STOCK OPTIONS

Question 1

Stock Options Checklist

Answer 1

• Stock Options
  
  • Past Efforts (Hug Formula)
  • Retention Incentive (Nelson Formula)

Question 2

Stock Options

Answer 2

Stock options that are granted and become exercisable during marriage are CP. However, stock options that are granted during marriage but become exercisable after separation are commingled assets. To determine the respective CP and SP shares of the commingled stock options, courts will use either the Hug or Nelson formula.

Question 3

Past Efforts (Hug Formula)

Answer 3

Stock options granted as payment for an employee’s past services are calculated using the Hug formula

CP = (years between date hired and date separated) + [(years between date hired and date options become exercisable) x amount of shares]

SP = amount of shares - CP

Question 4

Retention Incentive (Nelson Formula)

Answer 4

Stock options granted to encourage continued employment are calculated using the Nelson formula.

CP = (years between date options were granted and date of separation) + [(years between date options were granted and date options become exercisable) x amount of shares]

SP = amount of shares - CP