Court Opinion

ID: 9746445
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:16:33.164516+00
Date Added: 2024-06-11T07:25:13.266243
License: Public Domain

FORD ELLIOTT, J.,
Dissenting.
¶ 11 respectfully dissent. While I agree with the majority that child support is a paramount duty of a parent and that in determining income available for child support, the court must consider all forms of income, I cannot agree that unexercised stock options represent ascertainable income for support purposes. A stock option is precisely that, an option to purchase stock. To realize any value in the options, the holder must actually purchase the stock. This alone would support the conclusion that unexercised stock options are not income available for support.
¶ 2 I agree that the courts of this Commonwealth have held that when determining a child support obligation, the court “must consider every aspect of a parent’s financial ability to pay support including property interests, stocks and other forms of investment.” Blaisure, 577 A.2d at 642. However, in considering the parent’s financial ability to pay, the court must not only consider all ascertainable assets but also be able to value those assets and determine the income available from them for support purposes.. As the Fisher court found, stock options do not lend themselves to such valuations until vested and exercised. I find further support for the Fisher court’s analysis in Marchlen v. The Township of Mt. Lebanon, 560 Pa. 453, 746 A.2d 566 (2000). While limited to the issue of whether stock options constitute compensation to an employee and therefore may be taxable by a political subdivision as earned income, the court determined that stock options are in fact compensation but ascertaining their value for taxation purposes occurs when they are exercised.
Thus, it is not that stock options have no value at the time they are granted, rather, the value of the stock option is speculative and not readily ascertainable until exercised. It is precisely for this reason that the taxing authority must wait until *685the exercise of the stock option to compute the associated tax liability.
Marehlen, 560 Pa. at 460-461, 746 A.2d at 570 (footnotes omitted). At the heart of the court’s discussion in Marehlen is the idea that until the option is exercised and the stock actually purchased there is not realized income but only the prospect of potential income.4
¶3 The majority, while not requiring Mother to exercise her options, does ascribe to Mother an earning capacity based on the unexercised options. However, what of the ease in which a parent has options but is without the financial means to exercise them. Moreover, would the earning capacity valuation depend on Mother exercising all of her options or just some of her options; would the value be the difference between her purchase price and the stock value on the date of the filing of the petition for support or modification or the date of the hearing; should a party be able to petition for modification of support based on the daily vagaries of the stock market?
¶ 4 It needs to be recognized that while some employees have a choice as to whether to take a portion of their compensation in the form of stock options, other employees do not have that choice. Rather the options are controlled and granted by the employers in lieu of salary. In the event that an employee-spouse chooses stock options to reduce income for any purpose, thus leaving the dependent spouse or children without adequate support, on petition, the trial court may treat such actions by the obligor spouse as it would any voluntary reduction of income. See Pa. R.Civ.P.1910-16-2(d)(l), 42 Pa.C.S.A. However, in such a case, the trial court is not valuing the stock options but rather assigning an earning capacity based on the obligor’s decision to reduce actual income.5
¶ 5 For all of the above reasons, I would affirm the trial court’s decision to refuse to include Mother’s stock options as part of her income presently available for child support.

. The Marehlen court also noted that stock option plans take many forms and have assorted conditions.

. I note the majority’s reliance on Portugal decided by this same panel. However, 1 believed then and still believe today that the salient factors in Portugal as to whether contributions to a 401(K) retirement account can be included as income for support purposes are: (1) that the employee’s contributions to the account were voluntary; (2) that the employer contributions were accessible by the employee; (3) that the value of all the contributions was readily ascertainable. Based on the facts and record before this court, I do not find Portugal instructive or controlling in the present case.