Orlando executives can earn a lot of money in employee stock options. These options, technically speaking, don’t have any value until they’re executed and converted into stock. In some cases, they could even have negative value if the options have yet to vest or if they’re underwater and not “in the money.”
Essentially, when you own stock options, you will have the right to purchase company stock at a specific price and at a specific date in the future. When the options have “vested,” you have the right — and not the obligation — to exercise the options and put money forward to buy the stock. Until the options become vested and you have exercised them, they don’t have an actual value. That said, they may hold the promise of some future value depending on the performance of your company.
As you can probably expect, dividing stock options in a divorce is tricky — especially when they’re not vested options, and it’s not known what their value will be once they can be exercised. Different theories might be used to try and estimate the value of stock options for asset division purposes. If you’re faced with this kind of challenge, you may need to hire an expert accountant who can perform various calculations to determine the theoretical value of your options. Vested, in-the-money stock options are easier to evaluate because the current price of the stock is known.
Spouses who need to divide unvested stock options in their divorces may want to talk about it with an experienced divorce lawyer. At Mercedes R. Wechsler, PA, we regularly help divorcing executives navigate their complex asset division challenges including the division of unvested stock options during a divorce.