Schuman v. Schuman

Supreme Court of Virginia · 2011 · Family Law

Family LawEquitable DistributionMarital PropertyDeferred Compensationstock optionsrestricted stockdeferred compensationvesting

Facts

During the marriage, Mary Schuman worked for SAIC and received compensation in the form of restricted stock, stock options, and a special recognition stock award. The parties separated on August 24, 2007, and divorce proceedings followed. The trial court treated the stock awards as Mary's separate property, and the Court of Appeals affirmed on the ground that the awards did not vest during the marriage. Daniel challenged that classification, arguing the awards were granted during the marriage and were improperly treated as separate property.

Issue

Whether stock awards granted during the marriage but vesting after separation are automatically the employee-spouse's separate property because the vesting dates occurred after the marriage ended. More broadly, whether vesting alone determines the classification of deferred compensation under Code § 20-107.3.

Rule

For purposes of equitable distribution under Code § 20-107.3, deferred compensation may be marital property whether vested or nonvested. The relevant inquiry is not the vesting date alone, but what portion of the total interest was earned or acquired during the marriage and before the parties' last separation; that marital share is calculated in the same manner as for pensions or retirement benefits.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Elena Morris and Jason Morris lived in Richmond, Virginia, until their last separation in May 2022. During the marriage, Elena's employer, Blue Cedar Analytics, granted her retention units in 2021 that would be paid in cash if she remained employed until 2024; the award letter stated the units recognized her prior year's performance and also encouraged continued service.

In equitable distribution, how should a court most likely classify the 2021 retention units?

Explanation. The majority opinion holds that stock-based awards that compensate for work already performed and work performed until vesting are a form of deferred compensation. For deferred compensation, vesting is not dispositive. The court must determine the marital share, meaning the portion of the total interest earned during the marriage and before the last separation. Thus, a post-separation vesting date does not automatically make the award separate property, but grant date alone also does not make the entire award marital.