“Stock” has more than a dozen meanings in the Merriam-Webster dictionary, but the second meaning — “the proprietorship element in a corporation usually divided into shares and represented by transferable certificates” — matters most here. Your Virginia divorce can quickly descend into acrimony, recrimination, and vindictiveness. Nothing, however, derails a property settlement agreement like dividing assets that include restricted stock units (RSUs) and stock options.

Stock awards are not like cars, homes, or bank accounts that can be easily appraised and divided. They are complex, contingent on employment, vesting schedules, and tax consequences. For Virginia men, understanding how RSUs and stock options fit into equitable distribution is critical to protecting your financial future.

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Understanding Stock Options and RSUs in Virginia Divorce

Dividing stock awards requires first understanding what they are. Many divorcing spouses struggle with financial jargon, so let’s break it down.

  • Stock Options — These give an employee the right, but not obligation, to buy a stock at a set “strike price” on or before a set date. They can become valuable if the market price rises above the strike price, but worthless if the market price drops.
  • Restricted Stock Units (RSUs) — RSUs are company promises to issue stock to an employee in the future, contingent on employment or performance milestones. They vest over time, meaning you must stay employed or meet conditions before you actually own the shares.
  • Common Stock — The basic form of ownership, available to anyone through the stock market.
  • Preferred Stock — Shares with higher priority for dividends and liquidation rights.

Together, these fall under stock awards, a broad category of executive compensation tools used to reward and retain talent. They complicate divorce because their value isn’t always immediate or clear.

Who Typically Receives Stock Options and RSUs?

Stock awards are most often part of executive or professional-level compensation packages. They are designed to align employee performance with company performance.

  • Executives and managers — RSUs and stock options are typically awarded at higher ranks.
  • Rank-and-file employees — May occasionally access stock purchase plans (ESPPs), but usually not RSUs or options.

RSUs have become more common than options, since they reduce risks of insider trading and “pump and dump” sales. After scandals like Enron and WorldCom, companies shifted toward RSUs as safer incentives.

If you have RSUs or stock options, chances are you are or were in a higher-level role. In a Virginia divorce, these assets are subject to equitable distribution, meaning the court must fairly, though not necessarily equally, divide them.

Marital Property vs. Separate Property in Virginia

The classification of stock awards is guided by Virginia Code § 20-107.3.

  • Marital property — Property acquired during the marriage, including stock awards vested or earned during the marriage.
  • Separate property — Assets acquired before the marriage, through inheritance, gift, or as exchange for separate property.

Why this matters: stock options and RSUs may be granted before marriage but vest during marriage. Courts typically classify vested portions during marriage as marital property. Even if you cash out later, the fact they vested during marriage ties them to the marital estate.

Courts also weigh nonmonetary contributions, such as raising children or homemaking, when dividing property. That means your spouse may be entitled to a share of your stock awards even if she never worked for them directly.

Key Virginia Court Cases on Stock Awards

Virginia courts have wrestled with stock award classification for decades. Here are four important cases:

  • Dietz v. Dietz (1993) — Stock options granted before marriage but vesting before and after separation were partly marital property. The court ruled the marital share was subject to division once exercised.
  • Ranney v. Ranney (2005) — Options granted one month before marriage but vesting almost entirely during marriage were marital property because continued employment occurred during the marriage.
  • Shiembob v. Shiembob (2009) — RSUs granted during marriage but vesting after separation were separate property because the husband’s employment continued post-separation.
  • Schuman v. Schuman (2011) — Virginia Supreme Court clarified stock awards are a form of deferred compensation. The Court of Appeals erred in tying classification solely to vesting dates.

These cases show that vesting schedules, employment conditions, and timing all affect whether stock awards are divided.

The Coverture Fraction and Division of Stock Awards

Enter the coverture fraction, a legal formula used to divide deferred compensation fairly.

  • Numerator — The time (days) the employee worked during marriage.
  • Denominator — The total employment time until the award vests or the employee retires.

Example: A husband works 5,000 days, with 2,500 during marriage. His wife’s equitable share of marital stock awards is 50%.

But stock awards complicate things further:

  • Some vest before marriage, some during, some after.
  • Attorneys may calculate separate fractions for each award.
  • Others may lump all awards together.

The law is unsettled, and outcomes depend on judicial discretion, making a strong legal strategy critical.

Crafting a Property Settlement Agreement

Dividing stock awards is not a do-it-yourself project. An effective settlement agreement should:

  • List each award separately — Include grant date, vesting schedule, and current status.
  • Classify marital vs. separate portions — Based on grant and vesting dates.
  • Account for taxes — RSUs are taxed at vesting, options at exercise, creating hidden liabilities.
  • Plan for future events — Awards vesting post-divorce may still be partly marital.

Professionals who may be necessary:

  • CPAs to calculate tax consequences.
  • Forensic accountants to trace stock origins.
  • Tax attorneys for long-term planning.

Rushing this process risks losing significant wealth or creating grounds for appeal.

Why Men Need Experienced Divorce Attorneys in Virginia

Stock awards are not simple assets. They carry unique rules, risks, and financial consequences. For Virginia men, the stakes are high: your executive compensation could form the largest part of your marital estate.

At The Firm For Men, we:

  • Stay updated on the latest Virginia rulings.
  • Fight to protect separate property classifications.

Call our Virginia Beach office today at (757) 383-9184 to schedule a consultation with our top Virginia law attorneys and protect your future.