McMahon agreed on millions of unrecorded payments, WWE says
STAMFORD — Vince McMahon, who announced last Friday his retirement as WWE’s chief executive officer and chairman amid a company investigation of his alleged misconduct, agreed to make certain payments totaling approximately $14.6 million from 2006 through 2022 that were not recorded in the company’s financial statements, a preliminary company review has determined.
Those payments, which include amounts paid and payable in the future, “should have been recorded as expenses in the quarters in which those agreements were made,” WWE said in a filing Monday to the Securities and Exchange Commission. All payments underlying those unrecorded expenses “were or will be paid by Vince McMahon personally,” the filing said.
“In light of the unrecorded expenses and related facts, the company expects to conclude that its internal control over financial reporting was not effective as a result of one or more material weaknesses,” said the filing, which was signed by WWE’s chief financial and administrative officer, Frank Riddick III. “The company continues to evaluate the appropriate accounting treatment for the unrecorded expenses, as well as its internal control over financial reporting and its ultimate conclusions on these topics may differ from what the company currently anticipates.”
The filing did not disclose the payments’ recipients. McMahon agreed to pay four women a total of more than $12 million in the past 16 years to keep secret allegations of sexual misconduct and infidelity, according to a report published earlier this month by The Wall Street Journal. The newspaper cited unnamed people familiar with those agreements and related documents.
WWE also said in the filing that it has, “also received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters.” It did not specify from whom it had received such requests.
A message left Monday for WWE inquiring about whether the unrecorded expenses had been found through the investigation of McMahon’s alleged misconduct being conducted by a special committee of independent members of WWE’s board of directors was not immediately returned. A message left for McMahon’s attorney, Jerry McDevitt, was not immediately returned either.
The company has determined on a preliminary basis that, “while the amount of unrecorded expenses was not material in any individual period in which the unrecorded expenses arose, the aggregate amount of unrecorded expenses would be material if recorded entirely in the second quarter of 2022,” the filing said. The company estimates that second-quarter 2022 revenues totaled approximately $328 million, compared with $266 million in the same period last year.
WWE officials anticipate that when the company issues its financial statements for the second quarter of 2022, it will revise its previously issued financial statements to record the unrecorded expenses in the applicable periods for the 2019, 2020 and 2021 calendar years, as well as the first quarter of 2022, the filing said.
WWE is working to issue those financial statements by Aug. 9, “but there is no assurance that it will be able to meet this deadline,” the filing said.
As a result of McMahon’s departure, the company has named two new co-chief executive officers: Stephanie McMahon, who formerly served as chief brand officer and is the daughter of McMahon, and Nick Khan, who previously served as president and chief revenue officer. Stephanie McMahon has additionally succeeded her father as the company’s board chairperson.
“We are grateful for the opportunity to lead WWE together with our unmatched management team,” Stephanie McMahon and Khan said in a news release Monday. “We recognize this is a tremendous opportunity and responsibility, and we look forward to serving the WWE Universe.”
Additionally, Paul “Triple H” Levesque will, “assume all responsibilities related to WWE’s creative (operations), in addition to his regular duties,” the news release said. Last Friday, WWE announced that Levesque had resumed his role as executive vice president of talent relations. The 14-time WWE world champion, who is married to Stephanie McMahon, underwent heart surgery last year.