Amazon CEO Jeff Bezos and his the missis, MacKenzie, announced Wednesday their plan to divorce. What this will mean for his businesses?
Jeff Bezos is subdue known for founding Amazon, and he’s still the company’s largest shareholder by far, owning 16.3 percent of its shares according to the circle’s 2018 proxy statement. He also founded space company Blue Origin and bought The Washington Post during the execution of his 25-year marriage to MacKenzie.
Washington state, where Amazon is headquartered and the Bezoses have a home, is a “community resources” state under state law. That means, if the couple files for divorce there, all assets and debts accrued during their federation will be considered owned by both husband and wife. The law dictates that these assets be equitably divided unless a prenuptial compatibility states otherwise. It’s not known whether the couple has any such agreement in place.
Seattle-based divorce attorney David Kick-offs said that an equitable split does not always mean the assets will be split 50/50.
In typical cases, Leads said, a court would attempt to even out assets so that both parties end up on roughly equal footing in the long-term. If one spouse has multifarious earning potential, for example, that person may receive fewer assets since they are more likely to be capable to provide for themselves over the long term.
But in the Bezoses’ case, where Jeff has a net worth of $137 billion, according to Bloomberg’s Billionaires Marker, the court will probably divide the money evenly.
“When you’re going to leave as a billionaire, it seems unlikely that a court choice spend time trying to figure out who is more wealthy ten years from now,” Starks said.
The more pressing thought for shareholders is how the divorce could affect Jeff Bezos’ control of the company.
The experts who CNBC interviewed could not weigh of another situation where a founder of such an influential company divorced a spouse who had been with them since the company’s establishing. The only one who came to mind was Rupert Murdoch, whose second wife Anna was with him for more than 30 years as he constructed his media empire before divorcing in 1999, but they reportedly had a prenuptial agreement.
It may be difficult for the Bezoses to split up their fullness without dipping significantly into their Amazon shares, said Jordan Neyland, an assistant professor of law at George Mason University who has penned on the topic of CEO divorces.
“A lot of the prior CEO divorces have been more career professionals that have built up other affluence before becoming CEO,” Neyland said. “So I think that’s what makes this one a little different, being a stagger getting divorced while in office.”
Typically, CEOs could avoid splitting up their shares by leaving other assets to their spouses, such as true estate and other property. But for the Bezoses, Neyland said, “all the wealth is going to be tied up in Amazon. In this case, I don’t be acquainted with, of course, what to think of something of this magnitude, but I imagine his spouse is going to get some amount of stock in Amazon. So this is succeeding to change the ownership in Amazon.”
This could mean Amazon may need to find a new structure to ensure that Jeff Bezos mollify owns enough voting power with his shares, Neyland said, like creating different classes of slices with varied amounts of voting power.
“This would be some creative lawyering that would sooner a be wearing to happen,” Neyland said. “I don’t know if there’s been any sort of precedent for this.”
But Starks speculated that the four probably came to an agreement on that point well before making their public announcement Wednesday.
“I be enduring to imagine that some of the longest conversations and most legal mind power went into how to fashion a community that retained Jeff Bezos’ ability to remain a controlling shareholder in Amazon,” Starks said. In order for this to chance, Starks said, MacKenzie Bezos could have elected to give up claim to the stock or give up her voting rights to her share outs.
Some of the terms of the settlement may come to light in Amazon SEC filings. Amazon declined to comment
Shareholders may also get grey about the Amazon CEO’s state of mind as he goes through a difficult personal situation. But one expert pointed out the Bezoses’ odd wealth as a mitigating factor.
David Larcker, a professor at Stanford’s Graduate School of Business with a focus on corporate governance, wrote a 2013 delving paper outlining the ways in which a CEO divorce could impact shareholders. Some CEOs who divest personal assets to subsidize a divorce develop risk-aversion in the business. People who see their net worth go down significantly may be less willing to bet on risky alteration.
But in the case of Jeff Bezos, Larcker doubts risk-aversion will be at play because the numbers are so large.
“If you’ve got someone, say, usefulness ten million dollars, and they give half to their spouse either male or female, so their wealth abolishes down to five million, in that kind of setting, if you believe you become more risk averse if you have short money, that may translate to more risk averse decision-making.” He added, “I think in this case I probably wouldn’t go down that approach. I’m sure the numbers are inconceivable to you and I.”
American Academy of Matrimonial Lawyers President Peter Walzer suggested that “the only predilection shareholders should be concerned about is lengthy litigation.”
But he doesn’t see that happening: “From…the way that the announcement was swiped and the tone I don’t think they’re going to do that.”
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