The Securities and Exchange Commission recently mandated full disclosure of executive compensation to shareholders. Corporations are asking their shareholders to approve these compensation plans in a proxy vote. You should also read about these perks. Be able to quantify them and their impact on your life in the event of divorce.
Executive compensation in today’s corporations is becoming more detailed and complex. If a perk is worth more than $10,000 or more, it needs to be broken down and disclosed. You now have a verifiable number to use in the divorce. Look for details on salary, stock grants, deferred compensation, use of the private corporate jet for family travel, the cost of car service for the family, an allowance for personal income taxes and club memberships, domestic services such as maids and chauffeurs, vacation time shares, educational reimbursement, financial planning services, and insurance policies. Prior to the recent SEC ruling, specific disclosure had been required for perks worth more than $50,000. Many believe that part of their strategy was to require this disclosure to the shareholders so they would embarrass the board to the point that executive compensation would be reduced. That doesn’t seem to be the case thus far though.
Divorce is first the division of assets less liabilities, and then the division of income. These corporate perks can be quantified as income and assets. Be prepared to quantify these as appropriate in both categories. If you lose these corporate perks with your marriage, make sure you add back in these expenses when asking for your temporary support and post-divorce budget that includes maintenance. Lifestyle is usually a big factor in the divorce of the highly paid executive. Create a financial post-divorce lifestyle for yourself that quantifies these perks in detail and with notes describing how they were used by the family and replacement costs. Create a schedule that categorizes these expenses as follows: description of family perk, dollar value of the perk, history of how and when the perk was paid to the family over the past 3-5 years. Get your calendar out and write down the dates that you received these family perks and describe where you traveled, how you traveled, and what was paid for by the company while on the business trip or vacation. Be prepared to show your personal expenses for clothing, spa treatments, vacations, jewelry, plastic surgery, etc. to maintain your image as the “corporate wife or husband.” Alpha women also have corporate spouses. This exercise will verify your participation and contribution to the marriage relationship.
Ask yourself who signed the company confidentiality agreement? If it wasn’t you, your ex’s business will want to protect the privacy of any “off-the-record” financial benefits while still meeting the new SEC mandates. You are not bound by that agreement though. If you have substantial assets and are divorcing a highly visible individual or public official, don’t be afraid to manage your public relations.
For example when Jane Beasley and Jack Welch divorced, she went to court with an economist that quantified in minute detail where and how money was spent. This led to an investigation by the SEC and Jack Welch gave back many of the perks he had received in his retirement package from GE. Gary Wendt didn’t view his perks at GE as part of his marital asset base until his wife and marriage partner, as she described herself, fought for recognition and compensation after a long term marriage.
I once helped a woman account for $2 million per year in living expenses over a three year period just prior to separation that illustrated in great detail how money was spent on the family. We accounted for all expenses. Her husband had offered $200,000/year for maintenance after a 35 year marriage. Their divorce settlement was agreed upon on the court house steps the day the trial was to begin. The client received over 50% of the assets and a maintenance award of over $600,000/year, plus additional funds for the children in college to be paid by the husband.
Start early with your documentation and financial calendar with the social diary of your married life together.