Vest-Level Hug Method — In re Marriage of Hug Explained

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How it works

Named for In re Marriage of Hug (California, 1984). Structurally identical to Vest-Level Nelson, but the grant-date anchor is replaced with the employee's hire date. The denominator becomes longer — typically several years longer — which dilutes the CP fraction per tranche.

Formula

V = vest date, S = shares, DOH = date of hire, DOM = date of marriage, DOS = date of separation

\text{Start} = \max(DOM,\; DOH) \qquad \text{End} = \min(DOS,\; V_i)

\text{Overlap} = \max(0,\; \text{End} - \text{Start})

\text{CP fraction}_i = \frac{\text{Overlap}}{V_i - DOH}

\text{CP}_i = S_i \times \text{CP fraction}_i \qquad \text{Total CP} = \sum_i \text{CP}_i

In practice

The Hug approach is cited in case law but infrequently applied in practice. It anchors the time rule at the hire date rather than the grant date, treating equity as deferred compensation for services rendered from the start of employment. This usually produces a larger CP fraction than Nelson when the employee was hired well before the grant — the marital overlap is measured against a longer denominator that can include pre-grant tenure.

Its inclusion here lets you see how much the anchor-date choice affects the outcome. A large gap between the Nelson and Hug curves tells you the employee's pre-grant tenure is a significant factor in the allocation.

Try it — single-grant calculator

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Grant Date

Last Vest

Total Shares

Tranches

DOS

Marriage (optional)

Hire Date (for Hug)

Vested

270

shares CP

Ratable

300

shares CP

Vest-Nelson ★

435

shares CP

Grant-Nelson

300

shares CP

Vest-Hug

—

shares CP

Grant-Hug

—

shares CP

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Vest-Level Hug

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