In Re Marriage of Micheli, 2014 IL App (2d) 121245 (July 31, 2014)
In this case, the trial court divided all marital assets equally, including vested stock options, but then awarded all unvested stock options and Restricted Stock Units (“RSU”) to the husband.
Restricted Stock Units, like options, are a form of deferred compensation from an employer. The units are awarded to an employee, and when the restriction terminates, the RSUs become common stock. The RSUs yield dividends to the employee before they vest.
The Appellate Court reversed, holding that awarding all unvested options and RSUs to the husband was an abuse of discretion. To explain, trial courts have fairly wide latitude or “discretion” to award marital property equitably to parties in divorce, but there are limits to this discretion.
The Appellate Court reasoned that all unvested options must be apportioned at the time of judgment, just like stock options as set forth in Illinois law at 750 ILCS 5/503(b)(3). It further held that RSUs were analogous to options and therefore also needed to be divided between the parties as well.
The trial court stated “The uncertainty of the values of the unvested stock options and RSUs is not an impediment to an equitable distribution when they become vested.”
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