Walker

William Walker (Bill) appeals portions of the interlocutory judgment dissolving his marriage to Deanna. He claims the trial court erred in both characterizing and valuing the employer-granted stock options. He is correct.

I

Deanna and Bill separated October 27, 1985, after an 18-year marriage. On August 22, 1983, Bill began a new job with Caremark. During his employment, and before separation, he was granted several company stock options, all at the stock’s then market value. The date of exercisability as to each option varied. The stock, subject to terms of forfeiture, vested on various dates.

*648 On August 3, 1987, Caremark was sold to Baxter, Inc. As a result, the options’ dates of exercisability were accelerated and all of the stock immediately vested.

At time of trial, Bill had sold some of the stock received pursuant to the exercise of certain of the options, realizing a pretax gain of $255,388. Moreover, Bill had exercised options yielding 15,123 shares of Baxter stock. An additional 60,000 options had not yet been exercised.

The court found all of the gain on the stock sold after separation was community property. It ordered Bill to pay his wife one-half…