How do you divide a nearly trillion-dollar empire when a divorce occurs and the CEO doesn’t have a prenup? Investors are wondering and watching to see.
With a 16% stake in the Amazon, how will founder Jeff Bezos’ divorce impact the company? There’s no prenup in place, and since MacKenzie Bezos has been his wife for the entire ride, from online bookseller to global force, she can anticipate receiving half of the community property. That’s according to Wealth Advisor in the recent article, “Amazon Achilles Heel: Bezos Prenup Disaster Threatens $800B Behemoth.”
That may be a challenge, when the majority of that wealth is in his $126 billion in stock. Jeff can give her close to 40 million shares and a few of their houses and call it good, but there can be problems with that arrangement, too.
MacKenzie could get half the stock in exchange for giving up the voting rights and the right to sell. This would effectively lock her in as a silent partner, shoring up Jeff’s continued control. Amazon could give her a prestigious but non-executive role on the board. She would certainly be a candidate to serve as director, with her 8% of the stock.
MacKenzie needs a way to liquidate whatever shares she gets, because Amazon doesn’t pay dividends and is unlikely to do so for the foreseeable future.
There’s no simple way to turn that asset into current cash flow, short of selling some stock. In fact, that’s what Jeff does now: he’s been selling a bit of his to fund other investments and the family lifestyle, in addition to paving the way for philanthropic ventures.
MacKenzie will need the same authority in her divorce settlement, or she’s still going to need cash. At some point, a judge may allow her to sell $60 billion in stock.
The goal now is making sure that Jeff keeps control of the company. That should have been the plan years ago. Amazon doesn’t have a real succession plan. There’s no trust holding the stock safe for future generations. And the company doesn’t even carry life insurance on him. As a result, they are all subject to his mortal frailty. Divorce hit before death or disease, but it was only a matter of time.
Jeff has done the same thing that many business owners do. The scale is different but the lack of succession planning for the loss of a key person is the same.
Reference: Wealth Advisor (January 14, 2019) “Amazon Achilles Heel: Bezos Prenup Disaster Threatens $800B Behemoth”