In a recent Texas Supreme Court case, the Court considered a mediated settlement agreement related to a discretionary employee bonus. The issue was whether the agreement partitioned a discretionary employee bonus that the husband got nine months after the divorce was granted. The husband argued that it was future income and earnings that the agreement partitioned to him, but the wife argued it was earned during the marriage and should be considered undivided community property.
The couple in question married in 1980. The husband worked at an energy and commodity trading company starting in 1992. As part of his employment, he was eligible for an annual discretionary bonus. This wasn’t guaranteed but would be awarded based on performance. While married, he got a bonus every year.
The wife sued for divorce in 2008, and the couple agreed to divide $10 million of community assets with $5 million to each spouse. However, since they couldn’t resolve other differences, they entered into mediation from which they developed a mediated settlement agreement. This agreement partitioned other property, including retirement plans and jewelry. The husband claimed that the bonus he’d gotten in 2010 before the finalizing of the mediation settlement agreement went into an account awarded to his wife.