Those in executive positions often have very demanding and stressful jobs. They may put in well more than 40 hours per week and have responsibility for decisions that can affect other people’s livelihoods. The stress and responsibility of an executive position command much more robust compensation.
Frequently, executive compensation packages do not just include a higher base salary than the salaries commanded by those lower in the company hierarchy. They also include robust benefits packages and an assortment of unique compensation arrangements including stock options, retention bonuses and performance-based pay. Executive compensation packages help incentivize the best job performance possible. Unfortunately, they can also make it far more difficult for spouses to handle property division matters in an Ohio divorce.
How can divorcing couples address executive compensation in accordance with Ohio property division rules?
Determining how much is marital property
Looking at the executive compensation package and the executive’s employment contract are often important early steps when preparing for property division negotiations. Frequently, executive compensation packages impose retention requirements and have different levels of compensation available based on company performance, personal performance and how long the executive retains their position.
Typically, income earned during the marriage is part of the marital estate and subject to division in an Ohio divorce. Spouses may need to establish what portion of the available stock options, retention bonuses and other deferred compensation might be part of the marital estate.
Valuing unpaid compensation
Frequently, executive compensation packages include a stake in the company, such as incentive bonuses offering company stock options. Particularly in scenarios where the organization has not yet had its IPO, valuing what future stock may be worth can be difficult.
Other times, spouses may have to agree on a valuation date even though the executive may not have received the stock yet and the price may change before they become eligible for it. Spouses may find themselves disagreeing quite intensely about how to properly value and divide executive compensation that a worker has not yet received.
Proactively identifying high-value assets that can cause challenges during property division proceedings may help spouses advocate for a reasonable outcome. Executive compensation is one of many complicating factors that can impact divorces involving high-value marital estates.