WWE
In a new SEC filing Tuesday, WWE CEO Vince McMahon reversed some of the bylaw changes he made after his return earlier this month, including a notable change regarding shareholder voting rights.
While this development could nullify a class action lawsuit filed earlier last week, a new potential class action lawsuit filed by the Detroit Police and Fire Retirement System last week also targets McMahon.
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On Thursday, January 5, and utilizing his power as a controlling shareholder, McMahon provided written consent that included his re-election to the board along with those of George Barrios and Michelle Wilson.
This included changes to the company’s articles of incorporation “which McMahon said were intended to ensure that the company’s corporate governance continued to adequately enable and support shareholder rights”.
McMahon then formally returned to the board on Friday, January 6 and was re-elected to its chairmanship on Monday, January 9.
Then, according to Tuesday’s filing, because there is “a significant alignment … regarding the decision to conduct a review of strategic alternatives amid the company’s upcoming media rights cycle and that the company’s corporate governance will adequately enable and support shareholder rights.” He said he executed and gave further written consent on Monday to “substantially reverse” the changes made on the 5th.
Wrestlenomics’ Brandon Thurston noted that one of the original changes McMahon made required shareholders to approve any corporate transactions or media rights transactions. Since he is the majority shareholder, he would have to agree to such a deal.
With the Tuesday change, this is no longer the case. As Executive Chairman, he now has the decision-making authority that he gave back to himself with the constitutional amendment before being re-elected to the position.
From the file:
“No further approval from the Company’s stockholders is required to authorize the actions taken by Mr. McMahon pursuant to the January 16 approval.”
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It was reported Tuesday by Sportico that the Detroit Police Department and the Fire Retirement System petitioned the Delaware Court of Chancery last Thursday to have their own similar class action lawsuit against McMahon recognized.
The lawsuit alleges that he acted improperly in attempting to “impose his personal will on WWE and their (board) by purporting to pass a package of illegal and unfair constitutional amendments that would prevent the board from making critical business decisions.” .
The pension system also alleges that McMahon enjoys too many voting rights due to its Class B shares (10 votes per share) compared to Class A shares (one vote per share). Although he owns 39% of the company’s capital, he controls 81% of the voting rights.
They allege that McMahon violates Section 141 of the Delaware General Corporation Law and the company’s articles of incorporation.
From Sportico:
“By changing the company’s governance structure in the absence of a negotiated exchange between WWE and McMahon, the system alleges “usurped the power of the board of directors over critical corporate governance functions and vested them solely in McMahon’s capacity as a shareholder.” Neither Delaware law nor does WWE’s charter permit the manner of transfer of power that the system says occurred, and the system wants a declaration that the consent is invalid.
Last week, a shareholder filed a class action lawsuit against McMahon over the changes he made to the articles of incorporation. It is not known if the repeal of these changes will make both of the above items obsolete.