In a departure from my usual UK tattles, comes a story reported by Reuters from Oklahoma, USA involving the CEO and founder of one of that country’s biggest oil companies, Continental Resources.
Mr Harold Hamm, billionaire, is about to commence his divorce trial which could result in the largest ever divorce judgment. The question primarily for issue is how the Court will deal with the increase in value of Mr Hamm’s 68% share of Continental Resources, from about US$16 million in 1987 to a staggering US$19 billion today. That’s quite an increase – a thousandfold in fact!
Scheduled to run for nine weeks, just how much Judge Howard Haralson will award each spouse will be determined by his evaluation of Mr Hamm’s work during the marriage. Whilst seemingly counterintuitive, Mr Hamm’s argument will be to downplay his role in the company’s increased wealth with his wife arguing Mr Hamm’s role was pivotal to the company’s success.
There is a reason for what may seem to be rather strange arguments. If Mr Hamm can show that Continental’s value grew in large part due to market factors beyond his control, including the rising price of oil, he may well be awarded the bulk of the wealth. Reuters report that Judge Haralson has already determined that the majority of Continental shares in Mr Hamm’s name are his property because he owned them prior to marriage.
Conversely, Mrs Hamm will be out to prove that the increase in the value of the shares was due to Mr Hamm’s business acumen and tireless management. According to Continental’s annual 2013 proxy filing to investors, “Over the course of the Company’s history, Mr Hamm has successfully grown the Company through his leadership skills and business judgment”. Not a bad endorsement! In Oklahoma, if the increase in value of the shares is derived from work efforts by either spouse, the increase is considered marital wealth, subject to an ‘equitable’ division – which could mean a 50-50 split.
No wonder the parties are going to trial – they’re only fighting over a difference of, say, US$9.5billion or so!! Not surprisingly, given the money we’re talking about, since Mrs Hamm filed for divorce in 2012, her legal team have been provided with more than 1 million pages of discoverable documents and have deposed (or interviewed) at least 70 witnesses. It will be most interesting to see how the trial unfolds. Watch this space for the decision in due course.
By way of contrast, were the matter to be heard here in Australia, Mr Hamm may, I suspect, argue that it was his special contribution that resulted in the asset pool increasing and he should be awarded the majority of the wealth. My view is that he would not be successful. Australian Courts have disapproved the notion of ‘special contribution’ for quite a number of years now. However, his initial contribution, being the ‘platform’ from which the wealth grew would certainly be taken into account and, I dare say, a sizeable adjustment made in his favour when assessing the parties’ contributions throughout the marriage.
No matter the size of your family’s asset pool, be it $100,000 or $100,000,000, Armstrong Legalare well placed to assist in resolving financial affairs on the breakdown of a marriage or de facto relationship. Please do not hesitate to contact one of our friendly Family Law Team for expert advice.