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Humility doesn’t become you

14 June 2013 By Christopher Swann

False modesty may be the best hope for at least one divorcing billionaire. The estranged wife of oil baron Harold Hamm, chief executive of Continental Resources, stands to gain a big chunk of his $11 billion fortune. His defense may be one that no CEO would ever deign to assert outside of divorce court: Much of his wealth is owed to good fortune, and rising oil prices, rather than exceptional management.

Hamm’s divorce settlement looks set to enter the record books as the largest ever, displacing that of fellow billionaire Rupert Murdoch, who in 1999 handed an ex-wife about $1.7 billion. A Reuters exclusive suggests Hamm could face a bill almost twice as large.

But a quirky legal precedent in Oklahoma, where the Hamms married, may help the tycoon save more of his riches. The state Supreme Court ruled in 1995 that spouses must split marital property acquired through the efforts, skills or investments of one, but can each keep anything gained through good fortune, appreciation or inflation. In short, Hamm comes out ahead if he claims to have lucked out through, say, rising oil prices.

Many oil executives could probably make the same self-abasing assertion, because the value of their companies’ shares is closely tied to the price of oil. And that price has soared six-fold since the Hamms tied the knot in 1988.

Yet Hamm’s entrepreneurial record could work against him. Having started his career cleaning out oil barrels, the magnate certainly qualifies as a self-made man. Since Continental floated in May 2007, the price of crude has climbed just 50 percent while the value of Continental stock, including dividends, has risen 500 percent.

Meanwhile, the return on shares of rivals like EOG Resources and Anadarko Petroleum has been only about 80 percent over the same period. Continental’s strong record owes a lot to Hamm’s role in the discovery of North Dakota’s Bakken shale, which accounts for much of America’s recent boom in oil output. And Continental’s public relations team has not been shy about trumpeting the company founder’s achievements.

A little more modesty from chief executives would ordinarily be refreshing. In Hamm’s case, however, it just looks false.

 

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