A Bonus is a Bonus

Husband (H) and Wife (W) were married in 1987. W was a certified surgical technician until their first child was born in 1983, when she became a stay-at-home mom. H was a hospital executive, and during the marriage, continued up the corporate ladder.

When the couple separated in July of 2002, H was earning $300,000 per year plus a bonus of up to 20 percent of his pay, based on performance goals.

The couple entered into their divorce settlement agreement in 2004. H was to pay W spousal support in the amount of $7,000 per month, plus 41 percent of his annual bonus. The terms of spousal support were to continue until 2014, unless either party died, or W remarried.

In 2006, H quit his job in California and became the chief executive officer at a hospital in Denver, Colorado. The compensation package he negotiated with his new employer different than his former salary. It included a salary with a senior management compensation plan and participation in company benefit plans, but no bonus. He continued to pay W $7,000 a month in spousal support with a yearly payment of 41 percent of his senior management compensation plan only. He thought the other benefit plans were not bonuses, so he didn’t have to pay her 41 percent of them too.

H lost his position in January 2010, when a new company purchased the hospital, but was re-hired by the new company under a different compensation package. H’s salary was approximately $960,000 under the new agreement. H later left that company, and worked as a healthcare consultant for approximately $350,000 plus bonuses.

Meanwhile, W went back to work as a manager in a gift store, and later opened her own children’s boutique. Sadly, the boutique failed, and W declared bankruptcy in 2009.

In 2012, H discovered that W had a boyfriend and was living with him. H went back into court and asked that his spousal support be terminated or reduced because of changed circumstances. His income was substantially less, and he could not continue to pay the current amount. Further, W did not need as much spousal support because she was sharing living expenses with her boyfriend. The court granted his request and ordered spousal support in the amount of $4,500 per month with no bonus monies, and that all support would terminate in 2014, as originally agreed upon in their 2004 settlement agreement.

W went back into court and asked that she be awarded back bonus monies owed to her from compensation packages from H’s companies that he did not include when providing her with her portions of his yearly bonuses. And, after a lengthy trial with mathematical experts on both sides arguing how much H owed (or didn’t owe) W, the court determined that W was not entitled to any further bonus-money amounts.

W appealed and the Appellate Court agreed with the trial court: “[H and W] intended the annual bonus phrase to refer to a fluctuating, discretionary payment H received from his employer based on performance, not more broadly to all payments he received above base salary.”

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