Vince McMahon on the WWE Board of Directors, three members removed

As reported back in mid-December, The Wall Street Journal revealed that Vince McMahon told people he plans to make a comeback at WWE an that he received bad advice from people close to him to step down back in July, and that he now believes the allegations and investigations would have blown over had he stayed, according to these people. It was then reported on Thursday that McMahon has made the first steps to make his return to the company as he is looking to help lead a sale, and that he is looking to bring on former WWE Co-Presidents Michelle Wilson and George Barrios to help, who were shockingly let go in early 2020. Shortly after that report broke, McMahon issued a press release to confirm his plans for a return, with a statement and more details. Thursday’s original report can be read here.

In an update, WWE made a SEC filing today that confirms McMahon is officially back on the Board of Directors with three existing seat holders removed, making way for McMahon’s return as well as former Barrios and Wilson.

While McMahon has returned and the reinstatement of Barrios and Wilson has been confirmed, the three members that were removed are Alan M. Wexler, JoEllen Lyons Dillon, an Jeffrey R. Speed.

The filing reiterates that McMahon “expects to assume the role of Executive Chairman of the Board,” and includes his correspondence with the Board, which was detailed in Thursday’s Wall Street Journal report, and the press release that McMahon later issued.

McMahon has also changed several company bylaws, including one that states any media rights deals and/or a company sale must be approved by him.

The filing states, “These actions will enable unified decision making through the Issuer’s upcoming media rights negotiations and a parallel full review of the Issuer’s strategic alternatives, which the Reporting Person believes is the right course of action and in the best interests of the Issuer and the Issuer’s stockholders in the midst of the current dynamics in the media and entertainment industry.”

Thursday’s report noted how McMahon and the Board exchanged letters last month. The filing includes the following excerpts from McMahon’s initial letter on December 20:

“Now that the completion of the special committee investigation has been publicly disclosed, I believe WWE has a unique opportunity during this critical juncture to maximize value for its shareholders and all other stakeholders. Specifically, given the rapidly evolving media landscape in which more and more companies are seeking to own the intellectual property offered on their streaming platforms – I firmly believe that the best thing to do for all of WWE’s shareholders and other stakeholders is to undertake a comprehensive review of strategic alternatives. I am confident that our other shareholders will support this decision.”

“As you know, the media rights subject to the upcoming negotiations are critical to any strategic alternative consideration, and therefore the two initiatives must occur in parallel fashion. By combining a review of strategic alternatives, with the media rights negotiations, our Company can make better, more well-informed, and faster decisions. Moreover, any party that engages in strategic discussions with WWE will want to be assured that I, as controlling shareholder, am aligned with the decision-making process. In other words, we must unify the Company’s decision-making regarding these two interconnected initiatives to fully capitalize on this unique opportunity.”

“I want to be very clear that I wholeheartedly believe that WWE has an exceptional management team in place. Stephanie, Nick, Paul, and the rest of the management team have my full and unconditional support, and as Executive Chairman, I would support them to facilitate unified, efficient, and effective decision-making during this important period in the Company’s history. An announcement that I am rejoining the Board as Executive Chairman provides a natural opportunity for WWE to announce its intention to engage in a strategic review process. In light of timing of the media rights cycle, it is important to finalize my return to WWE as soon as possible. Accordingly, I would request to hear back from you by 6pm Eastern Time on Tuesday, January 3.”

The Board responded, and an excerpt from their response can be seen below:

“With respect to your suggestion regarding a process to evaluate strategic alternatives, and your role in that process, we are prepared to initiate such a process and are happy to work with you to ensure that it is the best process for the Company and all of its shareholders. Indeed, we would welcome you and your advisors playing an important role in that process, including working together to identify the full range of potential alternatives and counterparties. To that end, we suggest that your bankers and lawyers meet with our bankers and lawyers in the first week of January to discuss how to best move forward together with this process.”

“Although we welcome your participation in the launch of a strategic alternatives review process, it is also our unanimous view that your return to the Company at this time, while government investigations into your conduct by the U.S. Attorney’s Office and SEC are still pending, would not be prudent from a shareholder value perspective. This determination is based on a variety of factors, including non-public information the Board has become aware of and the risks to the Company and its shareholders of placing a greater spotlight on these issues.”

“The attached draft letter agreement provides that the Board will not agree to the shareholder demand that the Company file suit against you, on the conditions that you confirm your commitment to repay all of the investigation-related expenses incurred by the Company and that you agree not to serve as an officer, director or employee of the Company during the pendency of the government investigations. Those conditions and the draft letter agreement reflecting such conditions were unanimously approved by the Board prior to receiving your letter of December 20, and were reaffirmed unanimously subsequent to that date.”

McMahon’s response on December 31 included the following:

“I appreciate your timely response to my December 20 letter. However, it is surprising that you did not address what I had sought to make clear in my letter – namely that we have a unique but narrow window of opportunity to maximize shareholder value by combining the upcoming media rights negotiations with a strategic review process the Board acknowledges is the right course of action for our shareholders – and that the only way to fully capture that opportunity is by having me – the Company’s founder and controlling shareholder – return as Executive Chairman at this critical time so that I can work alongside the management team to unify the decision making related to these two interconnected initiatives.”

“I would like to be clear that unless I have direct involvement and input as Executive Chairman from the outset, I will not be able to support or approve any media rights deals or strategic transaction (including any commitments made by or on behalf of the Company regarding a potential transaction or process). This position is not driven by self-interest or a lack of confidence in the Company’s management team, but rather by my commitment to doing what is best for WWE and all its shareholders and by my strong belief that maximizing the outcome of these processes will require close coordination and unified and efficient decision making. I sincerely hope we can work together to unlock this tremendous value potential.”

“Regarding the shareholder demand letter, I am glad to learn that following a review of the shareholder demand, the Board has determined that the demand does not warrant any further legal action. However, it is unfortunate that the Board would seek to use this conclusion to attempt to extract an agreement from me not to return to the Company. Any construct along these lines is entirely unacceptable, especially in light of the critical inflection points now facing the Company.”

The full SEC filing can be seen at this link.