10 November 2014

1st Time In History That a CEO Has Denied That He Earned the Billions He Made

Harold Hamm is CEO of Continental Resources, and owns 68% of the company's shares. Some believe he is the largest holder of underground oil in the US, his shares now worth nearly $14 billion.

His wife is suing for divorce and as it turns out, divorce law has given Hamm incentive to downplay his role in the phenomenal increase in share price during his time as CEO. Although Hamm's net worth was about $18 billion at the beginning of the trial, his wife will get a settlement of less than a billion. The reason is that Hamm didn't really earn the money. At least according to his lawyers. The following is from Reuter's:

Under Oklahoma law, the enhancement of wealth that comes as a result of the efforts, skills or funds of either spouse is subject to "equitable distribution."
Over the 26-year marriage, the value of Continental soared some 400-fold. During the trial, Harold Hamm's legal team contended that Continental's growing wealth was mostly due to passive or market factors such as the rising price of oil.
Seeking a larger judgment, Sue Ann Hamm's lawyers called expert witnesses to show that Continental grew because of Harold Hamm's deft management decisions.
Judge Haralson found that Harold Hamm played a central role in his company, but he did not agree with the massive dollar values that Sue Ann's expert witnesses placed on the CEO's contributions to Continental's weatlh.
For instance, Haralson wrote that the experts had not established exactly how much value was attributed solely to Harold Hamm and not to other managers at Continental, and that passive factors like oil prices and new technologies helped to propel the firm's value.

Still, he makes $5.49 million, which isn't bad for having little to do with the company's performance.
It would be really fascinating to see just how much CEOs thought they'd actually earned in such a case. 

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