CEO Divorce: Impact on Shareholders

By: Timothy P. Flynn

There is no doubt that a divorce proceeding affects any professional's work routine; that includes, of course, corporate executives.  The distraction of a divorce in the board room, however, affects others outside the company; it pulls the corporate shareholders within its scope.

We're not just talking about guys like Mad Men's Don Draper, whose divorce temporarily but significantly affected the partners of a successful NYC advertising agency.  A CEO's divorce can affect the bottom-line for the shareholders in the company.

There are several ways that an executive's divorce could affect the company for which he or she manages.  First, if the executive has a significant stake in the company, the divorce could affect the executive's controlling interest.  The divorcing spouse will want a portion of the value owned by the executive and that value could affect control of the company.

Second, the divorcing executive's corporate focus and energy levels will be impacted by the trajectory of his or her divorce proceeding.  It is no surprise that business studies and surveys have shown that well over one-third of companies report a negative productivity impact directly arising from the divorce of an executive.

Third, the divorcing executive's strategic decision making can be influenced by the divorce proceeding.  If, for example, the executive is funding her divorce settlement with personal assets so that she can retain her share of corporate ownership, her outlook toward risk could be impacted: i.e. she may become more risk-adverse in the short term in order to protect her suddenly less-diversified and more concentrated net worth.  Being less risk-adverse may not be good for the company or its shareholders.

All of this affects a shareholder's interest in the company.  In many cases, perhaps because of the above examples, corporate divorces are handled as privately as possible.

The collaborative model we prefer here at Clarkston Legal serves the executive, and thus her company, very well.  The collaborative model is where the divorcing parties, and their team of professionals, meet and negotiate a settlement before a divorce proceeding is officially filed with the family court.

If you or your spouse are considering a divorce and there are corporate implications, you should give serious consideration to the collaborative model.  To learn more, contact us for a free consultation.

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Posted in: CEO,collaborative divorce,divorce,divorce lawyer,shareholder

Epic Divorce Battle: 17-Years and Counting

Law Professors should know better.  In what has to be one of the longest-running open cases in U.S. history, the divorce proceedings between two law professors continues to rage in Hamilton County, Ohio.

The two now-adult children produced from this ill-fated union have never known anything other than their parents locked in an epic divorce battle during which each parent has alternately won, then lost custody.  How utterly embarrassing.

The judge currently presiding over the matter recently chastised both parties for their non-exemplary behavior in the latest hearing conducted in the matter last month.  Over the years, several of the family court judge's rulings have been appealed by both parties; this, no doubt, has gobbled-up some of the years this matter has been pending and active in the courts.

Michigan Connection:  Law Professor Sharlene Boltz, one-half of this divorce disaster, is a graduate of the University of Michigan Law School.  We here at the Law Blogger wonder whether she ever took a family law course.

Here in Michigan, county family court judges are under a directive of the Michigan Supreme Court to complete all divorce proceeding within one year.  While this is a good rule-of-thumb, it is difficult to accomplish in some cases.

One of the ways we attempt to reduce protracted delays in the divorce matters we handle at our law firm is utilization of the collaborative divorce approach.  In a collaborative divorce, the spouses communicate directly about the ultimate settlement in the case prior to actually filing the initial pleadings.

Once a divorce is filed, the spouses and their minor children are subjected to the public jurisdiction and the timetable of the local family court.

The negotiations in a collaborative divorce proceeding, on the other hand, are conducted privately, often with the assistance of at least one lawyer and, if necessary, a counselor or therapist.  A team approach is used with an emphasis on cooperation and without concern for court-imposed deadlines.

Unfortunately, this divorce model does not suit every family.  For the collaborative divorce model to work, both spouses must commit to on-going communication and mutually reasonable objectives; if one of the spouses insists on the adversarial process, the collaborative model will not be possible.

If you are contemplating divorce and believe you have a rational cooperative spouse, perhaps you should give the collaborative divorce model a try.  To learn more, contact our law firm for a free consultation.

www.clarkstonlegal.com
info@clarkstonlegal.com

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Posted in: child custody,collaborative divorce,divorce,Law Professor Sharlene Boltz