Vince McMahon is facing investor lawsuits over allegations that he illegally installed himself as chairman of the WWE Board of Directors.
McMahon previously resigned as chairman and CEO of the company last July amid allegations that he paid $12 million over several years to keep several women quiet about sexual harassment allegations.
McMahon told the Board of Directors in late December that if he wasn’t brought back to the Board, he wouldn’t approve any potential sale of the company or media rights deals. In response, the Board voted unanimously to reject McMahon’s return.
Following Stephanie McMahon’s resignation from WWE as Chairwoman and Co-CEO on Tuesday, Vince was named executive chairman of the Board, with Nick Khan serving as CEO.
According to court documents obtained by Bloomberg Law, WWE shareholder Scott A. Fellows filed a lawsuit against Vince in Delaware’s Chancery Court, accusing him of using his 81% voting control to oust three board members in order to restore himself, George Barrios, and Michelle Wilson to the Board through bylaw changes that would “impose his will on the board and WWE.”
According to the lawsuit, McMahon timed his return to seize control of upcoming negotiations over the company’s television deals, and he forced his way back by threatening to withdraw support for any deal reached without his participation.
According to the lawsuit, “take complete personal control over any major corporate decision” by “adding his cronies to the board” is a violation of Delaware law.
Here is an excerpt from the lawsuit:
“Following an investigation into allegations of sexual harassment against McMahon, the Board unanimously determined it was not in the best interests of the Company and its stockholders for McMahon to return to WWE. Nonetheless, McMahon executed the Written Consent to remove certain directors who opposed him and add himself and two cronies to the Board. The Stockholder Approval Amendment went further and usurped the power of the Board to manage the affairs of the Company. It even prohibits the Board and officers from advocating for transactions McMahon may oppose even if they believe those transactions are in the best interests of the Company and its stockholders. As such, McMahon violated his fiduciary duties by executing the Written Consent. Plaintiff is entitled to a declaration that the Stockholder Approval Amendment is void and invalid. Plaintiff has no adequate remedy at law.”
The Amendment in question reads as follows:
“The Stockholder Approval Amendment violates Section 141 of the DGCL and WWE’s Charter, which vests management of the Company with WWE’s Board. The Stockholder Approval Amendment was also adopted for the inequitable purpose of holding the Board and management hostage with respect to virtually every major strategic decision. The Stockholder Approval Amendment prevents the Board or management from, directly or indirectly, authorizing, agreeing to, permitting, endorsing, recommending, approving, or effecting a new media rights agreement, a significant stock issuance, or an agreement that deters replacing directors without the prior approval of stockholders, i.e., McMahon.”
On Wednesday, a spokesperson for McMahon and WWE did not immediately respond to a request for comment. Fellows is requesting that the Court rule his lawsuit as a class action so that other shareholders can join, as well as that the Court award him damages to cover legal fees.
