Harold Hamm is the quintessential self-made man. He was born the son of sharecroppers and at the time of this writing is the world’s 34th richest person, according to Forbes.
Hamm is the founder and CEO of Continental Resources (CLR) and his name is synonymous with oil. He was one of the first to predict the rise of fracking in this country and some reports say he owns more oil in the ground than any other American.
But he may be about to argue that he had nothing to do with his earning his fortune; it was all luck. Why? That may be the only way for him to keep his billions in his divorce.
In 2012, Sue Ann Hamm filed for divorce from her husband. The pair have been married since 1988. As soon as the divorce became public, speculations arose that it could get ugly. The most expensive divorce in history is currently that of Russian oligarch Dmitry Rybolovlev, who paid his now ex-wife $4.5 billion earlier this year. With an estimated net worth of $20.3 billion, Hamm could easily end up paying more than that.
In this case, the marital property being discussed as divisible is a whopping $17 billion. That number was arrived at in a report by Kenneth Button, an economist hired as a witness by Sue Ann Hamm. The report is sealed in the trial but has been cited in multiple news reports on the case. It’s based largely in Hamm’s controlling stake in Continental Resources.
“You’re talking about $8 billion he could lose that’s more than anybody could lose in serial lifetimes,” said Raoul Felder, a prominent New York divorce attorney and expert in celebrity cases. In practice, Sue Ann Hamm stands to receive up to 50 percent of the couple’s marital assets. “He ought to be settling this for 1 or 2 billion dollars.”
That hasn’t happened yet. The case has been in court in Oklahoma for the past two weeks. Court proceedings are private, largely to protect Continental Resources shareholders.
The question of who gets what comes down to how Hamm made his fortune.
Felder explained by example: “You have a piece of vacant land before you get married, a separate property. If you do nothing about it and by passive acts it increases [in value], for instance they build a railroad next door or a road, fine, it’s passive,” he said. “But if you make a victory garden on there or you build a house, it’s now active.” In the first case, you could keep the whole value of the property. In the second, you’d have to split it.
So essentially, for Hamm to keep the entire $17 billion, he’d have to completely contradict the image he’s projected for decades, that of a self-made man.
“On the one hand he wants to show he’s a world leader, he’s great, he’s an innovator, he’s hands on,” Felder said. “On the other hand he’s saying I’m just a dumb guy who fell into something lucky. I was reading the newspaper all day.”
That’s part of the reason Felder, who has not consulted on this case, would advocate that Hamm pay up voluntarily.
“I’d say settle because this is dangerous ground,” he said. They’re going to start digging up newspaper clips and video clips of him saying how he did that, how he did this, and he’s going to lose at some point. They’re not going to believe he’s just a jerk who got the sweepstakes ticket and won the oil fields.”
This divorce is bigger, though, than just Harold and Sue Ann Hamm. Continental Resources is currently a $29 billion company by market cap. According to the Button report, it was worth just tens of millions when the couple wed. As founder and CEO Hamm is the company’s largest shareholder, with 68% of the company shares.
The question on investor minds: could Hamm lose control of his company?
“This was always a big worry when they started the equitable distribution laws,” said Felder. “The guy wakes up and says ‘Oh, well the housewife is Vice President and owning 50% of the shares of stock.’”
Sue Ann Hamm, though, is far from your typical housewife. She is a lawyer and former Continental executive. She is, in many ways, active in her husbands affairs.
Donations to charities and political campaigns were reportedly done in both of their names. In May 2012, she organized a fundraiser for then-presidential candidate Mitt Romney. That same month she filed for divorce. (Harold Hamm advised the Romney campaign.)
Sue Ann Hamm alleges that her husband was having an affair. He alleges they were separated as early as 2003. According to Reuters, the couple has filed for divorce twice before, he in 1998 and she in 2005.
Even if the couple settles this case outside of court, Harold Hamm’s stake in the company may be compromised. Hamm may have to sell shares of the company to finance any major divorce settlement. As it currently stands, shareholders may have longer to wait. The court case is not expected to wrap up until October.
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