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Vince McMahon repeals January WWE bylaw amendments, new lawsuit filed

A company sale or media rights deal no longer has to be approved by shareholders.
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In a new SEC filing Tuesday, WWE Executive Chairman Vince McMahon repealed some of the bylaw amendments he made upon his return earlier this month including a notable one regarding shareholder voting rights.

While that development may negate a class action lawsuit filed early last week, a new potential class action lawsuit filed last week by the Detroit Police and Fire Retirement System is targeting McMahon as well.

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On Thursday, January 5th and using his power as controlling stockholder, McMahon both executed and delivered a written consent that included his election and that of George Barrios and Michelle Wilson back to the board. 

That also included amendments to the company bylaws "that Mr. McMahon indicated were intended to ensure that the Company’s corporate governance continued to properly enable and support stockholder rights."

McMahon then returned officially to the board on Friday, January 6th and was elected back to his chair position on Monday, January 9th.

Then, according to the Tuesday filing, because there is "substantial alignment...concerning the decision to conduct a review of strategic alternatives amid the Company’s upcoming media rights cycle and that the Company’s corporate governance will properly enable and support stockholder rights," he executed and delivered another written consent on Monday to "substantially repeal" the amendments made on the 5th.

Wrestlenomics' Brandon Thurston noted that one of the initial amendments McMahon made required shareholders to approve any company transaction or media rights deal. Since he is the controlling shareholder, he would have to approve any such deal. 

With the Tuesday change, that is no longer the case. As he is now Executive Chairman, he now has the decision power he gave back to himself with the bylaw change before being elected back to the position.

From the filing:

"No further approval of the stockholders of the Company is required to approve any of the actions taken by Mr. McMahon pursuant to the January 16th Consent."

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It was reported Tuesday by Sportico that last Thursday, the Detroit Police and Fire Retirement System petitioned the Delaware Court of Chancery to have their own similar class action lawsuit against McMahon recognized.

The suit is claiming he acted wrongfully in 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." 

The retirement system also claims McMahon enjoys too much voting power due to his Class B shares (10 votes per share) vs. Class A shares (one vote per share). Despite him owning 39% of the company's equity, he controls 81% of the voting power.

They claim McMahon violates Section 141 of the Delaware General Corporation Law and the company charter. 

From Sportico:

"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. "

Last week, a stockholder filed a class action lawsuit against McMahon for the changes that he made to the bylaws. It's unknown if the repeal of those changes will make both of the above moot.