The Ohio Laborers’ Pension Fund is suing Vince McMahon and members of the now-dissolved WWE board of directors, trying to start a shareholder class-action suit.
It’s the kind of lawsuit WWE has been hit with multiple times over the years, though each with different allegations. This one is built around claims that Vince McMahon and other members of the WWE board breached their fiduciary duties by bringing Vince back onto the board in early 2023 and executing the WWE-UFC merger, putting Vince’s interests over those of shareholders.
The plaintiffs claim Vince McMahon and the board didn’t fairly consider company sale offers from bidders other than Endeavor because, allegedly, those alternatives would have bought the company outright and would have pushed Vince out of WWE permanently, whereas the WWE-UFC merger with Endeavor allowed Vince to continue as executive chairman. Shareholders were left with a less valuable transaction as a result, the lawsuit says.
The complaint, filed in Delaware Chancery Court, paints Vince as a “larger-than-life figure” who “used his domineering personality and control over WWE to carry out his own personal agenda at the expense of the Company’s public stockholders.”
The suit goes over allegations of sexual misconduct and Vince’s $15 million in payments to silence women he allegedly abused, originally reported by The Wall Street Journal in 2022, which resulted in Vince’s “first real threat at becoming dethroned” from WWE.
There’s a heading in the complaint that reads, “McMahon is a serial sexual predator who cost the company millions of dollars and significant reputational harm”, which details various previously reported misconduct allegations against Vince.
Vince’s “retirement” (yes, the complaint puts that word in quotes), as we know, was followed by his forced return to the company. He used a Written Consent action in January 2023, enabled by his preferred stock and control of WWE voting shares, to remove members of the board and replace himself and add “two of his cronies”, former WWE executives Michelle Wilson and George Barrios. Subsequently, two independent directors and Stephanie McMahon, an executive and board member, resigned.
Nick Khan, Frank Riddick, Paul Levesque, and Steve Koonin remained on the WWE board before and after Vince repositioned himself in the company this year. Along with Vince, Barrios, and Wilson, the aforementioned board members are all named defendants in this lawsuit.
“As justification for his coup, McMahon claimed that it was ‘necessary’ for him” to return and oversee a sale or merger of WWE, the suit says. But “[i]n reality, McMahon was maneuvering to secure his power and control over the Company in the face of mounting stockholder discontent and government investigations into his illegal predatory behavior.”
“McMahon immediately approached his long-time friend and Endeavor CEO Ari Emanuel, whom McMahon knew would allow him to remain at the helm of the post-transaction Company,” the complaint alleges. “Thereafter, the WWE Board — which was controlled by McMahon — conjured up a sham sales process designed to favor Endeavor and exclude other bidders seeking axe [sic] McMahon.”
The plaintiffs’ narrative about the company sale process seems based on WWE’s prior disclosures in SEC filings, in particular the S-4 filed in May.
The plaintiffs claim “McMahon’s crony-filled Board would later seize on this unequal playing field to pretextually accuse [bidders other than Endeavor] of showing ‘less enthusiasm and urgency.'”
The suit details other offers WWE received, as disclosed in the S-4.
One bidder offered $95 to $100 per share on March 13. This bidder was anonymized in WWE’s filings as “Strategic Party 1”. The plaintiffs seem to name the other bidders but their names are redacted from the complaint.
I believe Strategic Party 1 refers to Liberty Media, the owner of Formula One, SiriusXM, and the Atlanta Braves. Notably, the S-4 disclosed, “Strategic Party 1 attended a WWE event held in Denver,” on March 26. The event was a house show, which suggests to me it was convenient for this party to attend. Ball Arena, where the event was held, is a 20-minute drive from Liberty’s headquarters.
Another bidder, which WWE anonymized as “Financial Sponsor 1” offered to pay $90 to $97.50 per share. A third bidder, “Strategic Party 2”, which I believe is Comcast, offered $76.83 per share.
“But because these offers all contemplated cashing out WWE stockholders (including McMahon–signaling his complete ouster from the Company and likely the wrestling world), the Board never bothered to a counterproposal,” the suit alleges.
The all-stock deal not only secured Vince’s future,” the suit says, but “also stuffed the pockets of his loyalists”, referring to the other named defendant board members who, WWE’s own filings show, received millions in bonuses as part of the merger process.
The merger agreement valued WWE shares at $95.66, less than two of the aforementioned offers.
I’ll note that the $95.66 per share valuation referred to by plaintiffs, was disclosed by WWE as the value of WWE without considering any cost synergies as a result of the merger. According to the S-4, WWE was being valued as being worth at least “$105.04 per share with synergies”, which would make the valuation greater than the other disclosed offers. The complaint claims WWE could have gotten higher offers from other bidders but didn’t negotiate in good faith.
In any case, TKO shares (which WWE shares converted to 1:1) are worth about $78 on the New York Stock Exchange, as of this writing, whereas, purportedly WWE shares could have been sold for cash for the greater offers mentioned above.
The suit accuses WWE of not using independent and disinterested directors in its sale process and alleges the financial advisors used (Raine, JP Morgan, and Moelis) were “largely conflicted”. Raine had previously provided services to Endeavor and major Endeavor shareholder Silver Lake. Both Moelis and Raine had their compensation for the deal contingent on the closure of the merger, plaintiffs say.
The complaint thoroughly details the events of the public scandal surrounding the news of Vince’s alleged sexual misconduct, related payments for non-disclosure agreements, the letters Vince and the board wrote to each other in late 2022, and his return to the company.
The complaint notes Vince continued to control WWE’s creative process while the investigation was ongoing and immediately appeared on TV after the news broke. It brings up Stephanie’s comment at a media conference in November 2022 where she said there had been “a pause” from some sponsors who were hesitant about advertising with WWE because of the scandal.
There are numerous curious redactions. The suit alleges that on the day Vince completed his forced return to WWE “Emanuel contacted McMahon”. The sentence continues but is redacted.
The complaint references a January 9 board meeting, which is after Vince’s January 5 return. The minutes “indicate that McMahon represented to the Board that he [redacted]. But McMahon’s coup was complete.”
There are additional redactions throughout the complaint’s narrative of the bidding process, hiding the names of the other bidders but also seemingly other details, as well sentences that mention WWE’s board’s meeting minutes and offer letters.
Quotes from Nick Khan’s interview with Bill Simmons are mentioned, including one where he offhandedly says it was “always [Khan’s] point of view . . . at some point he [i.e., McMahon] would come back”. Khan in the interview said that Vince’s controlling shares gave him the power to return “and I applaud him for doing so.”
The complaint is dated November 17. The Ohio Laborers’ Pension Fund is represented by lawyers from Block & Leviton LLP.
Brandon Thurston has written about wrestling business since 2015. He operates and owns Wrestlenomics.