AND CROSS-APPEAL FROM JEFFERSON CIRCUIT COURT HONORABLE DONNA
DELAHANTY, JUDGE ACTION NO. 12-CI-502147
FOR APPELLANT: Armand I. Judah Louisville, Kentucky
FOR APPELLEE: Justin R. Key Louisville, Kentucky
BEFORE: DIXON, JONES, AND J. LAMBERT, JUDGES.
appeal and cross-appeal arise out of an order from the
Jefferson Circuit Court classifying and dividing the
parties' assets following their dissolution of marriage.
Specifically, the parties take issue with the trial
court's designation and division of certain stock Colette
acquired as part of her employment. For the reasons more
fully explained below, we affirm.
began working at United Parcel Service ("UPS")
approximately nine years before she married Darren in 1996.
During this nine-year period, Colette acquired approximately
647 shares of Class A common UPS stock. Colette maintained
ownership of this stock after she married Darren. In 1999,
three years into the parties' marriage, UPS's stock
split. This doubled the number of Colette's pre-marital
shares from 647 to 1, 294.
time of the parties' divorce, Colette had been working
for UPS for twenty-four years, during which time Colette
continued to acquire and sell UPS stock. In addition to
UPS's retirement savings plan and pension plan, Colette
is eligible for UPS's Management Incentive Program
("MIP"). If Colette's management team
recommends her for participation in the program she receives
an annual award. This award is paid in the form of Restricted
Performance Unit ("RPU") stocks. The MIP handbook
defines RPUs as "bookkeeping entries in an account set
up for [the employee] representing the value of UPS Class A
shares." As the program is "designed to reward
long-term commitment to UPS, " the stock represented by
the RPUs is not immediately available to UPS employees.
Rather, the RPUs are set to vest over a five-year period, and
if an employee leaves UPS for any reason before the RPU
vests, that employee forfeits his or her RPUs.
25, 2012, Colette petitioned for divorce. On March 28, 2013,
the trial court entered an order dissolving the parties'
marriage, but reserved issues related to property
distribution for further determination. The parties were not
able to reach a mutually agreeable property settlement. As a
result, the trial court conducted a hearing at which it
received testimony and other evidence related to the
parties' property, including their respective 401(k)
accounts, pension plans, and Roth IRA accounts; division of
personal property; the sale and division of equity in their
two jointly-owned residences; and 2012 tax liabilities. This
appeal concerns only the proper designation and division of
Colette's UPS stock and RPUs.
trial court ultimately found that all of Colette's UPS
stock was marital property except for the 647 shares she
owned prior to the parties' marriage. It refused to
consider Colette's argument about the split on the basis
that Colette did not produce any evidence "as to the
date of the alleged split." Accordingly, the court
restored only the 647 shares of stock to Colette as
non-marital property. It classified the other shares as
trial court also found that all the non-vested MIP incentives
are marital, and therefore, subject to division if they vest
in the future. It explained:
[Colette] presented evidence indicating that, in addition to
her stock, she is eligible for an additional MIP incentive
that enables her to obtain additional employment awards. The
MIP incentive was clearly earned during the course of the
marriage. The case cited by [Darren] is totally on point
wherein the Court of Appeals held that "the value of
appellant's vested right of future participation in an
employment benefit plan was a valuable deferred compensation
right even though it might never be fully exercised."
McGinnis v. McGinnis, 920 S.W.2d 68 (Ky. App. 1995).
As noted, the award has been earned during the marriage, thus
it is marital. If the award never vests and/or no benefit is
ever realized that does not destroy the nature of same. In
the event some benefit is ...