New York, NY family law attorney Lisa Zeiderman talks about how unvested restrictive stock treated in a divorce. Restricted stock units (RSUs) are a significant consideration during divorce proceedings, particularly regarding their vesting status. An important aspect of RSUs is that they are not always vested, which can complicate matters when a divorce is initiated and unvested restricted stock units are involved.

To navigate this situation, it is essential to determine whether the RSUs are intended as incentives—essentially, designed to retain the employee in their position moving forward—or if they are being granted as bonuses for work already performed during the marriage. In New York, the date of commencement of an action is significant; once a summons is filed, the action commences, provided it is served within 120 days. It is crucial to identify the status of the restricted stock as of the date of commencement, including which units are vested and which are unvested. Additionally, an assessment must be made regarding whether the unvested units serve as bonuses for past work or if they function as forward-looking incentives, similar to golden handcuffs.

If the RSUs are deemed to be incentives, then the Deusu formula—a coverture fraction formula—may be applied. This formula credits the spouse who has worked throughout the marriage, allowing them to receive more credit for their contributions, while the non-working spouse does not lose out entirely but receives considerably less over time. The working spouse’s additional years of service contribute to the vesting of the RSUs.

To accurately assess the situation, it is necessary to review the award documents and grant agreements to determine whether the RSUs are tied to past performance or future performance.