Twenty-five years after marrying, Jeff Bezos announced he is filing for divorce from MacKenzie. Unless there is a prenuptial agreement to guide them, investors holding high-priced shares of Amazon will be wondering if they should proceed to checkout.
According to CNN, the Bezos are the world’s richest couple, and they recently announced they are getting a divorce “after a long period of loving exploration and trial separation.”
The divorce could drastically reduce Bezos’ stake in Amazon and open the door for his wife to become one of its largest shareholders, with new leverage at the company.
Given that Amazon launched after the pair were married, virtually all of Jeff Bezos’ current $137 billion net worth could be considered community property and have to be equally divided.
But is there a prenup or post-nup agreement to guide them?
Florida Prenuptial Agreements
I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just resolving uncertainty in a marriage.
When a spouse is also the CEO of Amazon, they can be a guide past dangerous price swings. For example, when the CEO of Continental Resources was getting divorced, shares of his company dropped 2.9%. Conversely, when Rupert Murdoch announced his divorce, shares of News Corp gained 1.4%.
Why? Because in Rupert Murdoch’s case, the divorce announcement stressed the parties’ prenuptial agreement, that there would be no spin-offs, and a divorce would have “zero impact” on the company
A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce. This can be especially important in second marriages.
If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.
That’s where prenups come in. Prospective spouses may limit or expand state laws by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce. Prenups can be a reliable guide down rough rivers if they’re done right.
Proceed to Checkout?
It is not known whether the Bezos have a prenuptial agreement. It’s also unclear where they might file for divorce. Assuming there is no agreement, the Amazon CEO may need to either sell off or transfer half of his stake in the company to fulfill an equal split for the divorce.
Unlike other tech CEOs, Jeff Bezos’ control over Amazon doesn’t come from having a majority of voting power at the company, but rather from a strong leadership track record over two decades.
Divorce without a prenup can hit publicly traded companies hard. CEOs might be forced to sell or transfer shares as part of a property division. Selling shares can reduce a CEO’s influence and impact decisions regarding corporate strategy, asset ownership, and board composition. Divorce also impacts productivity, concentration, and energy levels because divorce is stress, and divorce can change appetite for risk.
The CNN article is here.