CONNECTICUT: Stock options and divorce: A look at UTC chairman George David's divorce action

stocksOriginally published 12/31/08, and 05/02/09
What a sexy topic, huh? Stock options. Who cares about stock options? You know? Why don’t we just have an in-depth conversation about card board or dirt, or something equally thrilling, huh? Well, if you are married to someone who has received stock options as part of a compensation package due to employment, or if you are someone who has received such compensation you may want to think about this issue a little bit. You may hear something that is useful to you.
Let’s try to do it quick and easy. Who can we use as an example? Former CEO of GE Jack Welsh when he divorced Jane Welch? No. Let’s use United Technologies Corporation chairman George David. He is in the throes of a divorce from his beautiful Swedish countess/wife Marie Douglas David and so I think his case is more apropos.
George David is said to be worth in excess of $300 million (admittedly not all that much when you think about guys like Bernie Ecclestone and Henry Silverman are worth billions) and a part of his assets includes these “un-exercised stock options.”  Yum. Yum.
What should his wife Marie Douglas be concerned about with these babies? Well, she needs to know whether the options are vested. If they are vested, then the portion that vested during the marriage is marital property. George was the CEO of United for about fourteen years. He was only married six years. So if the stock options, though un-exercised, vested during that six year period, that portion would be marital property, and the rest of it is off the table.
Marie and her attorneys also have to figure out whether these stock options were incentives for future and continued employment with United Technologies, or whether they were past compensation for work already performed.  If the stock options are compensation for future services, they are not marital property, except for the portion that vested, if any, during the six years of marriage. However, if the stocks were a form of deferred compensation for work completed during the marriage, they are marital property for those six years and she gets a piece.
Did that make any sense? I hope so. It was as simple as I could make it. The New York case that deals with this is the Dejesus v. Dejesus case, 90 NY 2d 643. That case went all the way to the highest court in New York State, the Court of Appeals. The Court of Appeals used a California case, In re Marriage of Hug to make it’s decision.
Okay. That’s all for now on this topic. Here, have a glass of wine. Relax….it’s going to be fine…