Are you thinking about getting a divorce?
Or are you in divorce proceedings already?
If you get divorced, then
a judge will divide your marital property between you and your spouse.
If your spouse has been granted employee stock options, those options may be worth a lot of money.
You may be
entitled to a large share of the options’ value.
Your judge may require your spouse to pay you your share of the options’ value in cash.
For you to get your fair share of the options’ value, you or your attorney has to hire
an expert witness to value the options.
Valuing stock options is not simple. The fair value of an option is
the cumulative, risk‑neutral, probability‑weighted present value of its possible future payoffs.
For market‑traded options, an option’s value depends on the interaction of multiple factors:
the underlying stock’s current value, the strike or exercise price of the option, the option’s time to expiration, the risk‑free interest rate, expected stock dividends (if any) and the expected volatility of the underlying stock’s trading price.
The value of your spouse’s employee stock options depends on all these factors plus probabilities that your spouse will
quit his job or be terminated and leaving his job will cause some or all his options to not vest, require him to exercise the options earlier than their nominal times to expiration or both.
To value your spouse’s options fairly and to be able to defend that valuation in court, an expert witness needs
a good grasp of options‑pricing theory. He needs to have worked through how differences between market‑traded options and employee stock options may give rise to differences in value.
I have the knowledge and experience necessary to value fairly the employee stock options that are part of your divorce proceedings.
I have an MBA from New York University’s Stern School of Business. I am author of Option‑Pricing: Black‑Scholes Made Easy published by John Wiley & Sons. I have valued employee stock options in divorce proceedings and in other litigation.
I have given seminars to divorce financial planners and to forensic CPAs on how to value employee stock options in divorce proceedings.
I can value
your spouse’s employee stock options fairly. I can explain the valuation methodology in a way that your judge can understand. I can defend my valuation in court.
Moreover, I can explain to you and to your attorney how option valuation works. If you and your attorney understand why your spouse’s options have as much value as they do, you will be better able to ensure that
the court values those options fairly and that you obtain your fair share of their value.
If your spouse, your spouse’s attorney or your spouse’s expert witness should start talking about the options’ “intrinsic value,”
They may be trying to value the options at zero.
“Intrinsic value” is an antiquated, misleading and irrelevant concept. It is the value that an option would have if it expired on the valuation as‑of date.
If your spouse’s options expired on the valuation as‑of date, they might very well have had a value of zero. But, most likely, they did not expire on the valuation as‑of date. Hence, their value is not zero.
Do not let your spouse, your spouse’s attorney or your spouse’s expert witness get away with using the options’ “intrinsic value” and valuing the options at zero.
If you would like for me to value your spouse’s employee stock options, I would be happy to do so.
If you are an attorney, CPA or divorce financial planner, I would be happy to
give your professional group a seminar on valuing stock options in divorce proceedings.
If you are getting divorced and are
a member of a divorce support group, I would be happy to give your group a sophisticated, yet easy to understand, presentation on why stock options have the value they do.
Not only will you be better able to understand an important part of your marriage’s property and it’s value, you will come to understand sophisticated concepts that revolutionized financial thinking and won a Nobel Prize.
At the end of the presentation, you may feel the way one buyer of my book did— that you’ve learned enough to
win a Nobel Prize yourself.
Whether you win a Nobel Prize or not, make sure you get your fair share of the value of your spouse’s employee stock options. Let me value them and explain their value to your judge.
To discuss a valuation, a seminar or a presentation,
give me a call today:
To download a copy of my seminar notes, How To Value Stock Options In Divorce Proceedings, click here.
Jerry Marlow, MBA, Expert witness— Valuation of stock options in divorce proceedings
© 2015 Jerry Marlow