The Hollywood Reporter first reported a class action lawsuit filed on behalf of WWE shareholders against Vince McMahon and the board of directors of the company for its sale to Endeavor which created TKO Group Holdings, Inc. The lawsuit, filed on November 22nd, was filed in the Court of Chancery of the State of Delaware.
The lawsuit, filed by the Laborers’ District Council and Contractors’ Pension Fund of Ohio claims that McMahon “wielded unchecked power at WWE and demonstrated his willingness to completely override and contravene the actions of the Board.” This led to the sale of WWE with the allegation that Endeavor was the pre-arranged purchaser.
The lawsuit also goes in-depth as to his sexual misconduct resulting in “hush” money in the millions paid out to multiple women. It also alleges that the Board did not investigate these incidents due to McMahon’s power over it.
The sale to Endeavor was pushed by McMahon which the lawsuit seems to infer was done because of the close ties between Endeavor head Ari Emmanuel and McMahon.
Notably, the plaintiffs claim that there were “superior offers” for WWE, but Endeavor’s was the one that was considered.
Payout Perspective:
The lawsuit is on behalf of the WWE shareholders which is looking out for the best interests of the share value. So, it was evident that once information came out as to the competing offers, a dispute would occur. McMahon’s payoffs have been the center of previous lawsuits by WWE shareholders. It is interesting to note that McMahon’s comments during the process of the sale mirror what the lawsuit indicates – that he wanted a swift sale of WWE. Thus, it would imply that he knew the seller. It still does not mean what he did was illegal but if you factor in the other competitive offers, one must ask if McMahon was using his Business Judgment (which is the standard) on behalf of the company. Moreover, were there checks against McMahon’s purported power.
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