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April 5, 2019updated 08 Apr 2019 11:09am

Amazon alive and well after Bezos divorce settlement

By MarketLine

A decision by the US divorce courts to award MacKenzie Bezos a record settlement is unlikely to damage Amazon’s financial prospects.

When it was announced that the Amazon founder and his wife, MacKenzie Bezos, were to divorce, attention immediately turned to how the US’s largest online retailer would be affected if Mackenzie were awarded half of the assets held by Jeff Bezos.

Jeff Bezos divorce

Prior to divorce proceedings concluding, Jeff Bezos owned 16.3% of the company he founded. The final settlement leaves much of that intact. Jeff Bezos will maintain 75% of his former shareholding and Ms Bezos is reported to have transferred all her voting rights to her former husband.

In practice, this means the retailer will not be subject to scenarios muted at the beginning of the divorce process. Fears abounded that the company would become racked by internal divisions were Ms Bezos to be awarded half of the shareholding held by Mr Bezos.

The renowned retailer could have lost much more than he has. In the state of Washington, Ms Bezos was entitled to half of the then $137 billion fortune of Mr Bezos. Given Mackenzie Bezos was intimately involved in the creation of Amazon, she was in a powerful legal position.

Following the divorce, Amazon will continue to thrive because the command structure has survived undamaged and Mr Bezos will carry on taking decisions as he did whilst married.

The chaos potential was enormous

A seat on the board could have easily been demanded because Ms Bezos could conceivably have held over 8% of the company – more than the largest institutional investor Vanguard, which holds a 6% shareholding.

A key reason behind the success of Amazon is the management style adopted by the CEO. Rarely has the company failed to deliver on promises, preferring only to release products and services once everything is ready.

Jeff Bezos claims he hardly takes an interest in the day-to-day functioning of his company. Instead, he focusses on years in the future, taking few decisions but each of which is seen as highly significant to the future prosperity of the Seattle-based company.

It was conceivable that Ms Bezos could have gained sufficient influence to have compelled Jeff Bezos to have gained prior approval from his former wife before making long-term decisions about the company.

For shareholders that would have been a difficult situation to tolerate given the esteem with which Mr Bezos is held and the degree of buoyancy he brings to the share price. That such an eventuality will no longer materialise is a relief for the company.