Employee Stock Option Plan in a divorce settlement

[Guest fancynancy]

I am new here but have read dozens of posts and realize that you guys are really knowledgeable and generous with your help. And I really need help. (I posted first on ESOP thread, but have moved to this Misc. Benefits thread because my question is about Employee Stock OPTIONS, not Employee Stock Ownership.)

I went through a nasty divorce, and 4 years later am still trying to finish the settlement. My Ex works for a huge publicly traded global company. Ex and the Plan Administrator have been friends for over 20 years. I cannot get a full and straight answer from the PA as to what my choices are to get my 50% (awarded by the court) of the employee stock options in the account. Every time I try, the PA contacts my Ex and then feeds me Ex's version of what he wants me to know. I finally went back to court and got a Court Order for Ex to authorize the company to give me the full information, but it is still being filtered by the PA.

I did finally get to see the account statements and have learned (after the Court Order) that in these 4 years, Ex has exercised and sold some of the stock. This situation of some sold shares and some unexercised Options probably has complicated the decisions on how to divide the account assets.

The only condition in the divorce decree is that the asset is to be settled in a way to cause the least tax liability to each of us. He is in a very high tax bracket and has to consider AMT. I am on SS and in such a low bracket that I owed no taxes the last 3 years.

How can I learn if the employer's Plan allows for Options to be transferred to me (and exercised at my own tax level) or what other choices I have in this asset division?

Thank you for any and all help.

[My 2 cents]

Not a lawyer here, but wouldn't the plan administrator have a fiduciary obligation to you that must transcend any personal or professional relationship being maintained with Ex? If the plan administrator is exercising favoritism against you and in favor of Ex, would it not be possible for you to seek compensation from the plan administrator personally for failing to satisfy the fiduciary obligations? Any lawyers out there?

[Guest fancynancy]

Ex is the employee of the company, I would be the alternate payee. I only expect the company to follow the rules of the Plan and the IRS, but I am still trying to figure out what those rules are. My court order directs Ex to authorize fully all access to all information about this asset including the contracts and policies that relate to it. Then perhaps I would know all of my choices for settlement and what is fair.

The settlement is not large enough to pursue more "legal" remedies to resolve it but is too large to ignore. I could use the money that is due to me.

[masteff]

First thing that comes to my mind is to start putting all communications in writing. Writing a) leaves a paper trail and b) can invoke a different level of response as it may be seen by more than just the person who's being a schmuck. In fact, I'd write to their head legal counsel and specifically name the person who has been blocking your attempts to get clear information on how to obtain your lawfully awarded divorce settlement; including a copy of the settlement will make it hard for them to not look into it at least a little ways.

If the amount is small enough, you might consider filing it in small claims court against your ex. The exact dollar threshold for small claims varies by state.

[david rigby]

... specifically name the person who has been blocking your attempts to get clear information...

...but you may want to phrase it a bit less confrontational.

[Chaz]

If you can't get a copy of the plan from the company, you can simply search the sec.gov website for the public company's '33 and '34 Act filings. The company would have to had filed a copy of the plan in one of those filings. There also should be a form of stock option agreement. Between these two documents, you can determine the transferability of the options. Often, options are not transferable except by will, etc., particularly if they are incentive stock options.

Note that a stock option plan is generally NOT subject to ERISA so the plan administrator has no ERISA fiduciary obligations towards either your or your ex.