For bankers subject to restrictions on U.S. executives' bonuses, "for richer or for poorer" just got a lot more complicated.

"Changes in executive pay are throwing a massive wrench into the works of family law across the country," said Frank Glassner, the chief executive officer of Veritas Executive Compensation Consultants LLC in San Francisco.

Divorce settlements for executives such as bankers who rely on bonus payouts are becoming harder to negotiate as some companies give employees less cash and more long-term incentive awards, including restricted stock and deferred money. This makes the bonuses more difficult to value and divide, said Eleanor Alter, a New York divorce lawyer.

Financial companies are under pressure from lawmakers to keep compensation in check as profits return. Though Wall Street bonuses rose an estimated 17% in 2009, to $20.3 billion, from a year earlier, many financial companies paid bigger shares of these bonuses in stock or other forms of deferred compensation, New York State Comptroller Thomas DiNapoli said on Feb. 23. Companies have also adopted clawback provisions that let them recoup bonuses for excessive risk-taking, he said.

Shifts in incentive compensation will affect most financial services workers who make more than $200,000, or roughly 50,000 people in New York, New Jersey and Connecticut, for example, said Alan Johnson, the president and founder of the Johnson Associates Inc. compensation consultancy in New York. About 50% of pay is being awarded in restricted or deferred compensation, said Paul DeLucia, a partner at Options Group, a New York executive search and compensation consulting firm.

Bank of America Corp. in Charlotte says it plans to pay as much as 95% of investment banking employees' bonuses in stock that vests over about three years, according to a person briefed on the plans last month. Citigroup Inc. Chief Financial Officer John Gerspach said in January that the cash portion of most employee bonuses would be capped at $100,000.

Earnings for the previous four years used to be the benchmark when calculating alimony amounts and child support, said Alter. Historical incentive compensation is no longer an accurate measure, she said, because "no one knows where it's going to go."

Glenn Liebman, a certified public accountant in Woodbury, N.Y., said his clients used to be paid base salaries of $250,000 with cash bonuses of $3 million to $6 million, which went toward alimony and child support payments in a divorce. These executives now may get only a portion of their bonuses in cash and the remainder in stock that is tied to share performance and may not vest for up to five years, he said.

"Changes to compensation are creating a horror show when dealing with the other spouse's budget and support package for children," said Liebman, a partner in Klein Liebman & Gresen, LLC, which values businesses and assets.

Lawyers must determine whether deferred compensation should be considered as income for calculating alimony and child support, or as an asset, said Michelle Smith, a divorce financial analyst in New York, who said 75% of her clients work in the financial services industry.

Assigning a value to bonus compensation now, especially if it is in stock, is hard because of fluctuating prices. Most courts will determine the right to share in a bonus based on the filing date. They will fix the value of the award as close to the date of trial as possible because of market gyrations, said Alton Abramowitz, national vice president of the American Academy of Matrimonial Lawyers in Chicago.

If the restricted stock or stock options are valued at current prices, they could be discounted because of volatility or a lack of marketability, said Martin Randisi, a certified public accountant at Holtz Rubenstein Reminick LLP in Melville, N.Y. Evaluating stock-based awards can cost at least $10,000 if the case is litigated, he said.

Since restricted compensation may be awarded during the marriage but not received until after a divorce, lawyers are struggling to figure out what former spouses can claim, said Abramowitz. The decision may depend on whether any part of the bonus was earned during the marriage.

New York City saw a 10% drop in divorce filings last year from 2007, according to the state Office of Court Administration.

"These are amorphous assets," said Robert Stephan Cohen, a New York lawyer, referring to restricted and deferred compensation. "Under these circumstances, couples may be hunkering down and trying to make their marriages work because the alternative is a nightmare."

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