpose the reference to Kochansky serves if it is not to leave the door open to an assignment of income analysis, however inappropriate that analysis may be) see also id. at 207 n.19 (The ruling would seem to reserve the Services ability to adopt an assignment of income analysis to any unvested options transferred to the non-employee spouse). Moreover, it is also worth noting that the central issue in Kochansky, the effect of the wifes community property rights on the result, was not addressed because it was not preserved in the court below. That procedural ruling fundamentally limits the precedential value of Kochansky, for it is very possible that the result would have been different if the issue had been preserved. Indeed, the Service itself admits earlier in Rev. Rul. 2002-22 that the application of the assignment of income doctrine generally is inappropriate in the context of divorce. By citing Kochansky in spite of these points, the Service undercuts the power of its own admission that the assignment-of-income doctrine is inconsistent with the policy behind Section 1041, and leaves reasonable taxpayers with no way to predict the tax consequences of a very desirable method of division the direct transfer of unvested qualified stock options from one spouse to the other incident to divorce. What is doubly frustrating is that a fair resolution of the entire issue should not be overly difficult. As a court-created rule, the assignment-of-income doctrine is clearly secondary to Section 1041. That statute requires, implicitly if not explicitly, that transfers of property incident to divorce trigger no adverse federal tax consequences. There is no basis for applying the assignment-of-income doctrine to any divorce-related transfer, regardless of whether the options at issue are vested or unvested. For exactly the same reason, it is wrong to allow divorce-related transfers of any stock option to result in loss of qualified status. Whatever Congress had in mind when enacting Sub Section 422(b)(5) and 423(b)(9), it did not intend those sections to apply to divorce-related transfers. The consistent trend in all areas of federal tax and securities law over the past 20 years has been to allow divorce-related transfers with no greater tax consequences than would have been present if divorce had not occurred. The statutes admittedly do not contain any express exception for divorce-related transfers, and there may be some merit to the argument that the remedy must be statutory. But that fact does not make reform any less necessary. I.R.C. Sub Section 422(b)(5) and 423(b)(9) should be amended to permit divorce-related transfers of stock options without loss of qualified status. Stock options also represent a contract, and thus fall within the ambit of state common law. Bodie, supra, 88 Iowa L. Rev. at 547. State law applying to stock options is not superseded by ERISA, for as noted previously, ERISA does not apply to stock option plans. Since the distinction between qualified and nonqualified plans is purely a matter of income tax law qualified plans are eligible for more favorable tax treatment the qualified or nonqualified status of the plan has no effect upon state law. State court opinions dividing stock options have frequently observed that the great majority of all stock option plans prohibit direct assignment. See Jensen v. Jensen, 824 So. 2d 315, 321 (Fla. 1st Dist. Ct. App. 2002) (Both expert witnesses in this case testified that the unvested stock options could be neither valued nor transferred) Otley v. Otley, 147 Md. App. 540, 557, 810 A.2d 1, 11 (2002) (The difficulty of establishing a present value and the fact that the options themselves are usually not divisible or transferable make the deferred distribution approach desirable) Fisher v. Fisher, 564 Pa. 586, 593, 769 A.2d 1165, 1170 (2001). Nothing in federal law requires that state courts enforce prohibitions on assignment. The issue is therefore purely one of state contract law. While there are no reported state court cases discussing restrictions on the transfer of stock options, there are reported cases discussing contractual restriction on the transfer of actual shares of stock. The general rule is that these restrictions are binding, but that they are narrowly construed. For example, a restriction upon voluntary transfer, or even upon transfer generally, does not apply to involuntary transfer: We hold that a transfer of stock ordered by the court in a marriage dissolution proceeding is an involuntary transfer not prohibited under a corporations general restriction against transfers unless the restriction expressly prohibits involuntary transfers. Ordinarily, for drafting purposes, we think use of the phrase involuntary transfers would be deemed to encompass divorce court transfers. No such phrase was used here, however and the general language is inadequate to prohibit the courts transfer of the F-L stock. Castonguay v. Castonguay, 306 N.W.2d 143, 146 (Minn. 1981). The agreement requires a shareholder who wishes to sell, assign, encumber or otherwise dispose of the corporations stock other than as expressly provided for in the agreement to obtain the written consent of the other shareholders. The agreement contains no express provision regarding the interspousal transfer of shares incident to equitable distribution. The spouse has neither joined in the agreement nor has she waived her interest in the stock. We are not prepared to cut off the marital interest of a spouse under these circumstances. We hold that, under the rule of strict construction, a restriction on the transfer of stock does not apply to interspousal transfers of stock which is marital property absent an express provision prohibiting such transfers. Bryan-Barber Realty, Inc. v. Fryar, 120 N.C. App. 178, 181-82, 461 S.E.2d 29, 31-32 (1995) see also In re Marriage of Devick, 315 Ill. App. 3d 908, 920, 735 N.E.2d 153, 162 (2000) (Strictly construing the restrictive provision of the affiliate agreements, we determine that the restriction is applicable only to voluntary transfers and not to transfers by operation of law, such as by court order). The reasoning of these cases is similar to the reasoning of the federal district court in DeNadai v. Preferred Capital Markets, Inc. 272 B.R. 21 (D. Mass. 2001), which held that the tax law transfer restriction in I.R.C. Section 422(b)(5) did not prevent involuntary assignment to creditors. One fact not considered in some of the stock transfer cases is the presence of a bona fide reason to limit transferability. If the IRS continues to take the position that any transfer of stock options under a qualified plan destroys the qualified status of the option transferred, there is a good reason for most plans to limit transfers. Federal tax law on this point is unfortunate, but it must be lived with until it changes. But even this situation is not unknown in the state court cases. In McGinnis v. McGinnis, 920 S.W.2d 68 (Ky. Ct. App. 1995), a shareholders agreement provided that if any person obtains an attachment or other legal or equitable interest in any of the Shares owned by an employee, the corporation would have an option to purchase those shares. Id. at 75. The court held that this provision did not on its face absolutely prevent a divorce-related transfer. It noted, however, that the practical result of such a transfer might be the involuntary sale of the very asset being transferred, and suggested that the court and the parties must live with this fact. By similar reasoning, it seems likely that a state court would not be deterred from dividing stock options by the mere fact that the shares so transferred might lose their qualified status. It also seems likely, however, that the court would first give the parties every opportunity to agree upon a method of transfer which preserves the tax advantages of qualified status. V. OTHER METHODS FOR DIVIDING STOCK OPTIONS While federal law now permits direct transfer of stock options in at least some cases, direct transfer may cause prohibitively adverse tax consequences, and it may not be in the best interests of the parties for other reasons. Since direct transfer was not permitted at all before 1996, there is a reasonable body of case law discussing other division methods. On the facts of specific cases, these methods may reach results which are equal or even superior to the results of a direct transfer. Deferred Distribution of Profits The most common method for dividing stock options in actual practice is a deferred distribution of the profits. Under this method, the court determines the nonowning spouses interest in each set of options. It then orders the owning spouse to pay the nonowning spouse the stated percentage of all profits traceable to exercise of the option. It will normally be necessary to direct the owning spouse to withhold taxes from the payment, or otherwise adjust the parties rights to reflect the fact that the IRS will assess the relevant tax consequences entirely against the owning spouse. For cases making a deferred distribution of the profits of stock options, see In re Marriage of Frederick, 218 Ill. App. 3d 533, 578 N.E.2d 612 (1991) Frankel v. Frankel, 165 Md. App. 553, 585, 886 A.2d 136, 155 (2005) Otley v. Otley, 147 Md. App. 540, 559-60, 810 A.2d 1, 12 (2002) (The benefit subject to distribution, as we stated in Green and repeated earlier in this opinion, is the profit) Green v. Green, 64 Md. App. 122, 494 A.2d 721 (1985) Smith v. Smith, 682 S.W.2d 834 (Mo. Ct. App. 1984), overruled on other grounds, Gehm v. Gehm, 707 S.W.2d 491 (Mo. Ct. App. 1986) Fisher v. Fisher, 564 Pa. 586, 591, 769 A.2d 1165, 1169 (2001) (over a dissent which would give the nonowning spouse more control over when the options are exercised) and Chen v. Chen, 142 Wis. 2d 7, 15, 416 N.W.2d 661, 664 (Ct. App. 1987) (The trial court determined a percentage. and divided the profit from the stock option contracts accordingly). Deferred distribution of the profits works best when the parties expect to exercise the option within a fairly short period of time after it vests, and to sell the stock as soon as the option is exercised. If no limits are placed upon when the option will be exercised or when the resulting stock can be sold, the owning spouse could delay the exercise or sale longer than the nonowning spouse desires, or could exercise the option or sell the stock sooner than the nonowning spouse prefers. Because this method gives the nonowning spouse little control over the option and the resulting stock, it tends to work best when the owning spouse has superior financial expertise, and the nonowning spouse trusts the owning spouse to make a good decision in the financial interests of both parties. Since the parties are sharing the profit from each option, the owning spouse has a natural incentive to maximize both spouses profits, so long as the owning spouse can be trusted to behave in an economically rational manner. Another common method for dividing stock options is to make the nonowning spouse an equitable owner of a portion of the options. This method is normally implemented by directing the owning spouse to set aside a certain number of options for the benefit of the nonowning spouse. These options cannot be exercised by the owning spouse alone. Rather, the owning spouse is ordered to exercise these options only when requested to do so in writing by the nonowning spouse. The resulting stock can be either sold immediately, or promptly transferred to the nonowning spouse. It will ordinarily be necessary to have the nonowning spouse make a separate payment to hold the owning spouse harmless from tax consequences, as the owning spouse may be liable to the IRS for taxes on the nonowning spouses shares. In situations in which actual transfer of the options is not possible or is otherwise inadvisable, this method provides a reasonably close approximation of the same end result. For cases awarding equitable ownership of certain options to the nonowning spouse, see Keff v. Keff, 757 So. 2d 450 (Ala. Civ. App. 2000), and Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (Ch. Div. 1976). See also In re Marriage of Valence, 147 N.H. 663, 669, 798 A.2d 35, 39 (2002) (directing husband to exercise options as soon as possible, except that he could hold the options for the minimum period necessary to obtain favorable tax treatment, but allowing the wife to consent otherwise in writing, so that she could effectively make independent decisions). It may be possible to mix both the deferred division of profits and the equitable ownership approaches: The trial court ruled that the husband could exercise the options and then sell any or all of his shares if and when the options vest. If so, the judge determined that the husband must share with the wife one-half of the net gain (i.e. the gross proceeds less the purchase price and less the tax consequences to the husband) from the sale. If the husband decides not to exercise his vested options, the judge ordered that the husband notify the wife of his decision and allow her to exercise her share of the options through him. The wife would then be responsible for the tax consequences resulting from the sale of the shares. Baccanti v. Morton, 434 Mass. 787, 802, 752 N.E.2d 718, 731 (2001). Thus, the husband had the right to exercise the options and sell the stock immediately upon vesting, paying the wife her share of the profit. If he declined to exercise the options or sell the stock immediately, he was required to hold the stock for the wifes benefit, allowing her to exercise and sell her share of the options as she desired. The equitable ownership method suffers from most of the same advantages and disadvantages as a direct transfer. It gives the nonowning spouse control over when to exercise options and sell stock, which is a powerful benefit when both spouses are equally able to make good investment decisions. It limits the owning spouses ability to commit financial misconduct, although not as much as direct transfer, because the nonowning spouse still bears the risk that the owning spouse will disregard instructions. The greatest limitation is again the fact that some nonowning spouses will not have the financial skills to make good investment decisions, and will not in the press of other matters be sufficiently motivated to seek expert assistance. The ultimate form of equitable ownership is of course division in kind. Several state court decisions have stated that such division is preferable in situations in which it is permitted by the employer. See In re Marriage of Valence, 147 N.H. 663, 669, 798 A.2d 35, 39 (2002) Fisher v. Fisher, 564 Pa. 586, 593-94, 769 A.2d 1165, 1170 (2001). But both cases noted that transfer was not permitted on the facts. There may be some concern on the part of the courts that equitable ownership, short of an actual transfer of the stock options, may be too difficult to implement. In Fisher, for example, after holding that a direct transfer was preferable but impossible, the court ordered the direct distribution of profits, apparently out of concern that allowing the wife more choice regarding the exercise of the options would unduly limit the husbands rights. But the husbands rights would surely have been even more limited by a direct transfer, and the court held that such a transfer would be favored, if permitted by the plan. Another possibility is that the court was concerned that equitable ownership would be an administrative burden to the husband, who would be responsible for exercising the wifes stock options when requested to do so. But this burden must be balanced against the benefit of giving the wife control over when her share of the options is exercised. A constructive trust is not really an independent method for dividing stock options, but rather a useful device for facilitating enforcement of either deferred distribution of profits or equitable ownership. By providing that the owning spouse hold certain stock options in trust for the nonowning spouse (under equitable ownership) or for the benefit of both parties (under deferred distribution of profits), an order or agreement imposes upon the owning spouse a familiar set of duties. As a trustee, the owning spouse must use reasonable care to manage the options held in trust, perhaps even using the care that a prudent investor would use with his or her own property. There is also a developed body of law on trustee misconduct which can be invoked in the event that the owning spouse acts negligently or dishonestly. For cases expressly approving a constructive trust, see Jensen v. Jensen, 824 So. 2d 315, 321 (Fla. 1st Dist. Ct. App. 2002), and Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (Ch. Div. 1976). See also Banning v. Banning, 1996 WL 354930 (Ohio Ct. App. 1996) (trust permissible but not required). Constructive trust tends to work best with deferred distribution of profits, where the owning spouse is expected to use his or her best judgment for the benefit of both parties. Under equitable ownership, the owning spouse is required only to follow the nonowning spouses instructions, not to use independent judgment, and it is important to draft any constructive trust language with this limitation in mind. For a good example of language which clearly imposes no duty of independent judgment in making decisions, see Callahan, 142 N.J. Super. at 330-31, 361 A.2d at 564 (He shall exercise her share of the options only at her direction). Where a constructive trust is ordered, the trial court normally retains jurisdiction to supervise its implementation. See Jensen v. Jensen, 824 So. 2d 315, 321 (Fla. 1st Dist. Ct. App. 2002) (The trial court imposed a constructive trust upon appellant to keep half of the options for appellees benefit, expressly reserving jurisdiction to enforce the provisions of the trust). Indeed, continued supervision is generally necessary even where a constructive trust is not expressly ordered: Unreasonable or spiteful spouses are not altogether unknown to trial courts charged with adjudicating the multifarious issues arising under the divorce code. The court of common pleas will have jurisdiction over the equitable distribution of the Fishers marital assets until all of the assets have been distributed we have already determined that the stock options or their value cannot be distributed at the present time. Mrs. Fisher will be able, so long as options acquired during her marriage may yet be exercised, to petition the court if she has evidence that Mr. Fisher has violated 23 Pa.C.S. 3102(a)(6) (policy of effectuating economic justice between parties who are divorced) or otherwise deprived her, under principles of equity, of assets she is entitled to receive. Fisher v. Fisher, 564 Pa. 586, 593-94, 769 A.2d 1165, 1170 (2001). Tax Consequences Regardless of whether the court defers distribution of profits or provides for actual equitable ownership of options, the court must include a separate provision accounting for tax consequences. If the options themselves are not actually transferred, all of the tax consequences will be due to the owning spouse. That spouse is therefore entitled to withhold from any payment to the nonowning spouse the taxes due on the nonowning spouses share of the options. See Fountain v. Fountain, 148 N.C. App. 329, 340, 559 S.E.2d 25, 33 (2002) (court may choose to place conditions on the distribution, i.e. require. non-owner spouse to save owner spouse harmless from any tax liability incurred as a consequence of purchase) In re Marriage of Taraghi, 159 Or. Aplikasi. 480, 494, 977 P.2d 453, 461 (1999) (trial court properly authorized husband to withhold taxes a sale of the stock upon exercise of the options is contemplated and husband will be taxed on the entire capital gain). Immediate offsets of stock options have been very rare in the reported cases. The fundamental problem is that an immediate offset requires a determination of the present value, and the present value of stock options is extraordinarily speculative. Indeed, it is often so speculative that the present value simply cannot be computed. See Jensen v. Jensen, 824 So. 2d 315, 321 (Fla. 1st Dist. Ct. App. 2002) (Both expert witnesses in this case testified that the unvested stock options could be neither valued nor transferred) In re Marriage of Frederick, 218 Ill. App. 3d 533, 541, 578 N.E.2d 612, 619 (1991) (The options could not be valued until such time as they were exercised) In re Marriage of Valence, 147 N.H. 663, 669, 798 A.2d 35, 39 (2002) (Unvested stock options have no present value) Fisher v. Fisher, 564 Pa. 586, 591, 769 A.2d 1165, 1169 (2001) (It is impossible to ascribe a meaningful value to the unvested stock options, primarily because it is absolutely impossible to predict with reliability what any stock will be worth on any future date). If the options are vested and there is a steady and stable market for the stock, it may be possible to reach a present value which both spouses can live with. If neither spouse is willing to accept the risk that future stock prices will not turn out as expected and this is a significant risk in the majority of all fact situations then it is necessary to use some form of deferred distribution. Some courts have avoided the need to predict future stock prices by using the value of the stock at the time of divorce, minus the strike price for the option. See Richardson v. Richardson, 280 Ark. 498, 659 S.W.2d 510 (1983) Wendt v. Wendt, 1998 WL 161165 (Conn. Super. Ct. 1998), judgment affd, 59 Conn. App. 656, 757 A.2d 1225 (2000) Knotts v. Knotts, 693 N.E.2d 962 (Ind. Ct. App. 1998) Fountain v. Fountain, 148 N.C. App. 329, 559 S.E.2d 25 (2002) Banning v. Banning, 1996 WL 354930 (Ohio Ct. App. 1996) Maritato v. Maritato, 275 Wis. 2d 252, 685 N.W.2d 379, 385 (Ct. App. 2004) (option has no value if market value is less than exercise price on date of valuation). The problem with this approach is that it depends too much upon short-term market fluctuations. For example, the same stock options might be worthless when market prices are at a low point (e.g. late 2001) and very valuable when the market is at a high point (e.g. late 1998). The better approach, and the majority rule, is to divide the profit made at the time when the option is exercised, using a coverture fraction to exclude value attributable to postdivorce efforts. One case makes an immediate offset using a valuation computed by an expert using the BlackScholes valuation model. Davidson v. Davidson, 254 Neb. 656, 578 N.W.2d 848 (1998). This model, which is based upon an entire series of factors, produces a better value for stock options than is obtained by subtracting the strike price from the market price on the date of valuation. But the method is not easily applied, and any value reached remains highly speculative. See generally Wendt Chammah v. Chammah, 1997 WL 414404 (Conn. Super. Ct. 1997) (both criticizing the BlackScholes method) see also Fountain (trial court had discretion to reject BlackScholes on the facts, as no specific valuation method is required not criticizing the method itself). A clear majority of the cases use some form of deferred distribution. Federal law clearly does not prohibit divorce-related transfers of stock options. Provisions prohibiting transfer are nevertheless common, because they are conditioned upon optimal tax treatment. But the only federal case to consider the issue, DeNadai, rejected the argument that the tax statutes are antiassignment provisions. ERISAs more express antiassignment and QDRO provisions are not relevant to the issue, as stock option plans are clearly outside ERISA. Nontransferability provisions included in stock option plans for tax reasons are enforceable under state law. But they will be construed very strictly, and they will not bind a divorce court unless their language is very clear. At a minimum, they probably must apply to involuntary transfers, and they might have to mention divorce-related transfers specifically. While it may be possible to force the employer to accept a direct transfer order in individual cases, this should be a remedy of last resort for qualified stock option plans. The IRS has clearly taken the position in Rev. Rul. 2002-22 that any direct transfer destroys the qualified status of the share so transferred, resulting in adverse tax treatment. There is also a clear possibility that the IRS will raise unforeseeable assignment-of-income doctrine arguments in response to direct transfers of unvested options. Until tax law is more settled, the direct transfer of qualified stock options poses significant tax risks. For vested nonqualified options, Rev. Rul. 2002-22 clearly opens the door to transfer without additional adverse side effects. Loss of favorable tax treatment is not an issue in this setting, as there is no such treatment to lose. Where state law permits, the direct transfer of nonqualified vested options may be a useful method of division. Even nonqualified options, however, are still risky to divide by direct transfer when they are unvested. Rev. Rul. 2002-22 clearly falls short of accepting that 1041 overrules the assignment-of-income doctrine in the context of unvested options. Since commentators have generally rejected the Services position on this point, it is hard to know exactly what arguments the Service would make, and there is a risk that individual transfers will become expensive test laboratories for new tax law theories. All of the tax law problems can be avoided to some extent by appropriate hold-harmless provisions in private settlement agreements. The problem is that there is no way to determine in advance the amount at issue (or the amount of attorneys fees necessary to fight the IRS to determine the amount at issue). At the very least, the extent of any award will have to be reduced to reflect the transferors deferred liability, assuming we have even the vaguest notion of what that might amount to. Rosettenstein, supra, 37 Fam. L.Q. at 207. To the great majority of litigants who prefer to avoid income tax quandaries, the clear message is to avoid any direct transfer of qualified stock options incident to divorce. Finally, as Rosettenstein notes, even if direct transfer is permitted and not accompanied by burdensome tax consequences, it should not immediately be assumed that direct transfer is necessarily in the interest of the nonowning spouse. Unlike retirement benefits, stock options generate maximum value only if they are competently managed by the holder. The option must be converted into stock at the right time, and the stock itself must be sold at the right time. In many situations, the employee spouse may have a better ability to identify the right time, so that the nonowning spouse may actually do better to receive only a share of the profits and not actual ownership of the options. Also relevant are the spouses personal tolerances for investment risk, their willingness to adopt tax law positions which might be challenged by the IRS, and the degree to which each trusts the other to manage a jointly held asset for mutual benefit. When all of these factors are considered, direct transfer may not always be the best division method, even in situations in which it is legally permitted. The state court cases generally prefer direct transfer as a division method wherever possible on the facts. Most of the cases find, however, that direct transfer is not permitted by the plan. The method most often used to divide stock options is a deferred distribution of profits. The second most common method is an immediate offset based upon the difference between the market value and the option strike price on the date of valuation. This method is overly simplistic, and tends to reach extreme results when market conditions are unusually high or low. A better method could be reached by relying less upon immediate market conditions, but any attempt to reduce stock options to present value is inherently speculative. Deferred distribution is clearly the better division method. A clear majority of the deferred distribution cases make a distribution of profits rather than awarding equitable ownership. This point makes an interesting contrast with the equally clear tendency to favor direct transfer where that is a feasible option on the facts. Minimizing the burden upon the owning spouse is clearly a very important factor the courts are consistently favoring division methods which limit postdivorce connections between divorcing spouses. The result is to leave the owning spouse with complete control over when the options are exercised, subject only to the general supervisory jurisdiction of the court to avoid clear instances of misconduct. Whether this approach avoids litigation will ultimately depend upon the behavior of owning spouses. If owning spouses abuse the control which the courts are tending to give them, awards of equitable ownership may become more popular. The Need for Reform State court decisions often suggest that direct transfer of stock options should be the primary method of division when such a transfer is legally permitted. No court or commentator in recent years has suggested any federal or state interest which benefits if divorce-related transfers are forbidden, and the consistent trend in federal law over the past two to three decades has been to allow divorce-related transfers. Federal law should be amended to recognize a QDRO-like device for transferring stock options, and to provide that such transfers do not result in the loss of qualified status for income tax purposes. Questions Call 1-877-770-2270Stock Options in Divorce One question that comes up in divorce cases is whether stock options can be divided between the spouses. Jawabannya adalah jika opsi saham diklasifikasikan sebagai properti perkawinan atau komunitas. Mereka bisa dibagi antar pasangan. Apakah Opsi Saham Opsi saham merupakan bentuk kompensasi bagi karyawan. Majikan dapat memberikan opsi saham sebagai kompensasi atas layanan masa lalu, sekarang atau masa depan atau sebagai insentif untuk tetap tinggal di perusahaan. A stock option is the right to accept, under certain conditions and within a specified time period, the employers offer to sell its stock at a predetermined price. Characterization Because a stock option is the right to purchase stock at a designated time in the future, stock options granted during the marriage often cannot be exercised until some time after the divorce. Trennya adalah untuk memperlakukan opsi saham sebagai properti perkawinan atau komunitas terlepas dari kapan hak untuk menjalankan opsi jatuh tempo, asalkan pilihan tersebut diberikan sebagai kompensasi atas layanan yang dilakukan selama perkawinan. Di sebagian besar negara bagian, karakterisasi opsi saham sebagai properti perkawinan atau nonmarital bergantung pada tujuan pemberian opsi dan pada saat akuisisi sehubungan dengan perkawinan. Opsi saham yang diberikan selama perkawinan sebagai kompensasi atas pekerjaan yang dilakukan selama perkawinan umumnya adalah harta perkawinan. Namun, opsi saham yang diberikan saat pernikahan untuk pekerjaan yang akan dilakukan setelah menikah adalah pasangan suami istri memiliki properti terpisah. Di beberapa negara bagian, opsi saham yang diberikan selama pernikahan selalu merupakan barang perkawinan, terlepas dari tujuan pemberiannya. Opsi Saham yang Tidak Terungkap Beberapa opsi saham tidak sesuai dengan layanan yang dilakukan seluruhnya selama perkawinan atau seluruhnya setelah pernikahan. Beberapa negara telah menyimpulkan bahwa opsi ini memiliki komponen perkawinan dan non-perkawinan, dan mereka membagi-bagikannya antara aset perkawinan dan aset non-pernikahan berdasarkan kapan mereka tinggal. Other states have adopted a standard rule that applies to all unvested stock options. Beberapa negara menganggap opsi saham yang tidak dapat dieksekusi pada akhir perkawinan sebagai properti non-perkawinan. Negara bagian lain telah memutuskan bahwa rencana persediaan yang diberikan selama perkawinan sepenuhnya merupakan barang perkawinan. Menilai Opsi Saham yang Tidak Terpercaya Menilai opsi saham yang tidak termanfaatkan sulit karena tidak mungkin memprediksi nilai saham di masa depan. Mahkamah Agung Pennsylvania telah menyarankan tiga pendekatan yang mungkin: Pendekatan distribusi yang ditangguhkan, di mana pengadilan memiliki yurisdiksi untuk mendistribusikan opsi setelah dilakukan Pendekatan pendekatan offset segera, di mana pengadilan menetapkan nilai sekarang untuk opsi tersebut dan mendistribusikannya Nilai sesuai dengan proporsi proporsi masing-masing partys Pendekatan yang baik, di mana pengadilan menentukan pilihan masing-masing sesuai proporsi proporsi masing-masing partitur Bukti Nilai Bukti nilai opsi saham harus diajukan ke pengadilan. Nilai tersebut sering diukur dengan model penetapan harga, yang memperhitungkan harga saham, harga pelaksanaan, tanggal jatuh tempo, tingkat suku bunga yang berlaku, volatilitas saham perusahaan, dan tingkat dividen perusahaan. Metode lain yang dapat diterima untuk menilai opsi adalah metode nilai intrinsik, yang menentukan nilai dengan mengurangkan harga opsi dari nilai wajar pasar saham. Questions for Your Attorney What are stock options Can I be awarded part of the stock options that my spouse acquired during our marriage What happens to stock options that are for services performed both during and after the marriage Talk to a Divorce attorney
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