WWE Shareholder Files Lawsuit Against Vince McMahon

A lawsuit (possibly one of many) has been filed against Vince McMahon following his return to WWE, according to Bloomberg News.

A WWE shareholder Scott Fellows filed the lawsuit against McMahon in the Chancery Court of Delaware on January 10. The lawsuit alleges that McMahon violated WWE’s Charter and breached his Fiduciary Duty as Controlling Stockholder with his return to the company as the Chairman of WWE’s Board of Directors.

As is well documented now, McMahon used his power as the majority WWE shareholder to re-elect himself back onto the board of directors with George Barrios and Michelle Wilson.

JoEllen Lyons Dillon, Jeffrey R Speed and Alan M Wexler were then removed from the board and Man Jit Singh and Ignace Lahoud resigned from their roles.

Fellows said the following in his 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 Stockholder Approval Amendment is described as:

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.

Fellows has requested that the court rule his lawsuit as class action allowing other shareholders to join. He wants a declaration that Vince breached his fiduciary duties and that the Stockholder Approval Amendment made since his return violates the company’s charter, making the Amendment invalid.

Fellows also wants an award for damages covering the cost of the lawsuit.