For executives facing divorce, property division is often fraught with challenges. Learn more about the many considerations involved in these high-stakes cases, including common types of executive compensation and potential strategies for achieving successful outcomes.

1. Executive Compensation
In Ohio Divorces
Presented by

2. The Complexities
of Executive Divorce
• Divorce is a challenging transition, especially
for high-net-worth couples
• Addressing executive compensation adds
another layer of complexity to property division

3. • Ohio law mandates equitable
distribution of marital property
• “Equitable” means fair,
not necessarily equal
• Prenuptial agreements may
impact property division
Equitable
Distribution in Ohio

4. Marital vs. Separate Property
Marital property:
• Includes assets and debts acquired during marriage,
regardless of title
• Subject to equitable distribution under Ohio law
Separate property:
• Includes inheritances, gifts and pre-marital
assets (provided they’re kept separate)
• Generally not subject to division
• Proper identification and valuation are crucial

5. Executive Compensation Types: Beyond Salary
• Qualified retirement plans such as 401(k)s and 403(b)s
• Nonqualified retirement plans such as supplemental executive retirement plans (SERPs)
and individual retirement accounts (IRAs)
• Defined benefit plans such as pensions and cash balance plans
• Profit-sharing plans (PSPs)
• Long-term incentives such as deferred compensation
plans, restricted stock units (RSUs), stock options
and long-term incentive unit awards
• Golden parachutes
Each type has unique considerations for divorce.
Marital vs. separate property determinations may factor into all of them.

6. Retirement Plans
• Qualified plans: Governed by ERISA,1
division through QDRO2
• Nonqualified plans: More flexibility on
division, but may require complex strategies
Both types require addressing
tax considerations.

7. Defined Benefit Plans
Pensions:
• Guaranteed payout based on salary and
length of employment
• Complex valuation of future benefits
• Require QDRO for division
Cash balance plans:
• Individual account with employer
contributions and interest credit rate
• Potentially divisible via QDRO – lump-sum
or continued benefits
• Division must comply with plan terms and conditions

8. Profit-Sharing And SERPs
PSPs:
• Deferred compensation
• Allocate incentives to an individual pretax account
• Vesting considerations
• Division depends on plan parameters
SERPs:
• Additional retirement benefits beyond qualified
plans like 401(k)s
• Complex valuation and tax considerations
• Complex division strategies like constructive trusts
or offsetting value with other property

9. • Deferred bonuses, RSUs, stock options
• May represent a significant portion
of executive compensation
• Subject to vesting requirements
• Involve greater uncertainty in valuation
• Constructive trusts as possible tool
for division
Long-Term Incentives

10. Golden Parachutes
• Severance packages for involuntary job loss
• Commonly built into executive employment agreements
• Often combination of cash bonuses, stock options and other benefits
• Inherent uncertainty makes them difficult to address
• Require financial experts and strategies like constructive trusts

11. Partnering With the
Right Professionals
• Importance of sound legal and financial
guidance in executive divorces, for both
the executive and non-executive spouse
• Work with attorneys who understand
the nuances of executive compensation
in Ohio divorce

12. For more insights, view the full paper for free on our website.
Footnotes:
1
Employee Retirement Income Security Act of 1974
2
Qualified domestic relations order
The content of this paper is provided for informational purposes only and does not constitute legal advice.
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