Marriage of Hug
Court of Appeal of California
201 Cal. Rptr. 676 (1984)
Paul (plaintiff) and Maria Hug (defendant) married in 1972 when Paul began working at Amdahl Corporation, which offered stock options to key employees primarily to recruit and retain high-quality talent and incentivize performance. Paul received an initial 1972 option for 1,000 shares at $20 per share, which was modified in 1974 to instead let him purchase 1,000 shares at just $1 per share, plus additional 1974 and 1975 options for more shares at $1 and $5 per share respectively, each requiring exercise over a four-year period; Paul and Maria separated in 1976. The trial court, after hearing evidence about the options' purpose, found they were primarily granted to initially recruit Paul in 1972 and then to compensate him for quality performance during employment, and apportioned the options based on Paul's original 1972 employment date, giving Maria a substantial interest; Paul appealed.
Whether employee stock options can be apportioned on a time-rule basis as to community- and separate-property interests without determining the underlying purpose of the employer in granting the stock option.