Executive Compensation in Florida Divorce — Stock Options, RSUs, and Deferred Comp

By Nadia Pazos, Family Law Attorney, Pazos Law Group · May 2026  ·  ← All blog posts

For executives, founders, and corporate professionals, a substantial portion of net worth often comes from stock options, restricted stock units (RSUs), performance shares, deferred compensation, and carried interest. These are not the same as cash — and Florida divorce law treats them with specific rules that can dramatically change outcomes.

The Four Categories of Executive Compensation

Most equity programs fall into four buckets, each treated differently:

1. Vested Stock Options (ISOs and NSOs)

Stock options that have vested are mature assets — the executive has the right to exercise them. Value is typically the difference between the strike price and current fair market value, less expected taxes on exercise.

• If granted during the marriage and vested during the marriage: fully marital.
• If granted before the marriage but vested during: marital to the extent that vesting required services performed during the marriage.
• If granted during the marriage but unvested at the time of filing: partially marital under a coverture formula.

2. Restricted Stock Units (RSUs)

RSUs are promises of company stock that vest over time. Once vested, they become company shares.

The Florida analysis is similar to stock options: granted during marriage + vested during marriage = fully marital. Unvested RSUs are apportioned using coverture.

3. Performance Shares and PSUs

Performance shares vest based on company or executive performance over a defined period (often 3 years). The marital portion depends on:

• When the grant was made
• The performance period
• Whether performance metrics relate to past or future services

4. Deferred Compensation and Carried Interest

Deferred compensation arrangements (NQDC plans, SERPs) often have vesting schedules tied to length of service. Marital portion = service during the marriage / total service.

Carried interest (for fund managers and private equity professionals) is one of the most complex compensation forms. The grant, vesting, and ultimate realization are typically separated by years. Each step requires analysis.

The Coverture Formula

For unvested equity granted during or before the marriage, Florida courts often use a coverture formula to allocate marital vs. non-marital portions. The basic formula:

Marital fraction = Months of vesting during marriage / Total months of vesting

Example: A grant of 10,000 RSUs vests over 4 years (48 months). 24 months of vesting occurred during the marriage. Marital fraction = 24/48 = 50%. Of the 10,000 RSUs, 5,000 are marital and 5,000 are non-marital.

This is the most common approach but not the only one. Some grants have specific service requirements that may justify a different allocation. Performance-based vesting may require an adjusted approach.

Valuation Methods

Three valuation approaches are common:

1. Intrinsic value (in-the-money). Strike price compared to fair market value at the valuation date. Simple but ignores option time value.
2. Black-Scholes / option pricing model. Accounts for time value, volatility, and other factors. More accurate for stock options.
3. Pay-as-received. Rather than valuing upfront, the order requires distribution of equity proceeds as they vest. Avoids valuation disputes but extends the financial entanglement.

Tax Implications

Tax treatment varies dramatically by equity type:

• ISOs: Favorable long-term capital gains treatment if held for required periods, but AMT exposure on exercise.
• NSOs: Ordinary income at exercise, then capital gains/losses on subsequent sale.
• RSUs: Ordinary income at vesting, then capital treatment on sale.
• Performance shares: Ordinary income at vesting.

Settlement structures should account for tax. The party receiving an equalizing payment in equity is taking on different tax exposure than the party receiving cash.

Strategy

1. Get the equity plans. Award agreements, vesting schedules, and plan documents are essential.
2. Identify grant dates and vesting periods. The coverture analysis turns on these.
3. Consider deferred-distribution orders. For complex grants, ordering distribution at vesting often avoids valuation disputes.
4. Coordinate with tax counsel. Equity has tax implications that vary widely.
5. Address future grants. What about grants made after the divorce filing but before judgment? The order should specify treatment.

Frequently Asked Questions

Are unvested stock options marital in Florida?

Partially. Unvested options granted during the marriage are typically allocated between marital and non-marital portions using a coverture formula based on the months of vesting that occurred during the marriage versus the total vesting period.

How do I value stock options in a Florida divorce?

Three common approaches: (1) intrinsic value — the difference between strike price and market value, (2) Black-Scholes or similar option pricing model that accounts for time value and volatility, and (3) deferred distribution — the court orders distribution of proceeds as the options vest. The right approach depends on the option type and the parties' goals.

What is the coverture formula?

The coverture formula allocates unvested equity between marital and non-marital portions. The basic formula is: marital fraction = months of vesting during marriage / total months of vesting. So if 24 months of a 48-month vest occurred during the marriage, 50% of the unvested equity is marital.

Do I have to share my signing bonus in a Florida divorce?

A signing bonus is generally marital if received during the marriage. If the bonus requires future service to retain (a 'clawback' period), the portion attributable to post-divorce service may be non-marital.

What about carried interest from my private equity or hedge fund work?

Carried interest is among the most complex equity types in Florida divorce. The marital portion typically depends on when the carry was granted, when it vested, when the underlying fund realizes gains, and what services were performed during the marriage. Deferred distribution is often the cleanest approach.

Related Reading

• High-Net-Worth Divorce in Florida
• Florida Equitable Distribution Explained
• Divorce for Business Owners in Florida
• International Divorce in Florida
• Brickell Divorce Attorney
• Fisher Island Divorce Attorney

The information on this page is for general informational purposes only and does not constitute legal advice. Florida family law is fact-specific. Reading this article does not create an attorney-client relationship with Pazos Law Group.