WWE Chairman Vince McMahon has another lawsuit to worry about that could prevent him from gaining control of the company.
Since his dramatic return, McMahon has put himself in a position to be liable for a potential lawsuit. He returned to WWE after retiring last year after accusations of misconduct with female employees. McMahon claims that he has returned to help the company with its pursuit to sell itself or for a new TV rights deal.
However, his shareholders disagreed with his return and took action against McMahon. On Jan. 11, a WWE investor filed a fiduciary lawsuit regarding McMahon’s return to the company. The claims from investor Scott A. Fellows allege that the chairman asserted himself into his Chairman role illegally and that he disregarded the other WWE Board of Director members. Following the lawsuit filed by Fellows, it’s reported that McMahon is facing another similar lawsuit.
Sportico’s Michael Mccann has reported that the Detroit Police and Fire Retirement System has filed a lawsuit that they hope will prevent McMahon from selling the company and regaining control from the Board of Directors.
Mccann wrote the following quotes regarding the Detroit Police and Fire Retirement System complaint.
“…The complaint argues that McMahon has breached fiduciary duties as controlling stockholder by trying to “impose his personal will on WWE and its [board] by purporting to adopt a package of invalid and inequitable bylaw amendments that would hamstring the Board from making critical business decisions.”
Although McMahon owns approximately 39% of WWE’s equity, he enjoys far greater stockholder power due to the company’s financial configurations. According to the complaint, McMahon owns about 92% of outstanding Class B shares, which contain 10 votes per share, whereas Class A shares hold only one vote per share. “Overall,” the complaint asserts, “McMahon controls 81% of WWE’s total voting power,” wrote Mccann.
What Happens Next for Vince McMahon Lawsuit Issues
The two lawsuits against McMahon both alleged that he had gone against the interest of the WWE’s business partners wrongfully. It’s also possible more cases will be filed against McMahon for similar grievances. The added lawsuit could halt McMahon from selling the company as fast as he could hope. However, WWE is still preparing to sell the company to buyers potentially.
Another thing to note in Mccann’s report is that he shared that the Detroit Police and Fire System Retirement believes that “…McMahon’s moves run afoul of both Section 141 of the Delaware General Corporation Law and WWE’s charter. Altering the company’s governance structure in the absence of bargained for exchange between WWE and McMahon, the system asserts, “usurps the power of the Board over critical corporate management functions and vests it solely in McMahon in his capacity as a stockholder.” Neither Delaware law nor WWE’s charter permits the kind of transfer of power the system says occurred, and the system wants a declaration the consent is void.”
Both lawsuits make the case that McMahon is wrong, and they have grounds to halt him from doing what he wants with WWE. The report adds at the end that the process of litigation could take some time and effectively complicate a sale from happening.
