On Wednesday, WWE announced its second quarter financial results with several legal notes relating to the 2022 investigation by the Board of Directors into Vince McMahon after it was alleged last summer McMahon sexually harassed employees and paid hush money to cover it up.
WWE is still paying for the investigation and legal fees in related lawsuits. This eventually led to McMahon walking away from the company before returning earlier this year as the Executive Chairman.
Interestingly, the filing notes federal law enforcement agents executed a search warrant and served a federal grand jury subpoena on McMahon on July 17, 2023, but no charges have been filed.
The filing also noted previous reports that McMahon went on medical leave after undergoing major spinal surgery last month with the plan for him to be on medical leave until further notice. However, McMahon will remain Executive Chairman. The filing notes the following:
“During the three and six months ended June 30, 2023, the Company incurred $5.3 million and $7.1 million, respectively, of expenses related to costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of members of the Company’s Board of Directors, related revisions to the Company’s financial statements and other related matters. Mr. McMahon has agreed to review in good faith and reimburse the Company for all reasonable costs incurred in connection with and/or arising from the investigation conducted by the Special Committee, related revisions to the Company’s financial statements and other related matters. To date, Mr. McMahon has paid approximately $17.4 million to reimburse the Company for costs that have been incurred and paid by the Company. Please see the Company’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q for further details and ongoing risks regarding this matter.
Other adjustments for the three months ended June 30, 2023 include $18,772 of legal and professional fees associated with the Company’s strategic alternatives review and recently announced Transaction Agreement with Endeavor, as well as $5,316 of certain costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of members of the Company’s Board of Directors. Other adjustments for the six months ended June 30, 2023 include $25,452 of legal and professional fees associated with the Company’s strategic alternatives review and recently announced Transaction Agreement with Endeavor, as well as $7,060 of certain costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of members of the Company’s Board of Directors and expenses paid by Mr. McMahon for plaintiffs’ attorneys’ fees in connection with a shareholder lawsuit that was mooted (refer to Note 20, Related Party Transactions, for further information). Other adjustments for the three and six months ended June 30, 2022 include certain costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of independent members of the Company’s Board of Directors.
(1)Other adjustments in the current year period include $25.4 million of legal and professional fees associated with the Company’s strategic alternatives review and Transaction Agreement with Endeavor, as well as $7.1 million of certain costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of members of the Company’s Board of Directors and expenses paid by Mr. McMahon for plaintiffs’ attorneys’ fees in connection with a shareholder lawsuit that was mooted. Other adjustments in the prior year period included certain costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of independent members of the Company’s Board of Directors.
(3)Our consolidated general and administrative expenses increased by $37.5 million, or 58%, in the current year period as compared to the prior year period. This increase was primarily driven by $33.6 million of additional legal and professional fees, including $25.4 million of costs associated with the Company’s strategic alternatives review and Transaction Agreement with Endeavor, as well as $5.4 million of additional costs incurred in connection with and/or arising from the investigation conducted by the Special Committee of independent members of the Company’s Board of Directors and expenses paid by Mr. McMahon for plaintiffs’ attorneys’ fees in connection with a shareholder lawsuit that was mooted. For further analysis, refer to Management’s Discussion and Analysis of our business segments.
During the six months ended June 30, 2023 and 2022, Mr. McMahon made payments of $8,333 and $2,200, respectively, associated with certain payments that Mr. McMahon agreed to make during the period of 2006 through 2022 (including amounts paid and payable in the future) to certain counterparties. These payments are considered non-cash capital contributions and are included as a component of Controlling stockholder contributions on our Consolidated Statements of Stockholders’ Equity. As of June 30, 2023 and December 31, 2022, total liabilities of $3,492 and $11,825, respectively, were included on our Consolidated Balance Sheets related to the future payments owed under these agreements by Mr. McMahon.
Additionally, during the six months ended June 30, 2023, Mr. McMahon made a payment of $17,405 to reimburse the Company for the costs that have been incurred and paid by the Company, through January 31, 2023, in connection with and/or arising from the investigation conducted by a Special Committee of the Company’s Board of Directors, related revisions to the Company’s financial statements and other matters. Mr. McMahon has agreed to review in good faith and reimburse the Company for additional costs incurred by the Company subsequent to January 31, 2023 (or that have been incurred by the Company and not yet paid as of January 31, 2023), in connection with and/or arising from the same matters.
As previously disclosed on June 17, 2022, a Special Committee of the Board of Directors was formed on June 15, 2022 to investigate allegations of misconduct by Vince McMahon. As previously disclosed, the Special Committee investigation was completed during the fourth quarter of 2022. However, related government investigations remain ongoing.
On July 17, 2023, federal law enforcement agents executed a search warrant and served a federal grand jury subpoena on Mr. McMahon. No charges have been brought in these investigations.
On July 21, 2023, Mr. McMahon went on medical leave after undergoing major spinal surgery. Mr. McMahon will remain on medical leave until further notice but will remain Executive Chairman of the Company.”
