Stock Options And Divorce

While stock options aren’t new, they definitely are more “in vogue” among employers to hire the best employees and then to keep them for a period of time until the options become vested (and redeemable). Of course, companies hope that employees will work for them because they enjoy what they’re doing, and that they’re in it for the long term, but it doesn’t always work that way.

Stock options can keep employees in jobs they’d otherwise dump as they wait for the vesting date to roll around. If that’s the case, is it possible they would also keep a spouse in a marriage longer than they’d stay otherwise?

Consider this: stock options are your or your spouse’s right to buy stock in the company that has granted the options. You or your spouse don’t have to buy the stock. They can be allowed to expire. Or, you or your spouse may do something to lose the options, such as change jobs or get fired. There is a lot of fine print tied in with stock options so don’t take my word for how your stock options work. Read the fine print and/or talk with your accountant or a financial expert.

There’s the potential to make a lot of money by investing in the right stocks. Exercising stock options means that you get to buy the company’s stock at the price the option was granted and not at the price it is selling for when you exercise your right to buy the stock. For some people that brings them instant wealth, buying shares of stock for a fraction of their current selling prices. You can see how this could impact a divorce settlement.

But what about the spouse who doesn’t want to keep working for their current employer just so that their options will become vested and make them AND their ex rich? Some people will do just about anything to keep their ex from getting any marital assets.

And what about the spouse who decides to stay in a miserable marriage with an eye toward bailing out when their spouse’s vested options turn into major marital assets? After all, isn’t it easier to survive a few more years of misery when there’s a big payout at the end? Employees in deadend jobs do that all the time, why would marriage be any different?

It adds some new wrinkles, doesn’t it?