Must I share my future bonuses with my ex-spouse?

With predictions that bonuses in the banking sector will be high this year; this article considers how bonus payments are dealt with upon divorce and for how long after separation they might be shared with a former spouse or civil partner.

Bonuses

A common form of remuneration for many highly valued employees of established or start-up companies are deferred bonuses. These commonly comprise stock options or cash.

Bonuses can be discretionary or contractual; immediately payable or deferred.

Deferred bonuses are awarded based on an employee’s performance in a particular year but they are commonly paid three years later to encourage the retention of the employee. (Unpaid bonuses are usually forfeited if an employee leaves the company).

Whilst over time the amount of a cash bonus might fluctuate in ‘real’ terms the future value of a deferred stock scheme is far less predictable. 

The two most common forms of deferred stock schemes which we come across regularly in family law are:

• Stock options: where employees are offered shares at a particular price which vest on a certain future date (commonly in 3 years). These are typical arrangements of banks and...

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