According to recent statistics from the American Psychological Association, approximately 50% of marriages end in divorce. Separation and divorce are emotionally taxing for relationships especially if these relationships have lasted for quite some time. Where it starts to get complicated is when custody of children becomes involved in the process. The APA suggest that its often helpful for divorcing parents to “come up with a plan and present it to their children together. And, keep the lines of communication open. Kids benefit from having honest conversations about the changes their family is experiencing.” Though this advice is sound, I can only imagine what divorces look like when the “child” being fought over is actually a Fortune 500 Company.
When we last checked in with Jeff Bezos, he wasn’t feeling too hot because after twenty-six years of marriage to Mackenzie Tuttle, the two decided it was time to call it quits. In early January, the Founder and Chief Executive Officer of Amazon (AMZN), perhaps the largest e-commerce website on the planet, announced that he and his wife would file for divorce. Aside from friends and family upset about the end of a truly loving relationship, everyone started panicking about the possibility of a dissolution of Jeff’s controlling stake in the Company.
For those unaware of divorce law in Washington State, the home of Jeff Bezos, the region has community property divorce laws, which may drastically harm Bezos’ wealth, given that his ex-wife may be entitled to half his assets. Reports suggested at the time that nearly $137 billion was at stake in the coming months of the divorce.
In a 2013 Stanford study, entitled “Separation Anxiety: The Impact of CEO Divorce on Shareholders,” researchers investigated how companies and their chief executives fare over the course of divorce proceedings, ultimately arriving at the conclusion that there are “three potential ways in which a CEO divorce might impact a corporation and its shareholders.”
The first, and perhaps most likely, relates to loss of control or influence. A CEO with a significant ownership stake in a company, like Bezos who owns 16.3%, may be forced to sell or transfer these assets to meet the demands of a divorce settlement. If this were to take place, not only would Bezos lose the influence he possesses over Amazon (AMZN), but due to such a large sell of, the company’s share value could drop as a result. The report says that “shareholder reaction to the loss of control will; vary, depending on the view that investors have of CEO performance and governance quality.”
Well, after months of arbitration between the Bezos clan, Mackenzie Bezos decided that to not go after controlling interests in Amazon (AMZN) or the Washington Post and Blue Origin.
According to a tweet sent out earlier this week, Mackenzie said:
“…Grateful to have finished the process of dissolving my marriage with Jeff with support from each other and everyone who reached out to us in kindness, and looking forward to the next phase. Happy to be giving him all of my intestines in the Washington Post and Blue Origin, and 75% of our Amazon stock plus voting control of my shares to support his continued contributions with the teams of these incredible companies…”
–Mackenzie Bezos
Having said that, Ms. Bezos is not leaving empty-handed by any means. She will retain 25% of the couple’s stake in Amazon (AMZN), valued at roughly $35 billion, making hearth third-wealthiest woman in the world. I cannot say that I’m not surprised at Mackenzie’s decision to relinquish her majority ownership in several companies. She could have gone for Jeff Bezos’ jugular, but that’s not what you do when you’re in love.
