The Court of Appeals upholds a court that treated a stream of payments from the sale of a company as "deferred compensation" and thus applied a coverture fraction to determine what share of them was marital. The husband, who had sold the company, is the one who sought this result, and the wife appealed it. He started and then sold the company during the marriage. The sale agreement spread out the payments to him, and required him to work for the buyer, and not to compete with it. He completed most of those conditions after separation.
The numerator of the coverture fraction the circuit court applied was comprised of the number of days from the date ZipList was founded to the date of the parties’ separation. The denominator of the coverture fraction was comprised of the number of days from the date ZipList was founded to the date of the final payout.
How does stock from a sale, rather than some kind of employee stock ownership or option plan, fit the Code's definition of a divisible deferred compensation plan?, which reads: “The court may direct payment of a percentage of the marital share of any pension, profit-sharing or deferred compensation plan or retirement benefits, whether vested or nonvested, which constitutes marital property and whether payable in a lump sum or over a period of time.”?
The Court responds by quoting a phrase from its earlier decisions, along with its context which seems not to specifically justify reading it into the deferred-compensation part of the statute:
As this Court previously stated, “[W]e find no support for the view that the legislature intended to exclude retirement plans, or any other specific type of property, from the overall equitable distribution scheme.” Mann v. Mann, 22 Va. App. 459, 463, - 10 - 470 S.E.2d 605, 607 (1996) (emphasis added) (citing Banagan v. Banagan, 17 Va. App. 321, 325, 437 S.E.2d 229, 231 (1993) (“When pension benefits comprise a ‘portion of the pool of marital assets,’ they are clearly contemplated by the ‘scheme’ of Code § 20-107.3, which is intended to justly distribute the ‘marital wealth of the parties.’”)). See also Cirrito v. Cirrito, 44 Va. App. 287, 292-93, 605 S.E.2d 268, 270-71 (2004) (the Court of Appeals found that the future wages lost pursuant to a non-compete agreement were a substitute for a salary and subject to equitable distribution); see also Luczkovich v. Luczkovich, 26 Va. App. 702, 708-09, 496 S.E.2d 157, 160 (1998) (this Court determined the equitable distribution of severance payments based on whether “the severance pay was intended to compensate the employee for efforts made during the marriage or to replace post-separation earnings”).
But, uh, no one was arguing that this asset should be left out of equitable distribution; the wife was trying to get all of it divided as ordinary marital property rather than deferred compensation.
However, the trial court and the Court of Appeals are on much solider ground when they go on to say that the Stock Purchase Agreement WAS a deferred compensation plan. It included a plan, it paid compensation for the husband's work performed over time, and it deferred that compensation.