Family Law

Although divorce is primarily a personal tragedy, it can also spill into the workplace, even costing you your job? not to mention a good portion of your wealth and reputation. In recent years, a number of very public divorces involving chief executive officers have done just that.

The issue of divorce hit the well-regarded mutual company Mass Mutual on February 24, 2004, an otherwise quiet day. At a routine board meeting, a director called for a delay because Claire O?Connell, the wife of CEO Robert J. O?Connell, demanded entry to address the board. The board member stepped out and received her ?message?? that her husband and a top executive named Susan Albano were having an affair.

In comparison, the Henry Stonecipher affair was handled rather quickly and without tremendous publicity. A long-term leader of Boeing, 68-year-old Stonecipher was well thought of until he had an affair with a female executive. When the affair was reported to the board, Stonecipher admitted his involvement. Once again, employees?who discovered the romance through the lovers? email exchanges?reported the affair. Stonecipher was terminated and a severance package agreed to without litigation. The woman employee was also terminated. Stonecipher?s wife of more than 40 years is now seeking a substantial portion of his wealth in divorce proceedings.

Jack Welch retired from General Electric as one of the most highly regarded CEOs in the land. However, his divorce subsequently brought great public embarrassment to the compensation committee of GE, as well as to Welch himself. It also cost Welch many of the benefits in his employment contract. What?s more, the prenuptial agreement Welch negotiated with his second wife, Jane, had expired after 10 years?unfortunate timing as that is precisely when Welch began his affair with Harvard Business Review editor Suzie Wetlaufer.

The very messy divorce of Gary Wendt, then-CEO of GE Capital, somehow became an issue of what the wife of a CEO is worth. Wendt offered his wife a generous settlement that included payment of $8 million, plus $250,000 a year in alimony, for a total settlement of $11 million. Lorna Wendt, however, argued she was entitled to half of his hard assets and half of his stock options, restricted stock, deferred compensation and supplementary executive retirement benefits. GE was forced to disclose all of the facts concerning these awards.

BEST PRACTICES

Have a prenuptial agreement. Rather than an expiration date, the amount given to a spouse in the event of a divorce should increase with length of marriage.

If you missed getting a prenup, push for a postnuptial agreement. It is difficult but not impossible. Done right, it is as enforceable as a prenuptial agreement.

Agree on a confidentiality agreement. In any divorce, no PR statement will be issued directly or indirectly.

Seal all court papers.

Require mandatory mediation with complete confidentiality. 

Don?t have an affair with an employee. If the board discovers it, it will have little choice but to terminate both parties regardless of performance. The ensuing investigation may also turn up more serious indiscretions.

Don?t attack your soon to- be ex-spouse publicly. It can only hurt you personally and financially.

Don?t attempt a compromise proposal of far less than the amount the spouse may get in court.

Don?t be indiscreet. As Stonecipher discovered, emails between lovers tend to get spouses angry.

Read this very interesting article at Chief Executive.