Stock Options in Divorce Settlements

Stock options are sometimes offered to employees, which involve a specific price during a specific period of time. A Westlake Village family lawyer wants you to know a few factors to consider with stock options in a divorce settlement.

Stock Options Pricing Example

Here’s an example, provided by a Westlake Village family attorney, of how a stock option may be presented to employees. The company may offer stock in the company at $100 a share and you may purchase up to 100 shares. The offer usually has a time limit for purchase, which could be one year from the date of the offer.

Evaluating the Price

Westlake Village family lawyerA Westlake Village family lawyer suggests doing some research into the actual market price of the stock before deciding if to purchase a stock option. If the actual current market value of the stock is $125, then the employee is does benefit from purchasing the stock option at the company price offered. But if the actual value on the market were $80, then this would not be a wise purchase.

Stock Value Factors

If the employee decided to purchase 100 shares at $100 per share ($10,000) when the actual stock value was $125 a share ($12,500), the value would be $2,500. But a Westlake Village family lawyer will tell you there other influences to be aware of that can affect the value.
Factors such as when the options were received play a factor. In some circumstances, when the options were exercised can also influence value. A Westlake Village family attorney will also attest that formulas have been developed by means of case law by certain jurisdictions to determine the valuation of stock options.

Seek Expert Advise

It cannot be emphasized enough about the importance of obtaining expert advise on stock option valuations to determine if the amount is significant, so a decision can be made on how to include it in the marital estate.
A Westlake Village family lawyer may advise to estimate an amount to include in the settlement, especially if the excised amount is small. It may even be too little to consider for a valuation procedure, depending on the current stock market conditions.
You should also consider if either party can afford to exercise the options as if neither could afford it, the options are of no value to either of you.
Either party could become highly contentious with the divorce and if the stock options do have significant value, obtaining professional advice on the valuation of stock options is highly recommended. To contact a Westlake Village family lawyer about your specific situation, call the office of Gary Mitchell at 888-452-1846 today.

This entry was posted in Family Law. Bookmark the permalink.

Comments are closed.