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Murray v. Murray2/8/1999
POWELL, Judge.
Plaintiff-appellant, Graeme Murray, appeals the decision of the Warren County Court of Common Pleas, Domestic Relations Division, granting the motion of defendant-appellee Susan Murray to modify child support and increasing appellant's child support obligation. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.
Appellant and appellee were divorced in 1994. The parties entered into a separation agreement, which was incorporated into the final decree filed on May 16, 1994. Appellee was granted custody of their son, lain, and appellant was to pay child support in the amount of $1,810 per month. The marital property was divided between the parties, including unexercised stock options appellant had received as an executive employee at Proctor & Gamble Company ("P&G;).
Appellant's child support obligation was based upon his income at the time, which was $212,702 in salary and average bonuses. Then-existing unexercised stock options were not considered in determining child support because they wersdealt with in the property division. Since the divorce, appellant has remained at P&G; and his income has increased substantially.
On May 18, 1997, appellee filed a motion to modify child support, asserting that there had been a significant change in appellant's income warranting a recalculation of child support. Appellant stipulated his income had increased to $325,743 per year. This amount was composed of his base salary, average annual bonuses, dividends and interest, and taxable employee benefits, but not the stock options he had received in the years after the divorce. Appellant offered to pay $2,754 per month in child support based upon his stipulated income.
On January 29, 1998, a magistrate held a hearing on appellee's motion. The primary issues were whether appellant's unexercised P&G;stock options should be included in his "gross income" for purposes of determining child support, and, if so, how to value the stock options. On May 18, 1998, the magistrate filed his decision, finding that the value of the P&G;stock options should be imputed to appellant and included in "gross income" pursuant to R.C. 3113.215. Appellant's child support obligation was increased to $7,494.10 per month.
Appellant filed objections to the magistrate's decision. On July 23, 1998, the trial court overruled the objections and adopted the magistrate's decision. Appellant filed a motion to reconsider, arguing that the magistrate had erred in his calculations. On August 17, 1998, the trial court granted the motion, and ruled that the magistrate had incorrectly included the value of one option which the parties had included in appellant's stipulated income. The trial court reduced the imputed income to $481,109.60, which, in turn, reduced appellant's child support obligation to $6,821.27 per month, plus a processing fee.
Appellant appeals the July 23, 1998 decision, raising three assignments of error.
"Assignment of Error No. 1:
"The trial court erred to the prejudice of plaintiff-appellant by including imputed income attributable to unexercised employee stock options in gross income for the purpose of modifying plaintiff-appellant's child support obligation."
In his first assignment of error, appellant argues that the unexercised P&G;stock options do not constitute "potential cash flow" and are not included in "gross income" as defined in R.C. 3113.215(A)(2). He asserts that the stock options are only marital property subject to division under R.C. 3105.171. Appellee responds that the stock options are defer
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