Vince McMahon's return to WWE's Board of Directors has prompted a proposed class action lawsuit from one of WWE's shareholders in the state of Delaware.
According to a report by Bloomberg, Vince McMahon is being sued by a shareholder Scott A. Fellows. Per court documents, Fellows is suing McMahon for abusing his power in an effort to "impose his will" on WWE and its Board of Directors by adopting "invalid and inequitable bylaw amendments" that would "hamstring" the board from making important decisions. The filing also noted that the class action could include thousands of shareholders. The plaintiff is seeking relief including invalidation of the bylaw changes; costs and fees
The document states McMahon has control of approximately 81% of the Company’s total voting power. McMahon officially returned to the board on Friday, January 6. In a press release, which is covered by the document, he stated that his return was to help with upcoming media rights negotiations knowing the potential partner would be speaking with and have the support of the majority shareholder.
The lawsuit makes the following statements regarding McMahon's return:
In late December 2022, McMahon demanded in writing that the Board invite him back to serve as Executive Chairman. McMahon insisted that he guide a strategic review process as Executive Chairman or else he would hold the Company hostage. He asserted that he would interfere with and withhold support or approval of any process that he did not lead. McMahon further threatened to withhold his support of any negotiation respecting WWE’s expiring media rights deals. WWE’s media rights are the Company’s lifeblood. The media right agreements were set to expire in 2024 and were slated for renegotiation in early 2023
By his Written Consent, McMahon seeks to hamstring the Board and prevent it from undertaking significant time-sensitive decisions respecting some of the most important properties of the Company. He also leveraged that purported blocking power to get himself reappointed as Executive Chairman of the Board.
McMahon lacks the power he purported to wield. Section 141(a) of the Delaware General Corporation Law (the “DGCL”) recognizes the inviolability of the board of directors’ power to make significant decisions respecting the business and affairs of the Company. The Board members have an unremitting obligation to discharge their fiduciary duties.
According to Bloomberg, a spokesperson for McMahon and WWE didn’t immediately respond to a request for comment Wednesday.
On Tuesday, January 10, 2023, Vince McMahon was voted in unanimously as executive chairman of the board. Simultaneously, Stephanie McMahon resigned from her position as co-CEO of WWE.
McMahon had previously retired from WWE amid sexual misconduct allegations, and an internal investigation facilitated by the Board of Directors
According to a recent report, WWE hired JP Morgan to help advise the company on a potential sale. Learn more here.
Fightful will continue to monitor and report all updates on this situation.
