Naperville Business Lawyer Discusses the Impending Divorce of Amazon Founder

As a business law attorney, I understand that many factors can affect a company’s value, especially when the company has many shareholders or investors. Publicly-traded entities can be particularly prone to fluctuations. Any decisions or news that might impact the company in any way are likely to cause at least some changes in the company’s share price and the faith that investors have in the company.

Earlier this month, news outlets were abuzz with the news that the online retail giant Amazon had passed Microsoft to become the most valuable company on the planet once again. At the time, Amazon’s share price had bumped to 1629.51 per share, making its overall market value about $797 billion. At the time of this writing, Amazon is currently trading at just over $1710.00 per share with a market value of about $837 billion. Despite the company’s current strength, however, many investors are somewhat concerned about how the impending divorce of founder and CEO Jeff Bezos will affect Amazon’s future.

A Long Marriage

Jeff Bezos founded Amazon in July of 1994, the same year that he married his wife MacKenzie. The couple was married in Washington State, where they have lived ever since. Under the divorce laws of that state, any property acquired by either spouse during the marriage is considered to be community property in event of a divorce, subject to equitable division between the spouses. (Illinois maintains very similar laws regarding marital property in divorce.)

At the beginning of January of this year, Bezos announced that he and MacKenzie were getting divorced. This means that virtually all of the wealth that he has accumulated thanks to Amazon’s success and other business ventures must be considered during the split. Bezos currently owns about 16 percent of Amazon’s shares, making him the company’s largest shareholder by a wide margin.

No Major Changes Expected

News outlets have indicated that things between the couple are amicable and are likely to stay that way, at least as far as anyone knows. This is good news for investors because a long, expensive trial could be damaging to the company—if only because of Bezos’ hands-on leadership style. Unlike other large public companies, Amazon’s founder shares do not carry extra voting rights, but other shareholders have long followed Bezos’ lead anyway. One financial expert observed, “[Bezos] is given control of the company because shareholders like him and his vision, not because he has 50 percent of the stock.”

Assuming that the couple’s property is divided roughly equally, MacKenzie is likely to receive at least a portion of Jeff’s shares. Unless other steps are taken, she would, therefore, be granted voting rights within the company. The company could choose to dilute her voting rights, but doing so would require creating different classes of shares—a move that would require a vote by current shareholders.

Most investors and industry experts are not overly concerned. They say that MacKenzie could sell the shares she is expected to receive and very little would change at Amazon. The share price might be affected for a little while but things would be expected to rebound quickly—as long as Jeff is still in charge. As it stands now, he already “runs the company as if he owned the whole thing,” said another investment analyst.

Contact a Naperville Business Attorney

If you own a business and are concerned about how your divorce might affect your company, contact an experienced business law attorney in DuPage County. Call 630-756-1160 for a confidential consultation today.

Sources:

Bloomberg

Reuters

CNBC