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The Detroit Police and Fire Retirement System is suing Vince McMahon for breaching his fiduciary duty as the controlling stockholder of WWE in an effort to impose his will on the company and the WWE Board of Directors.
Sportico is reporting that the lawsuit was filed last Thursday and is seeking declaration that will block McMahon’s attempt to take control of the WWE board.
“The complaint argues that McMahon has breached fiduciary duties as controlling stockholder by trying to “impose his personal will on WWE and its [board] by purporting to adopt a package of invalid and inequitable bylaw amendments that would hamstring the Board from making critical business decisions,” Sportico wrote. “Although McMahon owns approximately 39% of WWE’s equity, he enjoys far greater stockholder power due to the company’s financial configurations. According to the complaint, McMahon owns about 92% of outstanding Class B shares, which contain 10 votes per share, whereas Class A shares hold only one vote per share. “Overall,” the complaint asserts, “McMahon controls 81% of WWE’s total voting power.”
McMahon returned to the WWE last week and became Executive Chairman of the WWE Board after dismissing three members and bringing back former president’s, Michelle Wilson and George Barrios. Stephanie McMahon resigned as Co-CEO of WWE a day after McMahon’s official return.
“As the Police and Fire System tells it, McMahon’s moves run afoul of both Section 141 of the Delaware General Corporation Law and WWE’s charter. Altering the company’s governance structure in the absence of bargained for exchange between WWE and McMahon, the system asserts, “usurps the power of the Board over critical corporate management functions and vests it solely in McMahon in his capacity as a stockholder.” Neither Delaware law nor WWE’s charter permits the kind of transfer of power the system says occurred, and the system wants a declaration the consent is void.”
McMahon announced his retirement from WWE in the summer of 2022 after a WWE Board of Directors investigation into hush money payments made to former female employees with whom he allegedly had affairs with. McMahon also faced several accusations on sexual misconduct.