Returning WWE (NYSE: WWE) Executive Chairman Vince McMahon recently rescinded certain bylaw changes he proposed that would have taken power away from the company’s board, as he grapples with investor litigations after his surprising comeback.
The suits involve three groups of shareholders, including a pension fund, who sued McMahon this month after he ended his self-imposed exile, which began in July when he stepped down amid a wave of sexual harassment and hush money allegations dating back more than 15 years.
McMahon was accused in Delaware’s Chancery Court of timing his return to seize control of upcoming negotiations over the WWE’s expiring media rights and of forcing his way back by threatening to withhold support for any deal reached without his participation.
Two of the investors suing McMahon, including the Police and Fire Retirement System of the City of Detroit, challenged his unilateral move to rewrite the WWE’s bylaws in his favor. A third shareholder filed broader claims involving the sexual harassment allegations.
According to a January 17 filing, the returning executive chairman is said to be no longer required to have any the stockholders’ approval for major WWE decisions. But McMahon had reversed the most contentious changes, giving the board more power.
The pension fund and another investor are attempting to have the bylaw-related claims in their lawsuit declared moot so that they can take credit for the reforms and seek a “mootness fee” in recognition of their role in forcing McMahon to back down.
Meanwhile the other group of investors, whom are suing over McMahon’s alleged history of paying to cover up sexual harassment allegations, are attempting to separate their case from the consolidated action. This could keep the bylaw-related claims, complicating any fee request.
An ongoing investigation concerns non-disclosure agreements and hush payments made to former female employees who allegedly had relations with Mr. McMahon, as he is known in the industry. The expose, first released by The Wall Street Journal, started with a former WWE paralegal that was secretly paid US$3 million to bar her from discussing the alleged relationship with the firm’s chief executive and the hush deal in which Laurinaitis has allegedly had a hand in making.
Last week, The Wall Street Journal reported that McMahon agreed to a multimillion-dollar legal settlement with a former wrestling referee, Rita Chatterton, who accused him of raping her in 1986.
In a November letter to McMahon’s attorney, Chatterton, the then-World Wrestling Federation’s first female referee, demanded $11.75 million in damages for the alleged rape, according to The Wall Street Journal. She did, however, agree to a lower settlement amount.
“Mr. McMahon denies and always has denied raping Ms. Chatterton. And he settled the case solely to avoid the cost of litigation,” said Jerry McDevitt, a lawyer for McMahon.
The agreement follows a $7.5 million settlement reached in 2018 with a former wrestler who claimed McMahon coerced her into giving him oral sex, as well as a 2022 agreement in which he agreed to pay $3 million to a former WWE employee with whom he allegedly had an affair. McMahon has refused to comment publicly on the settlements.
The 77-year old executive stepped down as CEO and Chairman of the WWE board in June 2022 following the investigation into alleged executive misconduct by him and John Laurinaitis, Head of Talent Relations.
Early findings of the board indicate that Mr. McMahon could have possibly used his personal funds to pay the settlement money to the said former female employees.
When McMahon stepped down, his daughter, Stephanie Mcmahon–who was planning to take a leave–had to take the reins from her father. The stint, however, was short-lived as the female executive announced that she’s stepping down just days after her father returned to the company’s board of directors and reappointed himself as executive chairman.
McMahon justified his return with intentions of pursuing a potential sale, getting involved in WWE’s media rights deals, and maximizing shareholder value.
In Stephanie’s resignation statement, she said that her father returned as chairman to lead “an exciting process regarding strategic alternatives.” This spurred rumors that the company has been working a deal to take WWE private and sell it to the Saudi Arabian Public Investment Fund.
WWE has formally hired outside counsel to assist in its process of analyzing strategic alternatives for the company.
WWE last traded at $86.83 on the NYSE.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.