Should compliance officers make it a point to grab a stack of supermarket tabloids on their way into the office or browse TMZ videos once they get there?

Probably not. There are, however, times when the world of gossip and otherwise private lives intersect with risk management and disclosure obligations.

This week, Jeff Bezos, founder and CEO of Amazon, announced that he and his wife of 25 years, MacKenzie, will proceed with divorce proceedings. Bezos, with a personal fortune valued at more than $140 billion, is among the world’s wealthiest men. His company is also jockeying with Microsoft for the distinction of being Wall Street’s most valuable company. In September, Amazon became the second company, after Apple, to exceed a $1 trillion market capitalization.

We have no specific insight into what divorce arrangements might be revealed in the coming days. As of this writing, there was not yet verifiable news of a prenuptial agreement or post-divorce settlement.

What we do know thus far: The Bezos live in Washington, a community property state; Amazon was founded roughly a year after the couple was married; the decision to divorce was announced on Twitter, exclusive of any other media outlets; and there was no divorce-related disclosure to the Securities and Exchange Commission.

As for the last item on that list, one might reasonably (and with distaste) ask why that would even be a consideration. The answer, as is so often the case in matters of regulatory disclosure, comes down to hazy, amorphous interpretations of “materiality.”

Jeff Bezos owns roughly 80 million shares of Amazon, about 16 percent of the company. Assuming an even split of assets, MacKenzie Bezos could reap more than $60 billion in stock value. Will that asset split be based on stock shares, or will the Amazon CEO liquidate some of his holdings to cover the legal responsibility?

Material impact?

Those questions bring us to others that need to be asked regarding the potential for material impact. Would the post-divorce settlement affect control of the company as it reduces the holdings of Amazon’s founder by half? How will voting rights be affected amid the potential for stock dilution? Will the former Mrs. Bezos be elevated to the status of an insider and decision maker at the company or one of its subsidiaries?

The divorce also raises a cautionary tale regarding dual-class share structures.

Dual-class voting typically involves capitalization structures that contain two or more classes of shares—one of which has significantly more voting power than the other. Tech companies (among them Google/Alphabet, Snap, Facebook, Groupon, and LinkedIn) have increasingly favored tiered voting structures as a means to give founders and “visionaries” greater say in how their companies are run, with the ability to be nimble and pursue long-term strategies otherwise endangered by the short-term performance demands. Founders and pre-IPO insiders retain majority voting rights and control over director selection even as their ownership and risk are spread among new, less powerful shareholders.

Amazon does not have such stock classifications, but it raises an interesting “what if” scenario. Would control of the company be further affected if MacKenzie Bezos received superior shares from her ex-husband, rather than the traditional, less valuable shares on the table?

Where is the line?

In the bigger picture, the Bezos divorce once again raises the question of how private CEOs’ personal lives should be if their health, relationships, or actions affect stock price.

Despite a nearly 10 percent jump since the New Year, Amazon’s stock price slightly dipped after news of the forthcoming divorce broke.

There is precedent for arguing that Bezos’s divorce could be considered material in the eyes of shareholders.

In 2013, News Corp. disclosed news that CEO Rupert Murdoch and wife Wendi Deng were divorcing. The announcement came amid plans to split the media giant into two separate companies.

The 2008 separation of Tesla founder and CEO Elon Musk from his first wife was particularly ill-timed as it came during the quiet period leading up to a $100 million initial public offering. Complicating matters was that hundreds of millions of dollars in government loans were predicated on Musk’s controlling stock interest. Could his ex-wife become co-owner, diluting that interest?

The company’s response was a revised S-1 filing in 2010 that detailed reasons why Musk didn’t expect the proceedings to have a negative impact on the IPO, the government backing, or continued business operations. It presented a post-nuptial agreement that allowed Musk to retain ownership of all his shares.

Unrelated to divorce, but relevant to a discussion of private lives becoming corporate fodder, Tesla’s stock fell 6 percent after Musk took a toke off a marijuana blunt during a 2018 podcast appearance.

Should companies draw the line when considering what information to disclose on the private lives of their CEOs when that information could have a very real effect on the company and its shareholders? Should health concerns of the CEO and other company leaders be considered material information?

At the time of Murdoch’s divorce, Compliance Week asked corporate governance expert Eleanor Bloxham, CEO of the Value Alliance and Corporate Governance Alliance, for her take. “Information about a CEO’s personal life should be disclosed if those issues or life events could have a material impact—or be perceived to have a material impact—on their performance or the reputation of the CEO or the company,” she said.

The SEC requires only minimal disclosure regarding CEOs and typically steers clear of requirements to disclose personal matters that might, arguably, rise to the status of “materiality.” Among the information it mandates are age and compensation information. It does not require health-related disclosures, although detailing succession plans is urged, but not mandatory.

As for “materiality,” there are few clear answers in such matters.

Supreme Court decisions have ruled that an omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding to take a particular course of action, such as how to vote shares during a merger. Where is the line drawn? Is a divorce of monetary interest to investors? Should a CEO’s pregnancy be disclosed? What about an arrest, surgery, trip to rehab, or public meltdown?

A common argument is that a CEO’s private life is disclosure fodder if their actions could accelerate board plans for termination or succession. Even that would-be standard is heavily debated.

When Apple founder Steve Jobs lost his battle with pancreatic cancer, some investors and analysts accused his company of covering up the illness and downplaying its seriousness for as long as it could. In 1980, Time Warner CEO Steve Ross similarly demanded that a debilitating heart attack be kept secret because the news would be “bad for the company.”

Unlike Jobs and Ross, in January 1993, Michael Walsh, the former CEO of Tenneco, was diagnosed with brain cancer amid a $3 billion corporate restructuring. He immediately informed directors upon news of the diagnosis and reached out to shareholders.

Harry Pearce, former vice chairman of General Motors, took a similar approach when he was diagnosed with leukemia in 1998. His take at the time: “There is an absolute requirement to make a full disclosure. Any investor in the company is entitled to know the health of all the members of the senior management team,” he said.

As for compliance officers and directors (and any others involved in disclosure decisions), they can ill afford any move that lacks full consideration and debate. If the decision is that private lives should remain private, be prepared to defend that stance once the matter at hand inevitably leaks. If the choice is to go public, through either the media or a supplemental disclosure with the SEC, make sure that all involved understand why the public intrusion was in the best interest of the company and shareholders.

Neither decision may be unimpeachable. What is important, most of all, is to diminish far more damaging gossip and assure investors that their best interests are a priority.