Anytime a couple decides to split up, there are many different issues that they need to resolve. The spouses must determine how to divide their assets and debts. If one or both of the spouses has a position as a high-level executive, the financial issues can be considerably more complicated. Working with a seasoned legal team who understands the complex nature of executive compensation following a Toronto divorce is essential. An experienced local lawyer from The Riley Divorce & Family Law Firm could help navigate you through the divorce process in search of a resolution that best suits your needs.
When successful executives in Toronto get divorced, they often have more compensation and other financial issues to consider than a typical salary, pension plan, Registered Retirement Savings Plan (RRSP), and health insurance. Many executives also receive additional forms of payment as part of their compensation packages. Some of these forms of compensation, such as stock options, cannot automatically be divided between spouses, like a salary. For instance, some privately held companies do not allow non-employee spouses to hold stock or stock options.
You need to ensure that you work with a well-versed legal team who understands all types of executive compensation in both publicly traded and privately held companies. A dedicated local lawyer could take the time to get to know the precise nature of compensation involved in your particular case by obtaining a copy of the compensation contract, compensation handbook, and employee handbook for either you or your spouse in order to fully understand the issues. If appropriate, the qualified lawyers might also meet with a financial specialist to delve deeper into what aspects of your compensation package qualify as marital assets.
Many Toronto executive compensation packages include stock options, which are typically rights to purchase stock in the company at a beneficial price. These stock options can create problematic issues when an executive and their spouse decide to divorce. While some new executives obtain vested stock in the company as soon as they sign on with a company, many people receive unvested stock options. Some companies elect to use unvested stock options to entice new and valuable executives to stay with the company longer. These stock options can vest at various times in order to give an employee an incentive to continue working with the company.
With unvested stock options, employees need to stay with the company until a certain date when the stock options fully vest. They cannot exercise the option to purchase an interest in the company until the stock has vested. As soon as stock options vest, the executive obtains the right to exercise their options to purchase the stock at an advantageous price. After they purchase the stock, they might be able to immediately sell it or they might have to hold onto it for another preset period.
When an executive decides to pursue a divorce, any unvested stock can represent a large amount of money. If a court determines the unvested stock options represent marital assets, the stock options could be divided equitably between the parties. However, if the stock options are intended to entice an executive to stay with the company long after a divorce, those options might not be part of the marital estate and could remain solely with the employed executive.
A diligent legal team could meet with you to see what serves your interests and help advocate for the valuation that best fits your situation.
Additional compensation methods, such as company stock options often complicate executive compensation following a Toronto divorce. Our seasoned lawyers have successfully represented both executives and their spouses and know how to advocate for both sides.
Call a lawyer from The Riley Divorce & Family Law Firm who could help you fight for what you deserve.
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