The opportunity to gawp at the lifestyles of the rich and famous was a side benefit to taking a look at a dispute over active vs. passive appreciation in the divorce arena. The case of Hamm v. Hamm in the Oklahoma District court was concluded last November. The Memorandum Order runs to 80 pages, meticulously dividing the frankly huge marital estate of Harold and Sue Ann Hamm.
Harold is the son of sharecroppers who became an oil magnate and the CEO of Continental Resources with a net worth of $18 billion at one point. In his divorce from Sue Ann after 25 years of marriage, one of the main questions raised was not the value of the shares in Continental which Harold owned at the date of their marriage but the extent to which the increase in the value of the shares between the date of their marriage and the date of the divorce was due to his efforts. Sue Ann would not be entitled to the increase in value to the extent that the increase was not due to his active involvement in the affairs of the company i.e. was essentially passive appreciation.
Harold’s case was that the increase in stock price was largely due to factors outside of his control such as worldwide oil prices and the work done by other executives of the company. He claimed only 10% of the increase was attributable to him. (There was some suggestion during the hearing that the company’s web site and SEC filings relating to the company’s operations were amended to downplay Harold’s role!) Sue Ann’s lawyers argued that due to Harold’s skills and leadership, he was responsible for 90% of the increase.
The case was finally settled for a payment to Sue Ann of close to $1 billion. The public record at this point does not show how the court decided on the active vs. passive appreciation issue, but given the (relatively) low settlement amount, it would appear that greater weight was given to Harold’s position. Both Sue Ann and Harold are appealing the judgment. Maybe we’ll get to see more details on this in the event of an appeal. In the meantime, I’ll continue perusing the seemingly endless list of houses, ranches and other trinkets that the court divided up in the Order, indulging in my very own “caviar dreams”.