Additional Details On Shareholder Lawsuit Against WWE & Vince McMahon

New information has emerged in the shareholder class action lawsuit against WWE and Vince McMahon. Recent filings, which include a second complaint, allege that the company's investigation into McMahon was a "sham." Furthermore, the claims assert that the company rejected a more favorable deal in favor of a lesser one that would have allowed the former CEO to retain power. This situation arose from the original lawsuit filed in November 2023 in the Delaware Court of Chancery concerning the merger with UFC and Endeavor.

Recent reports from this week's "Wrestling Observer Newsletter" have shed light on the plaintiffs' involved in a legal case against WWE and other companies. The plaintiffs' include pension fund representatives from Ohio and Michigan and Dennis Palkon, a professor at Florida Atlantic University. They filed individual lawsuits and made a legal request to inspect WWE's records, which led to them obtaining copies of the minutes from WWE's Board of Directors meetings. The filings indicate that these records have offered valuable insights into WWE's decisions regarding Vince's investigation and the merger process. However, it is worth noting that the full context of the meeting minutes is not included in the filings, and much of the information has been redacted.

Several board members, including Man Jit Singh and Ignace Lahoud, attempted to resign the day after the June 2022 report regarding Vince's payments tied to sexual misconduct allegations against former employee Janel Grant. The complaint stated that during McMahon's brief hiatus, "the Special Committee (including Defendants [then-WWE Board members Steve] Koonin and [Steve] Pamon) conducted a sham investigation of the allegations against McMahon. The Special Committee facilitated the cover-up by ensuring that they received no written materials throughout the entirety of that committee's existence. The Special Committee did not interview McMahon's victims, did not reprimand or otherwise censure McMahon, received no interview memoranda, reviewed no evidence, made no factual findings, and issued no report."

The plaintiffs' claim that the minutes from the Board's meeting on August 14, 2022, indicated that the Special Committee "reviewed and considered next steps in the investigation." Still, they did not provide any details about the investigation itself. They pointed out that the Committee's legal counsel had introduced "new developments" and discussed "potential next steps" nine days later, on August 23. The plaintiffs' also noted that rather than issuing a final report, the Committee "simply transferred its investigation to multiple different Board committees."

Vince's daughter, Stephanie, who was still a Board member then, urged Singh, Lahoud, and other Board members not to resign through multiple emails and voicemails. Stephanie was appointed interim CEO and Chair the day after her father's resignation. Lahoud and Singh officially left the Board on January 6, 2023, after Vince used his majority voting power to reassert control in January 2023. This occurred despite the Board having unanimously voted just over a week earlier to prevent his return. The complaint states, "While [Singh and Lahoud] agreed with the Board's decision to explore the Company's strategic alternatives, they did not agree with Mr. McMahon's return at this time." Shortly after Vince's return, he was approved as Executive Chairman, with Nick Khan, Triple H, and Steve Koonin "reversing course" despite the Board's unanimous opposition expressed in a December 27, 2022 letter.

In summary, the filings allege that WWE misled its shareholders. Despite claims that the investigation was nearing completion, it was stalled and buried. Additionally, they assert that Vince and other WWE executives worked to ensure that Endeavor was the only company allowed to bid for WWE, preventing other potential bidders (whose identities were redacted in the filings) from participating and aimed to cash out all WWE investors. The complaint claims that the Board's effort to push the Endeavor deal allowed Vince to continue his role with WWE. According to the complaint, WWE was undervalued and enabled WWE executives to structure the Endeavor deal in a way that benefited them at the expense of the shareholders. Several Board members as well as other parties, including J.P. Morgan, Moelis, Paul Weiss. and Kirkland & Ellis have all been subpoenaed for documents and testimony.