With the announcement of Amazon’s company founder Jeff Bezos divorce with his wife MacKenzie, shares have responded by seesawing a bit as investors question the overall effect it will have on the company. On Wednesday, Amazon (AMZN) CEO announced that he and his wife of twenty-five years would be filing for divorce.
For the time being, it is not yet known what the divorce terms of the agreement will be, but it does seem to be proceeding amicably. However, most attorneys believe that Bezos will end up finding a way for retaining a controlling interest with voting power at the company.
One such unknown about their agreement is whether or not they will choose to file for divorce in Washington state, where Amazon is headquartered as well as one of the couple’s homes. If so, according to state law, all assets accumulatedduring their marriage would be split evenly because they are considered to be shared marital assets owned by both. Unless they have a prenuptialagreement, which has yet to be indicated, this is most likely what will take place.
What Does Bezos Divorce Mean For Amazon?
Bezos founded Amazon, and he is still the largest shareholder in the company by far; he owns a little over sixteen percent of its shares. Additionally, he also founded Blue Origin, a space company, as well as purchasing The Washington Post during his marriage to MacKenzie.
The couple could file in Washington since they own a home there, which is considered community property under the state’s law. If the two do decide to file there, the law requires that all assets and debts amassed during the marriage are considered to be owned by both. Therefore, the law demands assets to be equitably split between both husband and wife, except in cases in which there’s a prenuptial agreement. As previously mentioned, it is not yet known if the Bezos had such an agreement.
Just to put things in perspective, assets are not always divided fifty/fifty when equitably divided. Generally, the court will try to equal assets as closely as possible for both, leaving both husband and wife on virtually equal footing in the long-term. One example of this is if one spouse has a higher earning potential and will have a better opportunity for providing for him or herself long-term, that spouse may get fewer assets initially.
However, in the case of the Bezos, and the fact that Mr. Bezos is worth almost a hundred and thirty-seven billion dollars, the court will most likely split the assets equally. The fact that both are going to be multi-billionaires makes trying to figure out who is going to be wealthier ten years from now seems pointless.
The main thing to take away here is that MacKenzie could end up with a large sum of Amazon shares that she could either liquidate or hold on to the shares, making her one of the largest share holders along with Jeff and Vanguard. If she decides to liquidate then we would see millions of shares sold in the open market which could drastically affect the stock price so we will want to see how the terms of the divorce unfold.
What Does This Mean For Control of Amazon?
What’s most pressing for shareholders at his time is their concern of how the divorce will affect Bezos’s control of Amazon. As far as experts can remember, this is the first time such an influential company has been part of a divorce.
This is what seems to be the first time a founder such as Bezos’ caliber has divorced a wife who has been in the marriage since the company’s inception. Experts thought of one similar situation, but there was a prenuptial agreement in place and, so, it can’t shed any light on what may happen in this one.
Some feel it will be difficult to divide the couple’s assets without having to significantly dip into their company shares. Because a lot of CEO’s have already built up a company before marriage, the stakes aren’t as high as they are in this situation where the wife was there from the company’s founding to now. That is going to make this divorce and split of assets different from any other seen before.
Generally, a CEO would avoid leaving a spouse other assets, such as real estate, property, or other businesses, in order to avoid splitting their shares. However, in this case, most of the couples’ wealth is tied up in the company. There doesn’t seem to be any way around Bezos’ spouse acquiring at least some of his stock, which will change Amazon’s ownership and, ultimately, control.This could lead to Amazon finding a new structure for ensuring Bezos’ voting power, such as creating different classes of shares, each with their own amount of voting power.
With all the speculation, it’s most likely that the couple had already agreed before even making their divorce announcement. As to whether or not this is the case, Amazon declined to comment. Some stockholders worry this may be a troublesome distraction while others are concerned with his state of mind.
However, as one analyst pointed out, Bezos has an exceptional amount of wealth. Risks are much less likely when the amount of money is so large. The main concern, according to experts at this time, should only be how long litigation may take and most don’t see that being lengthy or difficult, either. Bottom line, it’s a “wait and see” situation, but it seems to be well under control with little to no bad outcome in sight.