Fairly dividing marital assets in a divorce can be challenging, especially if those assets include executive compensation. When it comes to dividing marital assets, a proper valuation is the key to an equitable property distribution. But valuing executive compensation can be difficult to do on your own given its complex nature. To better understand how to divide executive compensation, let’s take a look at what it is and what must happen before it can be divided.
What Is Executive Compensation?
Executive compensation is financial and non-financial compensation companies typically give to executives as part of their compensation package. Typically, executive compensation comes in the form of various stock and equity awards given as an incentive for future performance. Companies often use executive compensation to incentivize executives to act in the best interests of stakeholders because they have a stake in the company’s performance, too.
How to Divide Executive Compensation
To divide executive compensation, you have to first determine what is separate property and what is marital property. Executive compensation that is awarded and vested during the marriage is marital property and must be divided. For example, non-qualified stock options vested during the marriage can be valued and divided as marital property.
Compensation awarded but not vested during the marriage could be considered separate property and thus not subject to division. If awarded and not vested, you must determine whether it is for past performance or an incentive for future performance. It is possible for an employee to never receive incentive compensation due to poor performance, so this is often excluded from the marital division.
Once you identify the compensation that is marital property, you must accurately assess its value. A financial advisor, preferably one who has experience with divorce asset divisions, can employ a variety of valuation methods to do so. But, in general, this part of asset division can be very fact-specific. Each executive compensation plan is different and subject to different policies and vesting schedules as set forth by the employer. Furthermore, a financial advisor can generally spot asset-hiding strategies, such as voluntarily deferring compensation, and challenge them in court.
Speak with an experienced New Jersey divorce attorney if you have a complex asset division. Dividing complex assets, such as executive compensation, takes careful evaluation and attention to detail. Working with a seasoned New Jersey divorce attorney is the best way to ensure you receive your fair share of the marital assets.
Do you need the help of a New Jersey divorce attorney? If so, Williams Law Group, LLC can help you protect your right to a fair share of the marital assets. Located in Short Hills, New Jersey, Williams Law Group, LLC provides compassionate and dedicated legal services to Union, Bergen, Essex, Hudson, Morris, Monmouth, and Middlesex counties, and the surrounding areas. Our knowledgeable attorneys handle divorce and family law, child custody, and child abuse/neglect cases. Call our office at (908) 738-8366, email us at email@example.com, or contact us through our confidential online form to schedule a consultation and ultimately get connected with an experienced New Jersey divorce and child custody attorney.