Care with Shares

An employee's salary package can include the granting of options to take up shares in the employer company. Sometimes these are just straight transfers of shares but often they are transfers of shares that will become the employee's property only if the employee stays with the employer long enough and also sometimes meets targets set by the employer.

There is sometimes conflict between parties to a marriage about the way in which these unvested shares are treated, and valued. If they don't yet properly belong to the employee, can the employee's spouse get a share of them and if not how are they treated?

The Family Court can make orders for the transfer of property. Are these unvested shares property? In a recent case the Federal Circuit Court decided they were not; they were a financial resource of the employee. This was partly because of the conditions attaching to them and partly because they could not be sold or transferred until they became the employee's property.

They remained a financial resource, of the husband in this case, but the court decided that the wife had contributed to the acquisition of these shares through her role as primary carer for the children and made an adjustment in the wife's favour because the husband had this additional financial resource.