Fine print doesn’t mean print that’s illegible or incomprehensible, but it’s there for a good reason.

The fine print is where you will often find an important potential marital asset that can easily slip off the net-worth statement divorcing parties need to provide: Restricted stock units (RSU’s).

These are not the same thing as restricted stock or stock options, and are offered to employees mostly at publicly listed (but also at some private) companies.

What RSU’s Are

An RSU is simply a promise to pay someone later on with stock in a company (or money to buy the stock at the price on the day the promise is granted). Sometimes RSU’s expire if an employee leaves the company before they’re useable, but could be swapped for RSU’s in a new company the employee is moving to.

The time an RSU can be used is called the vesting date. RSU’s held but not yet vested won’t show up on a tax form because they are simply promises to pay (usually conditional on continued employment). Whether they are found to be incentive or bonus payments will often weigh heavily into the calculation of whether they are marital property.

An RSU is different from restricted stock, which is a share in a company that the person gets, but can’t sell until a certain future vesting date. Restricted stock has some value from day one because it confers voting rights, but you can’t sell it.

Stock options are something yet again. They are the right to buy a stock at a certain price at a future vesting date. Their value depends on what price you get to the buy the stock for later on. They can be very valuable if you have the right to buy a $60 share for $30, but if the shares plunge to $20, the right to buy them at $30 is worth nothing when you finally get the right to use the option. Options nearly always have some value before vesting.

How to Find RSU’s

If Husband works for a public company but says he has not been given any RSU’s, how could you find out that he is lying?

One quick way to find out if more investigation is required is to check the securities filings of Husband’s public company. It’s very straightforward if Husband is senior enough to be considered an insider (whether on the board or as a senior executive). The Securities and Exchange Commission filings contain details of compensation granted to such people. We check the annual reports, proxy filings and reports known as Form 4 filings.

But what if Husband is not senior enough to appear among the top few executives? You can still get a notion of the existence of RSUs. Say he works for Atento, S.A., a Luxembourg-domiciled, Brazil-based provider of customer relationship software all over Latin America. Even though Atento is based outside the U.S. it sells shares here and so has to file certain forms with the SEC.

According to an Atento filing last week, in 2017 the company granted RSU’s to “directors, officers and other employees” in 2017. Those RSU’s vested in January of this year.

If Husband insists he never got any RSU’s, the company (via subpoena if necessary) will back him up on it. Many times, a third-party benefits administrator is the one to go see for information.

Once you are going to the company, your lawyer will need other information. The plan document, for one thing, will tell you how to classify the compensation (incentive or bonus). Ask also for award letters, grant agreements, the employee manual and all amendment letters,

And if the company is private? There can still be stock-based incentives against the day the company goes public. You still go back to the company and ask.

As it happens, as I was writing this article a forensic accountant called to ask if I could assist a potential client who said her husband was “hiding stock options in his name or his sister’s name” in a Caribbean tax haven.

My answer: the company is the place to start to see if he got the options or if they were issued to his sister (who may also have worked there). Without knowledge that he had concealed assets, it would be tossing good money out the door to pay an expensive Caribbean lawyer to try to get records from a brokerage account overseas.

[For more on Offshore Asset searches, see our Offshore Asset Search Starter Kit].

[For more on how we approach our work, see our companion blog, The Ethical Investigator].