A shareholder lawsuit filed several years ago against WWE has provided insight into the actions of various board members after the allegations against Vince McMahon were revealed.
In November 2023, a shareholder lawsuit was filed against the company arguing that McMahon manipulated the sale process that led to the merger and formation of TKO, which benefited McMahon above shareholders.
The defendants in the consolidated suit include pension funds based in Ohio and Michigan, and University professor Dennis Palkon.
Brandon Thurston of Wrestlenomics has reviewed the case, aspects of which have recently been made public. This includes various excerpts of the board’s “meeting minutes” obtained by the shareholders after issuing a legal demand allowing shareholders to inspect certain company records.
The minutes available include information that former WWE board members Man Jit Singh and Ignace Lahoud attempted to resign the day after the first story broke in the Wall Street Journal concerning McMahon in June 2022. However, Stephanie McMahon convinced them to stay on the board with multiple voicemails and emails issued to other directors, per the minutes in the filing. Days later, Vince McMahon resigned on an interim basis (while still holding his creative role and a presence on television). At the same time, Stephanie assumed her father’s executive roles on an interim basis as CEO and chairwoman.
WWE’s board of directors saw a wave of departures that year including Connor Schell and Erika Ayers Badan, although neither stated they were leaving due to the allegations against McMahon. In each of their filings, their departures were listed as “not due to any dispute or disagreement with the Company, its management or any matter relating to the Company’s operations, policies or practices.”
After contacting the board of directors in December 2022, McMahon let his intentions be known to return to his previous role and rejoin the board. The board unanimously rejected this notion before McMahon exercised his controlling voting power to rejoin the board while placing the caveat that his return was designed to explore “strategic alternatives” and initiate a sale process.
McMahon’s official return prompted the resignations of Ignace Lahoud and Man Jit Singh.
Upon his return to the board, McMahon removed members JoEllen Lyons Dillon, Jeffrey Speed, and Alan Wexler and replaced them with former company presidents, George Barrios and Michelle Wilson.
WWE announced on January 10, 2023, that the board unanimously elected McMahon as Executive Chairman of the Board.
The meeting minutes include the information that Nick Khan, Paul Levesque, and board member Steve Koonin “reversed course” after initially being part of the board’s unanimous position that McMahon should not return. The minutes reveal that board member Steve Pamon did not attend the vote for McMahon’s return, and Michelle McKenna abstained. It is not clear if Stephanie McMahon participated, but days later, resigned from all her positions at WWE.
A major element of the shareholder’s lawsuit is their assertion that the special investigation into Vince McMahon’s misconduct was “a sham” and that the company “facilitated a cover-up”.
On August 15, 2022, WWE released a 10-Q filing, stating that the special investigation was “substantially complete”. The suit uncovered minutes from one day earlier that paint a different picture regarding the investigation’s status:
“Special Committee minutes show that just the day prior, August 14, 2022, the Special Committee ‘reviewed and considered next steps in the investigation.’ The minutes say nothing about an investigation about to wrap up. Even after the [quarterly report] was filed, the Special Committee continued to meet. On August 23, 2022, the Special Committee’s counsel brought up ‘new developments’ and discussed ‘potential next steps.”
The lawsuit alleges that other bidders for WWE were willing to cash out all shareholders while Endeavor’s bid was weighted toward the top executives benefiting with large bonuses after its completion and providing a role for McMahon in the new company.
The case has issued subpoenas to many entities including K&L Gates, J.P. Morgan, the Abu Dhabi Investment Authority, Liberty Media Corporation, and Vestry Light – a firm that specializes in sexual misconduct allegations and lists WWE as a client.
