M.G. VS. S.M. (FM-12-0446-15, MIDDLESEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1290-17T1
M.G.,
APPROVED FOR PUBLICATION
Plaintiff-Appellant,
December 26, 2018
v.
APPELLATE DIVISION
S.M.,
Defendant-Respondent.
____________________________
Argued December 5, 2018 – Decided December 26, 2018
Before Judges Alvarez, Reisner, and Mawla.
On appeal from Superior Court of New Jersey,
Chancery Division, Family Part, Middlesex County,
Docket No. FM-12-0446-15.
Dale E. Console argued the cause for appellant.
Gregory S. Baxter argued the cause for respondent
(Caruso & Baxter, PC, attorneys; Gregory S. Baxter,
on the brief).
The opinion of the court was delivered by
MAWLA, J.A.D.
Plaintiff M.G.1 appeals from a provision of a June 16, 2017 amended
final judgment of divorce and an October 10, 2017 order denying relief from
part of that judgment. The issue is whether the portion of restricted stock
transferred to plaintiff by his employer, which vests after the date of the
complaint, is subject to equitable distribution if the vesting is contingent upon
plaintiff's post-complaint employment efforts. The trial judge concluded
defendant S.M. was entitled to fifty percent of all stock awards made before or
near the date of complaint. However, because the judge's decision is contrary
to the evidence and his credibility findings, and mistaken as a matter of law,
we reverse and remand for further proceedings consistent with this opinion.
The following facts are taken from the record. The parties were married
in May 1998. In 2001, plaintiff became employed as a principal consultant for
a large multi-national corporation. Beginning in August 2003, and every
August thereafter until 2010, plaintiff received a stock award from his
employer. According to plaintiff's testimony and a corresponding summary,
the stock awarded would vest in yearly tranches. For example, plaintiff
received 490 shares in 2003. Those shares began to vest at a rate of 174 shares
per year commencing in 2011. A similar vesting schedule was applied to the
1
We use initials to protect the confidentiality of the parties' financial
information.
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subsequent stock transfers, such that the stock awards and the vesting occurred
on a rolling basis.
Plaintiff filed a complaint for divorce on July 28, 2014. By then, he had
been granted eight stock awards. However, only three had fully vested and the
remainder were due to vest post-complaint, beginning on August 31, 2014, and
every August thereafter.
At trial, plaintiff also produced an informational document from his
employer entitled "Overview of Stock Awards," which plaintiff, on
questioning by the trial judge, confirmed contained the employer's policy. In
pertinent part, the document stated as follows:
Stock-based compensation is a key component of our
reward program . . . because it provides an ownership
stake in the company's success for employees who
contribute over the long term. To preserve this core
element of our culture, in July 2003, [we] decided to
grant employees stock awards, which represent the
future right to receive shares of . . . stock when a
vesting requirement is satisfied.
....
At [our company] we believe that employees who
become shareholders maintain a long-term, vested
interest in sustained individual excellence and the
overall success of the company.
....
Each eligible employee's annual stock award grant is
based on his or her impact, level, and country.
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Furthermore, plaintiff testified the stock plan was
the way [the employer] retain[s] their employees and
they want to make sure that you consistently perform
better so if the year that it vests, if you don't perform
well, it gives them reason to let you go and you don't
get those [stocks], so you have to be consistently
performing at a better level to be able to take
advantage of the stocks that they give you.
Following the judge's questioning, plaintiff's attorney asked plaintiff:
"Now with regard to equitable distribution . . . do you acknowledge that some
of those stocks should be distributed to [defendant]?" Plaintiff agreed he
would share the stocks "already vested" with defendant as equitable
distribution. Defendant did not refute any of plaintiff's testimony regarding
the stock plan, the awards he received, the conditions for vesting, or the basis
on which the employer made the awards.
Following the conclusion of the trial, the judge rendered a thirty-nine
page written decision addressing custody and parenting time, equitable
distribution, alimony, child support, and counsel fees. In the section of his
opinion addressing credibility the judge opined:
The [c]ourt finds [p]laintiff to be credible.
After observing him during his testimony, the [c]ourt
determined that he was honest and sincere. His
description of events was logical and supported by the
facts.
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On the other hand, the [c]ourt does not find
[d]efendant credible. Many of her claims were
unsupported by facts or reason.
Regarding plaintiff's restricted stock units, the judge continued:
The restricted stock units ("RSUs") awarded to
[p]laintiff as part of his compensation package vest
over a five-year vesting schedule. As the stocks vest,
they are reflected in [p]laintiff's W-2 for that year.
Plaintiff concedes that [d]efendant is entitled to share
in the [RSUs] that were vested as of the date of filing.
Plaintiff takes the position that the RSUs
awarded on August 31, 2014 are exempt from
equitable distribution based upon the post-[complaint]
status of their receipt. This is incorrect. The 2014
award, not the vesting of that award, created a marital
asset which will vest in five years and whose value is
as of yet uncertain. The 2014 award was made in
recognition of [p]laintiff's past job performance. Said
past performance was during the marriage, making the
units subject to equitable distribution. In Pascale v.
Pascale, [140 N.J. 583 (1995),] the Court found that
stock options awarded after the marriage has
terminated, but obtained as a result of efforts
expended during the marriage should be subject to
equitable distribution. ([See also] Reinbold v.
Reinbold, 311 N.J. Super. 460 (App. Div. 1998)
noting that portions of a retirement incentive package
offered after the divorce were based upon pre-
complaint efforts and subject to equitable
distribution.)
In the within matter, the [c]ourt finds that the
RSUs awarded to [p]laintiff up to and including the
August 2014 award are the result of pre-filing, marital
efforts, and are thus subject to equitable distribution.
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Accordingly, the judge imposed a constructive trust to facilitate distribution of
the unvested stock to defendant.
After entry of the divorce, plaintiff filed a motion seeking various forms
of relief, including modification of the judgment pursuant to Rule 4:50-1, as it
pertained to the restricted stock. In the certification accompanying the motion,
plaintiff stated:
Additionally, I believe the [c]ourt erred and there is a
mistake with regard to my stock options. The [c]ourt
analyzed my . . . stock . . . [in its] decision and cited
[Pascale] . . . specifically finding that RSUs award[ed]
to plaintiff up to and including the August 2014 award
are the result of pre-[complaint] marital efforts and
thus subject to equitable distribution. I enclose . . .
literature from . . . my employer[] regarding options.
The information provided . . . clearly indicates that the
"awardees's rights in the [stock awards] shall be
affected, with regard to both vesting schedule and
termination, by leaves of absence, changes in the
number of hours worked, partial disability, and other
changes in awardee's employment status as provided
in the company's current policies for these matters."
Clearly, [the] stock[s] were performance options and a
reward for staying with my employer and a reward for
future performance. As such, . . . defendant should
not share in these options that have not vested as of
the date of filing.
The document plaintiff referenced in his certification was his employer's
stock award agreement pursuant to its stock plan. In addition to the language
plaintiff quoted from the document, it also provides as follows:
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2. Vesting Schedule and Conversion of [Stock
Awards].
(a) Subject to the terms of this Award Agreement and
the Plan and provided that Awardee remains
continuously employed through the vesting dates set
out below, the [stock awards] shall vest and be
converted into an equivalent number of Common
Shares as set out below[.]
[Emphasis added.]
Notably, the employer's cover letter enclosing stock plan documents stated:
"We look forward to you making a positive impact on [the company's] future
success and sharing in that success as a shareholder in our Company."
The judge denied plaintiff's motion, concluding that:
A presumption exists that stock awards result from
joint, marital efforts and are thus subject to equitable
distribution. Pascale v. Pascale[.] . . . Plaintiff's
literature from [his employer] going over the general
details of the stock plan fails to overcome this
presumption that it was received through spousal
efforts.
This appeal followed.
I.
We defer to a trial judge's factfinding "when supported by adequate,
substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)
(citing Rova Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J 474, 484 (1974)).
"We do not weigh the evidence, assess the credibility of witnesses, or make
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conclusions about the evidence." Mountain Hill, LLC v. Twp. of Middletown,
399 N.J. Super. 486, 498 (App. Div. 2008) (quoting State v. Barone, 147 N.J.
599, 615 (1997)). We also recognize the Family Part has "special jurisdiction
and expertise in family matters," which often requires the exercise of reasoned
discretion. Cesare, 154 N.J. at 413. Thus, if we conclude there is satisfactory
evidentiary support for the Family Part judge's findings, our "task is complete
and [we] should not disturb the result." Beck v. Beck, 86 N.J. 480, 496 (1981)
(quoting State v. Johnson, 42 N.J. 146, 161-62 (1964)).
Although our "[d]eference is especially appropriate 'when the evidence
is largely testimonial and involves questions of credibility[,]'" Cesare, 154 N.J.
at 412 (quoting In re Return of Weapons to J.W.D., 149 N.J. 108, 117 (1997)),
"[r]eversal is warranted when the trial court's factual findings are 'so
manifestly unsupported by or inconsistent with the competent, relevant and
reasonably credible evidence as to offend the interests of justice.'" Slutsky v.
Slutsky, 451 N.J. Super. 332, 344 (App. Div. 2017) (quoting Rova Farms, 65
N.J. at 484). Furthermore, "legal conclusions, and the application of those
conclusions to the facts, are subject to our plenary review." Reese v. Weis,
430 N.J. Super. 552, 568 (App. Div. 2013).
"A Family Part judge has broad discretion . . . in allocating assets
subject to equitable distribution." Clark v. Clark, 429 N.J. Super. 61, 71 (App.
A-1290-17T1
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Div. 2012). However, we reverse if a judge's "findings were mistaken[,] or . . .
the determination could not reasonably have been reached on sufficient
credible evidence present in the record[,]" or "failed to consider all of the
controlling legal principles." Gonzalez-Posse v. Ricciardulli, 410 N.J. Super.
340, 354 (App. Div. 2009); see also Wadlow v. Wadlow, 200 N.J. Super. 372,
382 (App. Div. 1985) (reversal is required when the results could not
"reasonably have been reached by the trial judge on the evidence, or whether it
is clearly unfair or unjustly distorted by a misconception of law or findings of
fact that are contrary to the evidence" (quoting Perkins v. Perkins, 159 N.J.
Super. 243, 247 (App. Div. 1978))).
II.
"[T]he goal of equitable distribution . . . is to effect a fair and just
division of marital [property]." Steneken v. Steneken, 183 N.J. 290, 299
(2005) (alterations in original) (Steneken v. Steneken, 367 N.J. Super. 427,
434 (App. Div. 2004)). After a trial judge identifies the marital assets and
determines the value of each asset, the judge must decide "how such allocation
can most equitably be made." Rothman v. Rothman, 65 N.J. 219, 232 (1974).
This demands more than simply "mechanical division[,]" it requires a
"weighing of the many considerations and circumstances . . . presented in each
case." Stout v. Stout, 155 N.J. Super. 196, 205 (App. Div. 1977), overruled on
A-1290-17T1
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other grounds by Peterson v. Peterson, 85 N.J. 638, 643, n.2 (1981). This is
because equitable distribution "reflects a public policy that is 'at least in part
an acknowledgment that marriage is a shared enterprise, a joint undertaking,
that in many ways [] is akin to a partnership.'" Thieme v. Aucoin-Thieme, 227
N.J. 269, 284 (2016) (quoting Smith v. Smith, 72 N.J. 350, 361 (1977)
(quoting Rothman, 65 N.J. at 229)).
However, an equitable distribution does not presume an equal
distribution. See Rothman, 65 N.J. at 232 n.6. Rather, N.J.S.A. 2A:34-23.1,
requires an equitable distribution be "designed to advance the policy of
promoting equity and fair dealing between divorcing spouses." Barr v. Barr,
418 N.J. Super. 18, 45 (App. Div. 2011). This policy is best implemented by
evaluating the facts and evidence associated with each asset.
On appeal, plaintiff argues the trial judge erred because he ignored the
evidence and testimony that post-complaint efforts were required in order for
the stock to vest. Plaintiff argues the judge's reliance on Pascale is unavailing
because that case addressed whether stock acquired after the date of complaint,
as a result of services during the marriage, was subject to equitable
distribution. Plaintiff asserts Pascale did not address a scenario where vesting
was subject to a contingency, namely, a party's post-complaint employment
efforts. Plaintiff points to case law from other jurisdictions which have
A-1290-17T1
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established a multi-factor analysis to address the issue raised here, and
additionally urges us to adopt a coverture fraction methodology for the
equitable distribution of stock pursuant to Marx v. Marx, 265 N.J. Super. 418(Ch. Div. 1993).
III.
Increasingly, executive compensation has been achieved through means
other than salary and retirement assets. Indeed, "[m]any companies favor
stock-based compensation plans to entice, retain, motivate, and attract their
employees." Donna Pironti & Mitchell Benson, Performance Awards Through
Employee Stock Compensation Plans: Tax and Divorce Issues, A.B.A. Sec. of
Fam. L.: Fam. Advoc., Fall 2018, at 17. Generally,
[s]tock grants are an employee retention mechanism,
as they contain vesting features that are triggered
during a period set by the employer. The vesting date,
the date on which the employee has the right to
receive stock . . . is often based on the employee's
longevity and/or specific performance. An employee
may receive annual grants only a portion of which vest
(and are then available for sale) when the employee
achieves certain goals. Stock grants have more value
to an employee because their outflow (cost) is equal to
the tax on the value of the stock.
[Ibid.]
In Pascale, the Supreme Court considered the equitable distribution of a
spouse's stock options received throughout and after the marriage. 140 N.J. at
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607. Specifically, the Court addressed whether a portion of the options
awarded ten days after the date of complaint were subject to equitable
distribution. Ibid. The trial court determined the options received after the
date of complaint were not subject to equitable distribution. Id. at 608. On
appeal, we concluded one of the two awards nearest the date of complaint
warranted inclusion in equitable distribution. Ibid.
The Supreme Court stated, where equitable distribution is sought of
assets received after the date of complaint
[t]he focus thus becomes whether the nature of the
asset is one that is the result of efforts put forth
"during the marriage" by the spouses jointly, making it
subject to equitable distribution.
To refute such a presumption, the party seeking
exclusion of the asset must bear "'the burden of
establishing such immunity [from equitable
distribution] as to any particular asset.'"
[Id. at 609 (alteration in original) (quoting Landwehr
v. Landwehr, 111 N.J. 491, 504 (1988)).]
The Court concluded
stock options awarded after the marriage has
terminated but obtained as a result of efforts expended
during the marriage should be subject to equitable
distribution. The inequity that would result from
applying inflexibly the date of complaint rule is
obvious. [One spouse] would be denied the benefit of
stock options that were earned by [the other spouse]
during the marriage, but were not awarded to her until
slightly after the marriage terminated. Serious
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mischief could arise under such a hard-and-fast rule.
For example, a spouse considering divorce might file
her complaint just before she expects to receive a
large bonus or commission, simply to deny her spouse
the benefit of that asset when the court determines the
value of the marital estate.
[Id. at 610.]
The considerations in this case differ from those in Pascale, and the trial
judge's exclusive reliance on its holding did not address them. Here, the
analytical framework is not when the stock was received, but rather, the efforts
required for it to vest.
Plaintiff's unrefuted testimony was clear that post-complaint efforts were
necessary to cause the stock, which had not vested as of the date of complaint,
to become payable. The plan documents and literature adduced in evidence at
trial, and attached to plaintiff's post-judgment motion, stated vesting would
occur dependent upon plaintiff's post-complaint performance. We reject
defendant's argument that "performance" in this case required plaintiff merely
to continue living and go to work. Nothing in the record supports this
assertion. Indeed, all of the objective evidence in the record demonstrates
much more was required of plaintiff as a high-level corporate employee in a
highly competitive industry.
As we noted, plaintiff's employer described the stock plan as a "reward
program . . . because it provides an ownership stake in the company's success
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for employees who contribute over the long term." Company literature
explained the stock grants were to "maintain a long-term, vested interest in
sustained individual excellence and the overall success of the company." This
language does not suggest the stock would vest through mere continued
employment without consideration of plaintiff's level of proficiency. Nor does
this language suggest the stock awards were for work already performed.
The company plan documentation, and other literature in the record, was
consistent with plaintiff's testimony. Plaintiff explained the purpose of the
stock award was to retain him and assure he "consistently perform[ed] at a
better level." As plaintiff noted, "if you don't perform well, it gives them
reason to let you go and you don't get those [stocks.]"
The trial judge misapplied his discretion because in the absence of any
evidence or testimony to the contrary, he concluded the stock was earned for
work performed during the marriage. The judge's findings were unsupported
by the evidence and inconsistent with his own credibility findings. As we
noted, the judge found plaintiff's testimony entirely credible, and reached the
opposite conclusion regarding defendant. Our review of the record confirms
the judge was required to reach a different result regarding the unvested stock
awards in existence as of the date of complaint.
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Turning now to the mechanics of distribution, at oral argument and in
his brief, plaintiff suggests we follow a coverture fraction analysis, or
alternatively, consider applying the concept of "marital momentum" to address
the equitable distribution of the unvested stock awards. The concept of
"[m]omentum of the marriage" recognizes the
reality that in many instances, one's occupational
efforts often start off by yielding small and modest
level earnings. However, these efforts may serve as a
strong springboard into higher future earnings.
Through continuing education, experience, and
perseverance, it is fairly common for the fruits of
one's occupational labors to ripen well after the seeds
are planted.
[Dudas v. Dudas, 423 N.J. Super. 69, 78 (Ch. Div.
2011).]
In the context of restricted stock units, it has been suggested "[t]he coverture
fraction allocates the award as marital and nonmarital based on the vesting
schedule, with the numerator being the time period from the date the award
was granted to the cutoff date and the denominator being the period from the
date of grant to the vesting date." Sandra R. Klevan, Beyond Salary and
Bonus: The Where, What, and How of Complex Executive Compensation from
a Divorce Perspective, A.B.A. Sec. of Fam. L.: Fam. Advoc., Fall 2018, at 12,
15.
We find neither method appropriate to determine whether the unvested
portion of the stock award is attributable to the marriage. In instances where
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an asset has been granted after the date of complaint, these principles are of
little help because they presume a marital component attributable to the asset
in question.
Indeed, in Thieme, a spouse who was employed for a closely held
company received a "closing bonus" when the company was sold after the
parties had been divorced. 227 N.J. at 272-73. The parties were married for
fourteen months, but had cohabitated prior to the marriage for eight years. Id.
at 272. Following the divorce, Aucoin-Thieme filed a motion seeking a share
of the closing bonus, and following a trial, she was awarded a portion of the
bonus attributable to Thieme's work during the marriage. Id. at 273. The trial
judge applied a coverture-like formula to determine Aucoin-Thieme's share as
follows:
[T]he trial court allocated the $2,250,000 [c]losing
[b]onus. It concluded that in the course of his
employment, Thieme earned the [c]losing [b]onus at a
rate of $14,423 per month. Multiplying that amount
by a factor of fourteen, the court ruled that during the
parties' marriage, Thieme earned deferred
compensation in the amount of $201,923. The trial
court then determined that Thieme's net income from
the allocated portion of his [b]onus, after the
deduction of taxes, was $100,961. It subjected that
amount to equitable distribution under N.J.S.A.
2A:34-23.1, awarding thirty percent of that amount, or
$30,288, to Aucoin-Thieme.
[Id. at 281.]
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Aucoin-Thieme appealed arguing the trial court had erred by limiting the
amount subject to equitable distribution to the work performed by Thieme
during the marriage. Id. at 282. The Supreme Court found the trial court had
correctly determined that the portion of the bonus for work performed prior to
the marriage was not subject to equitable distribution. Id. at 287. However,
the Court concluded equitable principles required Aucoin-Thieme receive a
greater portion of the bonus, whose payment was deferred until after the
divorce because
the prospect that Thieme would be generously
compensated was a significant factor in the parties'
personal and financial planning from the early stages
of their relationship. Thieme and Aucoin-Thieme
each relied on the expectation of deferred
compensation if [the company Thieme worked for]
were sold as they made important decisions for
themselves and their family.
[Id. at 290.]
The Court held
As a remedy, a percentage of the portion of the
[c]losing [b]onus that Thieme earned during the period
in which the parties cohabited prior to their marriage
should be deemed to be held by Thieme in
constructive trust for Aucoin-Thieme. We make no
determination as to the precise time period for which
the [c]losing [b]onus should be shared by the parties,
[or] the percentage of the [c]losing [b]onus that should
be allocated to Aucoin-Thieme to avoid unjust
enrichment[.]
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[Id. at 293.]
Thus, Thieme makes it clear the court can reach beyond the parameters
of the marriage and consider work performed outside of the marriage to
effectuate an equitable distribution. Use of a coverture formula is ill-suited to
make an equitable distribution in such a situation. Moreover, in this case, and
unlike Thieme, there is no evidence in the record to support the conclusion the
parties expected or relied upon the stock awards as a means of making future
financial plans for the family. Plaintiff was still required to work and perform
at a high level to obtain vesting. In this regard, his receipt of awards following
the complaint date would not constitute an unjust enrichment. For the same
reasons, a consideration of the marital momentum is also inapplicable.
Notwithstanding, plaintiff points to decisional law from other non -
community property jurisdictions, namely, Baccanti v. Morton, 752 N.E.2d
718 (Mass. 2001), which we find offers a more precise and nuanced approach
to the issue. In Baccanti, one spouse was employed as a manager in a
company and had been granted stock options, which had not vested. Id. at
722, 725. The trial judge awarded the supported spouse one-half of the
options. Id. at 722, 725. On appeal, the employee spouse argued the options
were not subject to equitable distribution because they would not vest until
after the divorce. Id. at 725. Alternatively, he argued that only the "options
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attributable to efforts he expended during the marriage should be subject to
division." Ibid.
After canvassing decisional law from other jurisdictions, the Supreme
Judicial Court of Massachusetts noted
[m]ost courts . . . have held that stock options are
marital property only to the extent that they reflect
efforts expended during the marriage. . . .
....
As a general matter, we agree with the majority
of State courts that have considered this issue. Their
approach focuses on the parties' respective
contributions in acquiring the asset, rather than on the
date that the options were granted.
[Id. at 727, 728 (citations omitted).]
The Baccanti court added:
there may be circumstances, such as a long-term
marriage in which both parties have contributed to the
"partnership" and the options are exercisable soon
after the divorce, where the judge finds that stock
options should be deemed wholly marital property
even though the options were given for services to be
performed in part after dissolution of the marriage. In
these cases, the judge must determine the extent of
each spouse's contribution to the asset.
[Id. at 728-29 (citing Pascale 140 N.J. at 610.)]
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The court then set forth a specific, multi-part approach for trial courts to
follow in determining whether and to what extent stock options should be
included in the marital estate:
[T]he judge must determine if the options were
given for efforts expended before, during, or after the
marriage. This requires a finding as to the reason (or
reasons) for which the options were given (i.e., for
past, present, or future services). In making such a
finding, the judge may look to the employee's stock
option plan, testimony from the employee or a
representative of the employer, or testimony from an
expert witness, if any such evidence is offered. . . .
The judge also may consider any other relevant factors
or circumstances surrounding the grant, including
whether the options were "intended to (1) secure
optimal tax treatment, (2) induce the employee to
accept employment, (3) induce the employee to
remain with the employer, (4) induce the employee to
leave his or her employment, (5) reward the employee
for completing a specific project or attaining a
particular goal, [or] (6) be granted on a regular or
irregular basis." . . .
The party challenging the inclusion of the
options in the marital estate (presumably, the
employee who was given the options) has the burden
of proving that the options were given for future
services to be performed after dissolution of the
marriage. In addition, this party has the burden of
establishing that the non-employee spouse did not
contribute to the employee spouse's ability to acquire
the options at issue and, for that reason, the value of
the options either in whole or in part should not be
considered part of the marital estate. . . .
If the party with the burden of proof establishes
that the options were given in whole or in part for
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future services to be performed after dissolution of the
marriage, and the judge determines that equity
requires that the options be apportioned, the judge
must calculate the portion of the options that properly
may be included in the marital estate. 2
[Id. at 729-30 (alteration in original) (citations
omitted).]
We adopt the rubric suggested in Baccanti, with slight modifications and
hold as follows:
(1) Where a stock award has been made during the marriage and vests
prior to the date of complaint it is subject to equitable distribution;
(2) Where an award is made during the marriage for work performed
during the marriage, but becomes vested after the date of complaint, it too is
subject to equitable distribution; and
(3) Where the award is made during the marriage, but vests following
the date of complaint, there is a rebuttable presumption the award is subject to
equitable distribution unless there is a material dispute of fact regarding
2
As to the calculation to be performed by the trial judge, the court noted the
majority of jurisdictions "apply some variation of a 'time rule' . . . whereby
unvested options are apportioned based on the time that the employee both
owned the options and was married and the time from issuance of the options
to vesting." Id. at 730. However, citing the broad discretion possessed by its
family court judges, the court found "that one formula will not necessarily
work in every case" and declined to adopt the time rule as the exclusive means
of dividing the asset. Id. at 731. For reasons we have already expressed, and
because Family Part judges have broad discretion pursuant to N.J.S.A. 2A:34-
23.1, we decline to adopt a formulaic approach as well.
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whether the stock, either in whole or in part, is for future performance. The
party seeking to exclude such assets from equitable distribution on such
grounds bears the burden to prove the stock award was made for services
performed outside of the marriage. That party must adduce objective evidence
to prove the employer intended the stock to vest for future services and not as
a form of deferred compensation attributable to the award date. Such objective
evidence should include, but is not limited to, the following: testimony from
the employed spouse; testimony of the employer's representative; the stock
plan; any employer correspondence to the employed spouse regarding the
award; and the employed spouse's stock plan statements from commencement
of the award and nearest the date of complaint, along with the vesting
schedule.
Had the trial judge applied these principles to the evidence before him,
plaintiff would, for example, have handily rebutted the presumption the
August 31, 2014 award was entirely subject to equitable distribution. Indeed,
plaintiff's testimony, the stock plan award correspondence, award and vesting
schedules, and the stock plan itself, strongly suggest the unvested awards were
either in whole or in part unattributed to the marriage. Thus, to that extent, the
stocks would not be subject to equitable distribution. We recognize there was
little guidance for the trial judge on this matter. Nor did the parties have the
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benefit of this opinion in presenting their arguments to the trial court. For
these reasons we reach no final conclusion and remand to the judge for further
proceedings and to make further findings pursuant to N.J.S.A. 2A:34-23.1 and
the factors discussed above.
Reversed and remanded. We do not retain jurisdiction.
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