The e-mail correspondence between Vince McMahon and the WWE Board of Directors were published in the SEC filing with the United States Securities and Exchange Commission.
McMahon initiated the e-mails on December 20, 2022, asking for the opportunity to return to the company, saying that it’s “critical” for him to lead the negotiations in the latest round of television rights fees and potential sale. He also said that he believes WWE has an “exceptional management team” and Stephanie, Paul, and Nick have his full and unconditional support. McMahon requested a reply by January 3, 2023.
On December 27, the WWE Board of Directors replied to his e-mail, agreeing with him that the management team led by Stephanie, Nick, and Paul are exceptional. They also welcomed to include him and his advisors in playing a role in the upcoming negotiations, however, they unanimously agreed that he should not return to the company at this time since there are pending investigations into his allegations. They also attached a draft letter that says that they would not sue him on the agreement that he repays everything associated with the investigation and that he agrees not to serve as an officer, director or employee of the company during the pendency of the government investigation.
McMahon responded on December 31, basically disagreeing with the Board’s demand and saying that unless he returns, he would not sign off on any potential sale or renewal of television rights. Vince shot down the Board’s idea that his return would actually harm the TV rights process, saying that to the contrary, his involvement would add value since potential partners would know that they have the full support of the main controlling shareholder. He also reiterated his full support for WWE’s management team and their leadership of the WWE franchise and asked for a reply by no later than January 5, 2023.
Vince used the nuclear option and forced his way back in today, one day after his deadline for a reply.
December 20, 2022:
Dear Board of Directors,
I have always recognized that we have a massive responsibility to the WWE Universe. Our fans deserve the best entertainment experience that WWE can offer, and I thank you for your efforts to keep our Company focused on that goal through this distinctly challenging year for WWE.
Throughout my entire tenure with the Company, I have always been committed to doing what I believed to be in the best interest of WWE and our employees, shareholders, fans, and other stakeholders. It also is why I voluntarily retired from the Company during the pendency of the special committee investigation and fully cooperated with the committee and its independent counsel’s process. My retirement was intended to give the special committee, its independent counsel, and the rest of the Board the time and space needed to understand and respond to the allegations.
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.
For these reasons, it is critical for me to rejoin the Board as Executive Chairman to work alongside our management team in leading the exploration of strategic alternatives and media rights negotiations – and it is necessary to fulfill my commitment to doing what is best for WWE. Successfully navigating this process will require close coordination among WWE leadership and the Board, as well as a clearly defined and well-executed strategy to secure the greatest value for WWE’s stockholders. As WWE’s founder and largest shareholder, no one has a greater interest in the long-term success of WWE – or is more aligned with all WWE shareholders – than me.
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.
I intend to keep my letter and any ancillary communications out of the public domain and trust that the Board will do the same. While I of course reserve all my rights, my strong preference is to conduct any dialogue regarding this letter privately and collaboratively. I, along with corporate counsel at Kirkland & Ellis LLP, am available to discuss any questions you may have.
Thank you for your continued commitment to WWE. I look forward to working together to maximize value for our shareholders, other stakeholders, and the entire WWE Universe.
December 27, 2022:
We write in response to your letter of December 20.
We fully agree with your assessment that the Company’s management team is exceptional and are pleased to hear that Stephanie, Nick, Paul and the rest of the management team have your full and unconditional support. We believe that our investors, employees and fans agree; there is tremendous excitement at the Company and among our fan base, and our stock price has grown by more than 40% in just the last year. We remain optimistic about the continued success of this management team and the WWE franchise overall, and we believe your support is critical to this success.
As you know, it is our fiduciary obligation to continue to act in a way we believe is in the best interests of the Company and its shareholders. We have always taken that responsibility very seriously and all of our decisions are guided by this duty.
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.
We are excited about the future of WWE and its continued success, and we look forward to working with you in the exploration of potential strategic alternatives as we continue to try to maximize shareholder value.
The Board of Directors of WWE
December 31, 2022:
Dear Board of Directors,
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.
There is no rationale for your position that my return to the Company “would not be prudent from a shareholder value perspective.” To the contrary, my return in the context of the media rights negotiations and a potential value maximizing strategic transaction is necessary precisely from a shareholder value perspective because it will allow WWE (as well as any transaction counterparties) to engage in these processes knowing they will have the support of the controlling shareholder. Further, the special committee of the Board has concluded its investigation and presumably all of its material findings have been publicly disclosed by the Company, and nothing has been communicated to me about any matter that would prevent me from returning to the Board. So while I am pleased to see that we all agree as to the Board’s fiduciary obligations to act in the best interests of WWE and all its shareholders, it remains unclear to me how the Board can discharge these obligations if it does not permit me to be actively involved in helping to lead these two interconnected initiatives from within the boardroom so that I can make a fully informed decision about whether any potential transaction creates the most value for all shareholders.
I also feel that it is necessary to clearly state my position that, in light of the fundamental nature of WWE’s media rights to the core value proposition and purpose of WWE, it would be improper for the Company or Board to take material steps towards any media rights deal without WWE shareholder support (particularly considering that a very clear majority of the voting power explicitly opposes the Company taking these steps without shareholder support).
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.
I would also like to clarify that my intention is to avoid the creation of any conflict of interest related to the special committee’s investigation or related matters because of my return to the Board. As Executive Chairman, and consistent with my prior actions, I would not interfere with any government investigations or the special committee’s and independent directors’ process in cooperating with those or related investigations and would fully support appropriate and tailored governance measures to insulate me from those matters, as well as any improvements to the Company’s internal controls determined to be appropriate by the independent directors. As I have previously conveyed, I also remain willing to continue working to finalize my reimbursement of the Company for its reasonable expenses incurred related to the investigation by and findings of the special committee to the extent not covered by insurance.
Finally, I would like to reiterate my full support for WWE’s management team and their leadership of the WWE franchise. It remains my sincere preference that we enable a cooperative path forward so that we can navigate these interconnected processes together, for the benefit of our shareholders. I look forward to hearing back from you promptly (and in any case by no later than January 5, 2023).