Bornemann v. Bornemann
In Bornemann v. Bornemann, 245 Conn. 508, 752 A.2d 978 (1998), the Court held that nonvested stock options could properly be considered marital property. Bornemann v. Bornemann, supra, 245 Conn. at 518-20.
It explained that to be considered marital property, however, the court must first determine whether the stock options were earned during the marriage. Id. at 521-22.
That determination is made by considering the purpose of the award, that is, whether the options constitute compensation for past or future services. Id.
On the one hand, stock options that are awarded prior to the date of dissolution and awarded solely for past services are considered to be earned during the marriage and are, therefore, considered marital property subject to equitable distribution under 46b-81. See id. at 522-29.
On the other hand, stock options that are earned prior to the date of dissolution, but that constitute compensation for future services, are not considered to be earned during the marriage and, therefore, are not subject to distribution as marital property under 46b-81. Id.
The Court determined that unvested stock options could be considered marital property. Id., 518-20.
It further concluded that to be considered marital property, the "court must determine whether an asset was earned prior to or subsequent to the date of dissolution in order to determine whether the asset is marital property. This approach is common in other jurisdictions that have considered the extent to which unvested stock options represent marital property, for the reason that state statutes commonly distinguish between assets earned or acquired prior to separation or dissolution and assets earned or acquired subsequent to separation or dissolution.
In determining when unvested stock options were earned, or will be earned, the purpose for which the options were granted must be considered. Stock options may be awarded for a variety of purposes -- including to compensate the employee for past or present services, or to provide an incentive for future service -- that may or may not relate in whole or in part to the period of the marriage." Id., 521-22.