The Complexity of Asset Division for Corporate Executives

Facing the end of a marriage always involves delicate financial matters, but when one or both parties hold executive positions in large companies or multinationals, the situation becomes considerably more complex. In Milan, a pivotal hub of the Italian economy, it is common to encounter complex remuneration packages that go far beyond a simple monthly salary. As a divorce lawyer practicing in the Lombard capital, I often observe how the correct qualification and quantification of Long-Term Incentive Plans (LTIs) represent one of the most critical and often underestimated aspects in calculating the share of severance pay (TFR) due to the ex-spouse.

The main problem lies in the hybrid and deferred nature of these compensations. Stock options, restricted stock units (RSUs), and multi-year performance-based bonuses are not immediate liquidity but constitute a substantial part of deferred remuneration. Ignoring these components during divorce negotiations can lead to an unfair settlement of financial agreements, harming one of the parties. It is crucial to understand that the concept of Severance Pay (Trattamento di Fine Rapporto), for the purposes of divorce law, is very broad and must include all indemnities that accrue based on the termination of the employment relationship, even if paid in forms other than traditional liquidation.

The Regulatory Framework: Severance Pay and Deferred Remuneration

Article 12-bis of the Divorce Law (Law 898/1970) establishes the right of the spouse entitled to a divorce allowance, and who has not remarried, to a percentage of the severance pay received by the other spouse, even if the pay accrues after the judgment. This percentage is equal to 40% of the total severance pay attributable to the years in which the employment relationship coincided with the marriage. Case law has progressively clarified that the notion of severance pay includes all sums paid to the worker at the end of the employment relationship that are of a deferred remuneration nature.

LTI (Long-Term Incentives) plans often fall into this category. If an executive accrues the right to receive shares or cash bonuses based on performance achieved during the years of marriage, these benefits, even if received later or at the time of termination of employment, may be subject to a claim by the ex-spouse. The technical difficulty lies in precisely calculating what portion of these incentives is attributable to the period of marital cohabitation and what, instead, is linked to work activity after separation or divorce. A superficial analysis risks unjustly excluding valuable assets or, conversely, including sums that should not be part of the calculation.

Studio Legale Bianucci's Approach to Complex Assets

Avv. Marco Bianucci, a lawyer specializing in family law in Milan, handles these cases with an analytical and multidisciplinary method. Managing divorces involving executives and corporate managers requires expertise that goes beyond the civil code, touching on aspects of labor law and corporate finance. The firm's objective is to ensure that the financial picture to be divided is clear and complete, avoiding future surprises.

When dealing with the division of LTI plans and stock options, the firm first proceeds with a detailed examination of the incentive plan regulations. It is necessary to understand the vesting clauses (accrual) and option exercise clauses. Avv. Marco Bianucci works to determine with mathematical precision the portion of these incentives that must be considered deferred remuneration accrued during the marriage. The strategy is based on transparency and the correct application of pro-rata temporis calculation criteria, protecting the client whether they are the executive who needs to protect the fruits of their post-marital work, or the economically weaker spouse who is entitled to their fair share.

Frequently Asked Questions

Do stock options always fall under the calculation of severance pay for the ex-spouse?

Not automatically. Stock options are included in the calculation if they are considered part of deferred remuneration and if the vesting period coincides, in whole or in part, with the legal duration of the marriage. It is necessary to analyze the grant plan to understand if they are linked to past or future performance.

How is the portion of LTI due to the ex-spouse calculated?

The calculation follows the pro-rata temporis principle. The total amount of the incentive is determined, and the percentage (40%) is calculated on the portion of it that accrued during the years when the employment relationship coincided with the marriage. This calculation often requires a technical appraisal to correctly isolate the relevant periods.

What happens if the executive changes companies before receiving the LTI plan?

If the executive loses the right to the LTI plan by changing companies (forfeiture clauses), that sum usually does not enter into the calculation as it is not actually received. However, if the new employer offers a sign-on bonus to compensate for the loss of previous incentives, such a bonus may be subject to evaluation for asset division purposes.

Does spousal support affect the right to a share of severance pay and incentives?

Yes, the right to a share of severance pay and its related components like LTIs belongs exclusively to the spouse who is already entitled to a divorce allowance and has not remarried. If a divorce allowance has not been granted, the right to a share of the severance pay does not arise.

Protect Your Rights in Divorce Proceedings

Managing executive compensation and incentive plans requires particular attention to avoid significant financial losses. If you are going through a separation involving complex assets such as LTI plans or stock options, it is essential to rely on a professional who has a thorough understanding of the subject matter. Contact Avv. Marco Bianucci at the Milan office located at Via Alberto da Giussano, 26, for an in-depth evaluation of your financial situation and to define the best protection strategy.