Amazon CEO Jeff Bezos’ impending divorce from his wife, MacKenzie Bezos, carries at least two big risks for the company’s shareholders, legal experts say.
Bezos could become distracted by the divorce proceedings, affecting his ability to run Amazon.
The divorce could also potentially lead to a mass sell-off of stock by either Bezos or his wife.
Legal experts think Bezos and his wife will work to minimize those risks, since it’s in their interests to do so.
But divorces don’t always go smoothly, and things could end up worse than they expect.
For the last 25 years, Jeff Bezos has been the steady hand on the tiller for Amazon, guiding the company through both rough patches and calm seas to ever-richer ports of call.
Now his personal life threatens to rock the company’s boat.
Bezos announced Wednesday that he and his wife, MacKenzie, are getting a divorce. Investors will likely be watching closely to see how the dissolution of his marriage affects Bezos’ running of the company and his stock holdings in it, said Mark Harrison, an advisor with consultancy Marcum, who has served as an expert witness in numerous financial disputes.
“Investors care mostly about uncertainty,” he said. He continued: “The market will look for signs of emotional upheaval between the two of them.”
For now, investors seem to be taking the news of the divorce in stride. Amazon’s shares closed Thursday down well less than 1%, and the company retained its title as the world’s most valuable corporation. But things could change if the proceedings become protracted or start to get ugly, Harrison said.
That may already be starting. In a statement on Twitter announcing their plans to divorce, Bezos and his wife portrayed it as a friendly parting. But subsequent reports in the National Enquirer and the New York Post that Bezos was carrying on an affair before he and his wife officially separated threatened to sully that narrative.
The Bezoses’ divorce has two big risks for shareholders
The risk of the Bezoses’ breakup to Amazon and its shareholders is two-fold.
As the company’s founder and sole CEO since its launch, Bezos is widely seen as the driving force behind the tech giant, which dominates the e-commerce market, has become the leading player in the cloud-computing industry, and has become the number-3 player in digital advertising behind Google and Facebook. Many investors likely consider him to be critical to the company’s continued success, and may rightly worry that Amazon’s business could suffer if Bezos is distracted by the divorce.
Discussing the potential danger, Harrison paraphrased hedge fund manager Paul Tudor Jones’ feelings on the topic.
A person going through a divorce is “worthless to him, because they’re completely unfocused,” Harrison said.
But the other danger comes from Bezos’ vast holdings of Amazon stock. He owns about 79 million shares, or about 16% of the company. That stake, worth about $131 billion, represents about 95% of his total wealth.
Washington state, where Amazon is headquartered and the Bezoses have long made their primary residence, will likely be where they end up …read more
Source:: Business Insider