THE CEO DIVORCE
CEOs tend to wield a lot of power both at home and in the boardroom. Many wield power across the entire globe as heads of multinational corporations and conglomerates. When you divorce a man like this, you have to be careful to dot your I’s and cross your T’s. You need good legal counsel. And you should pray for a sympathetic judge.
Most of the issues involved with divorcing a CEO are the same as those in any other divorce. They are just going to be on a larger scale. What are the issues? Custody of minor children. Spousal support. Equitable distribution. Grounds. Prenup. These are the biggies. These are what people fight about – no matter what their socio economic background and professional pedigree. If you have a prenup, you may want to see if there is any basis to set it aside. Or, it may have even expired. A lot of these CEOs tend to have prenups that are null after, say, 10 years. And, a lot of CEO marriages tend to last longer than, say the average sports star marriage. So maybe your prenup is not even valid! Wouldn’t that be cute? The wife of a CEO has to be a bit more astute than some other wives, though, because she is usually married to a very smart, cerebral man who can basically out-maneuver her in the courtroom with cunning moves that rob her of her rightful share of the marital estate, or even custody.
CEOs are not above using their power, money and influence to exact his “crimes.” One good thing for the wife in a CEO divorce is that the New York courts routinely award attorney’s fees in these types of cases so that getting appropriate legal counsel will not be an issue. Once counsel is in place, then you and your attorney(s) have to begin to do some serious police work. You, probably more than, say, a sports star’s wife, will have to worry about offshore trusts, stock options, bonuses, executive compensation packages, business income from privately held corporations and LLCs, and enhanced earnings from advanced degrees. That is not to say that a sports star’s wife would not have to worry about these issues. Some might. It is just to suggest that more likely than not, a CEO’s wife is more likely to face these issues than someone of another demographic.
In the CEO divorce equitable distribution scheme often involves substantial wealth, sometimes into the billions of dollars. Next to sports stars, rappers, movie stars and high ranking religious professionals, the CEO wife usually makes out best in terms of overall settlement. That is because compared to her husband, the other wives’ husbands make a paltry sum at best. You are looking at private art collections, status jewelry, minks, cars, real estate, cash, stocks, bonds, gold, futures, trusts, you name it, they got it. And you want to talk about perks? CEO perks make movie star perks look like a joke. I mean, take a guy like former CEO of GE, Jack Welch. When Jack Welch divorced his wife Jane Welch in 2002 to marry the editor of Harvard Business Review, Suzie Wetlaufer, I understand the friggin’ Securities and Exchange Commission had to get in on the action and sanctioned GE as a result of some of the perks paid to Welch – it was so much, and a lot of it was embarrassing because it was just so much stuff! I mean, down to vitamins and fresh flowers, and all the way up to private chauffeurs and gulfstream jets. It was straight up insane.
But there are other issues on the other side of this coin. Because actually it is not just the wives but the shareholders of the companies these CEOs manage also have headaches relating to this CEO divorce. I was reading recently about the “impact of CEO divorce on shareholders.” And they cite issues such as 1) the loss of control and influence of the CEO; 2)the effect that the divorce has on the CEO’s concentration, energy and productivity; and the CEO’s perception and handling of “risk” post divorce as factors for shareholders and management teams at the company to think about when a CEO goes through a divorce. If you are a CEO, obviously you also have your own side of this. CEOs tend to retire prematurely according to an article at this link from Harvard http://blogs.law.harvard.edu/corpgov/2013/12/03/the-impact-of-ceo-divorce-on-shareholders/ Originally published on December 19 2008
The Financial Times also wrote about this issue. Citing research conducted at the Stanford Graduate School of Business, the FT wrote:
Divorce, they write, could undermine CEOs’ control and influence, affect their “productivity, concentration and energy levels”, and have an impact on their attitude to risk. They cite Rupert Murdoch’s split from Wendi Deng and the divorce of Harold Hamm, CEO of Continental Resources, from his wife. News of the first, thanks to a pre-nuptial agreement, left News Corp shares unmoved; news of the second, with nopre-nup, knocked 2.9 per cent off Continental Resources’ stock price as investors worried about the fate of Mr Hamm’s 68 per cent stake in the group.
But the researchers have left out the most topical crossover between corporate and marital relations: the controversy over the pay-out to Nokia’s former chief executive Stephen Elop, triggered by the sale of the Finnish group’s mobile handset business to Microsoft. Mr Elop reportedly declined to renounce all or part of his multimillion-euro pay-off because he was in the middle of divorcing his wife. Nokia will not comment, but Helsingin Sanomat newspaper speculated last week that if Mr Elop “were to agree to relinquish his final compensation of €18.8m during the divorce proceedings, he might still be required to pay half of the value of the bonus to his wife”. more