Background
Geoff MacKay and Deborah Ford were married in 1999 and divorced in 2016. Their separation agreement — which survived the divorce judgment and retained independent contractual significance — required MacKay to pay Ford alimony equal to a percentage of his annual “gross income.” The definition of gross income included stock options, RSUs, and other equity incentives. The agreement spelled out a specific timing rule: equity compensation would be “deemed ‘received’” for alimony purposes “upon vesting if no further event is needed for the Husband to liquidate the asset and, if applicable, the board endorses such liquidation, or, otherwise upon there being, if ever, a liquidating event.”
At the time of the divorce, MacKay worked for AvroBio, Inc. and held approximately one million restricted stock units (RSUs) granted at various times. In 2023, he sold AvroBio RSUs for $425,212.04. Ford filed a complaint for contempt in March 2022, alleging MacKay owed alimony based on the RSUs’ value at vesting. After a three-day trial, the Probate and Family Court judge found MacKay had paid alimony on the RSUs’ value as of his chosen liquidation date — not the vesting date. The judge concluded the agreement was ambiguous as to which date controlled and entered a prospective order formalizing liquidation-date valuation. Ford appealed, arguing the agreement unambiguously required vesting-date valuation.
The Court’s Holding
Affirmed in part, vacated in part, remanded. The Appeals Court agreed with Ford that the trial judge erred in treating the agreement as ambiguous. The court held the agreement’s language was clear: RSUs were to be included in gross income at vesting, unless some further condition prevented liquidation — and no such condition was established on this record.
The court applied standard contract-interpretation principles: ambiguity is not created merely by the parties’ disagreement, and each word is to be given effect where practicable. The agreement required Ford to receive information about “the vesting schedule, terms and conditions” — which would have been pointless if vesting date were irrelevant to the alimony calculation. MacKay argued that SEC insider trading rules and lack of board approval constituted “further events” that delayed his ability to liquidate, but introduced no evidence that any such condition actually applied to bar liquidation of the AvroBio RSUs after vesting. The court noted that the agreement’s text said vesting controls unless liquidation requires further action — not that vesting controls only if MacKay actually sells on that date.
On the contempt question, the court declined to disturb the trial judge’s finding of no contempt. Civil contempt requires “clear and undoubted disobedience of a clear and unequivocal command.” Because the evidence at trial regarding what qualified as a “further event” was “muddled at best,” MacKay’s good-faith disagreement about the valuation date did not constitute clear disobedience. The prospective paragraph of the contempt judgment formalizing liquidation-date valuation was vacated, and the case was remanded for recalculation of alimony arrears based on the RSUs’ value at vesting.
Key Takeaways
- A separation agreement defining gross income to include RSUs “upon vesting if no further event is needed… to liquidate” is unambiguous: the default rule is vesting-date valuation, and the burden is on the obligor to show a genuine condition precedent to liquidation actually applied — not merely assert SEC rules or board-approval requirements in the abstract.
- A trial judge cannot reform a clear separation agreement to substitute liquidation-date valuation for vesting-date valuation simply because the vesting-date rule creates uncertainty in practice; the parties’ express choice of language governs.
- A finding of no contempt is not inconsistent with a holding that the agreement was misinterpreted: courts distinguish between “clear and undoubted disobedience” (contempt) and an erroneous but good-faith interpretation (no contempt but liability for arrears).
- Practitioners drafting alimony provisions tied to equity compensation should define precisely: (a) the valuation date (vesting vs. sale), (b) which conditions constitute “further events” that delay the valuation date, and (c) the documentation obligations and timing for each grant. Ambiguity in those terms is expensive to litigate.
Why It Matters
MacKay v. Ford is a cautionary lesson for family law practitioners and their clients in the Boston biotech and tech corridor, where executive compensation packages routinely include large RSU or stock-option grants. When a divorce occurs mid-career, alimony agreements must grapple with the mismatch between the vesting schedule (when the employee’s right accrues) and the liquidation event (when the employee realizes cash). The court here enforces the parties’ chosen baseline — vesting — and rejects an attempt to rewrite that choice after the fact through a contempt proceeding. Obligors who disagree with the agreed-upon rule must seek a modification, not quietly pay on a different metric.
The decision also clarifies the interaction between contract-interpretation error and contempt: a judge can simultaneously hold that a party misread the agreement (and owes arrears) and that the misreading was not contemptuous. Practitioners representing recipients of equity-compensation alimony should take note: they may need to seek a declaratory judgment or modification rather than contempt to obtain prospective relief, and they should litigate the interpretation question promptly so the clock does not run on accruing arrears at the wrong valuation date.