WWE officials offer update on sale, plans for Vince McMahon’s future

STAMFORD — WWE executives said Thursday that they were moving ahead with a review of “strategic alternatives” that could include a sale of the company — a process initiated by Vince McMahon, who last month dramatically returned to the sports-entertainment company as executive chairman after a short-lived retirement.

Launching the review was one of the main motivators for the comeback of McMahon, who had retired last July amid a company investigation of his alleged misconduct. He has also argued that his leadership was essential as WWE prepares for negotiations for media rights that will encompass its flagship shows, “Raw” and “SmackDown.”

“Though still early in the strategic-alternatives review, we intend to consider a broad range of options via a thorough process,” WWE Chief Executive Officer Nick Khan said on a call Thursday with investment analysts to discuss the company’s fourth-quarter and full-year 2022 financial results. “There can be no assurance that the review being undertaken will result in any transaction. And we do not intend to make future announcements regarding the review until such a time that is appropriate.”

Among analysts’ questions was one about whether McMahon would be willing to end his involvement with WWE following a potential deal, “if that gives shareholders the most value.” McMahon did not participate in the call.

“Yes, without question,” Khan responded. “He’s declared it to the board. He’s declared it to us in management. It’s all about shareholder value. Obviously, he is a shareholder, so it’s not about what role he’ll have. It’s about maximizing that value opportunity.”

To enable his return, McMahon leveraged his status as the company’s controlling shareholder to remove three board members and bring in the company’s former copresidents to replace two of them. Two other board members resigned because they opposed McMahon’s comeback.

A few days after McMahon announced his return, his daughter, Stephanie McMahon resigned as co-CEO and from the company’s board of directors. She had served as co-CEO and chairwoman since her father’s retirement, but she said she was confident in the company’s future.

“Having Vince around has been great,” Chief Content Officer Paul “Triple H” Levesque, a 14-time world champion in the ring and the husband of Stephanie McMahon, said on the call. “We’re standing on the shoulders of giants. So having him back and involved, even at just the board level, comes with his incredible insight. And he is a tremendous asset to this company.”

Impact of investigation

McMahon announced his retirement last July in the wake of articles published by The Wall Street Journal that revealed the allegations against him. The Journal reported that he agreed to pay four women a total of more than $12 million over the past 16 years to keep secret allegations of sexual misconduct and infidelity, citing unnamed people familiar with those agreements and related documents.

An investigation by a special committee of WWE’s board of McMahon’s alleged misconduct has proved costly. WWE disclosed in its earnings report Thursday that it incurred $21.7 million in expenses in 2022, including $2.3 million in the fourth quarter, related to the probe of McMahon and another recently departed executive, John Laurinaitis. The report did not provide a detailed summary of the expenditures.

The investigation’s costs contributed to a year-over-year decline in WWE’s quarterly profit from about $61 million to around $39 million, although the decrease mainly resulted from higher operating expenses.

In November, the company announced that the investigation had been completed and that the committee had been disbanded. It also said that the company’s management was working with the board to implement the committee’s recommendations related to the investigation. The company has not publicly disclosed the recommendations.

“Going forward, we expect to incur additional costs related to the investigation,” Frank Riddick III, WWE’s president and chief administrative officer, said on the call. “Mr. McMahon has agreed to pay the reasonable costs of the investigation not covered by insurance.”

Riddick added that the past quarter’s results included $7.4 million in expenses, “reflecting payments that Mr. McMahon has agreed to make related to additional claims that have been recently settled. These payments were or will be paid by Mr. McMahon personally.”

Riddick did not specify those additional claims. Among other recent developments, McMahon has reached a multimillion-dollar settlement with a former wrestling referee who alleged that he raped her in 1986, The Wall Street Journal reported last month.

McMahon