You are currently viewing The investor’s second lawsuit was filed against a power grab by Vince WWE

The investor’s second lawsuit was filed against a power grab by Vince WWE

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Even as WWE filed with the Securities and Exchange Commission this morning (January 17) seeking to solidify Vince McMahon’s control of the company, we learn of a second investor lawsuit aimed at blocking him.

Sportico News broke that the Detroit Police and Fire Retirement System had sued McMahon in Delaware Judicial Court last Thursday. Like the lawsuit filed last week by individual investor Scott Fellows, the pension fund lawsuit alleges that Vince violated his fiduciary responsibilities to shareholders by using his control of 81% of the voting shares to “impose his personal will on WWE and [Board] By claiming to adopt a package of invalid and unfair bylaw amendments that would impede the board of directors from making critical business decisions.”

from Michael McCannSportico share:

As the Police and Fire System says, McMahon’s moves contravene both Section 141 of the Delaware Public Company Code and the WWE charter. By changing the corporate governance structure in the event of a no-bargain exchange between WWE and McMahon, the system asserts, “usurping the board’s authority over important corporate management functions and entrusting them solely to McMahon as a shareholder.” Neither Delaware law nor the WWE charter allows the kind of transfer of power the system says has occurred, and the system wants a declaration of consent void.

Detroit Police and Fire are requesting that their invitation be recognized as a class action, allowing other WWE contributors to join.

It is unclear if the most recent filing from WWE is impartial or invalidates the claims made from these lawsuits, as it revokes the January 5 written consent at the center of these cases. In its place, the new January 16 written approval does not require shareholder approval of McMahon’s actions because there is “significant consensus between the Board and management regarding the decision to conduct a review of strategic alternatives amid the company’s upcoming media rights cycle.” Vince will be in the interest of shareholders.

McCann reached out to WWE for comment on the Detroit suit, but he didn’t get one. He made an educated guess (in addition to serving as a legal analyst for Sportico and chief legal correspondent for sports, McCann is an attorney, professor of law, and director of the University of New Hampshire’s Sports and Recreation Law Institute) as to what the company’s response to each of the investor’s lawsuits would be, however:

… expect the company’s lawyers to insist that none of McMahon’s moves violated the law. While McMahon may have acted aggressively, the company can confirm that the board retains sufficient decision-making power. It could also argue that McMahon’s power reflected a legal circumstance: his ownership of the shares.

He also points out that even if the lawsuits fail, they could tie WWE in court and stop a potential sale.

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