World Wrestling Entertainment (WWE) Chairman Vincent K. McMahon agreed to pay $1.6 million to class attorneys as a mootness fee for his alleged role in forcing "invalid and inequitable bylaw amendments" that were designed to present the WWE Board of Directors from making "critical business decisions." The settlements were filed in both In re World Wrestling Entertainment, Inc. S'holders' Litig., C.A. No. 2023-0028 (Del. Ch.), and Fellows v. McMahon, C.A. No. 2023-0022 (Del. Ch.).
Stockholder litigation erupted earlier this year after McMahon left the Board and six months later announced his return as Executive Chairman to lead an "exploration of strategic alternatives and media rights negotiations." Upon his return, McMahon allegedly authorized a strategic review of the entertainment business, while threatening to meet resistance by withholding support for any negotiations on WWE's lucrative but expiring media rights.
McMahon's return was followed by his filing of a written consent removing three directors and appointing their replacements, including himself, as well as bylaw amendments requiring stockholder approval for any Board transaction. Two other directors subsequently resigned, and his son-in-law was named as one of the replacements.
The derivative settlements, which were filed and approved by Vice Chancellor Laster on the same day, followed the conclusion of a Board investigation into McMahon's alleged misconduct. The settlements left open the possibility that McMahon would make additional payments for expenses incurred after January 31, stating specifically that McMahon will "review in good faith and reimburse the company for additional costs incurred by the company and/or its subsidiaries subsequent to January 31, 2023 (or that have been incurred by the company and/or its subsidiaries and not yet paid as of January 31, 2023)."
These settlements help demonstrate that the Delaware Court of Chancery remains available to provide swift, efficient relief for equity holders of Delaware entities who believe that board of directors, or individual directors, have taken improper actions.
