Jun 6, 2019 | Divorce


Some professionals and executives who work in the Rockford area may receive what are called “stock options” from their employers. These options can prove to be a valuable benefit and can be subject to a great deal of controversy in a divorce or legal separation.

As the name implies, a stock option is a legal right for a person, usually a high-ranking employee, to purchase stock in the employer’s company for a set price, which is called the “strike price.” The option is usually good for a range of time.

A person can make money on a stock option by using it to buy valuable corporate stock for a substantial discount. By way of example, let’s say an employee receives a stock option to buy 100 shares of company stock at $100 a piece for a total of $10,000. The stock option offers a great deal if, at the time the employee exercises it, stocks are trading at $200 a share, or $20,000 for 100 shares. On the other hand, the option has little value if stock prices have fallen below $100 over time.

Putting a value on a stock option can be difficult since there are a number of moving parts to the process. Nevertheless, stock options may be considered marital property during the course of a divorce or permanent legal separation.

As such, getting the right dollar value on these assets is crucial, as it can mean the difference between a fair property settlement and someone’s getting the short end of the stick.