For those with questions regarding how stock options, restricted stock, and other stock rights are allocated in divorce under Colorado law, look no further than Kristi Anderson Wells’ answer recently-published in “Ask Super Lawyers”.
Stock and equity awards, such as options, restricted stock, restricted stock units, phantom stock, and stock appreciation rights, are a form of deferred compensation known as “executive compensation.” The purpose of executive compensation is to compensate executives, highly compensated directors, and employees: 1) to defer tax liability, and 2) to provide an equity stake or a link to stock performance in the company. This is achieved through various compensation mechanisms, each with unique structures, and can include bonus plans, incentive plans, omnibus stock plans, top hat plans, as well as employment and severance agreements. In Colorado, vested stock rights acquired during the marriage will be marital property subject to division in the divorce. Unvested stock rights are handled differently in Colorado property divisions depending on whether they are options or restricted stock.