In what could be the first of several copycat lawsuits, a WWE shareholder has filed a class action lawsuit against newly-reinstated Executive Chairman Vince McMahon.
Filed in Delaware's Chancery Court, Scott Fellows is claiming breach of fiduciary duty in line with section 141 of the state's General Corporation Law. He is looking for invalidation of the bylaw changes McMahon made after returning to the Board Friday in addition to costs and fees.
According to the suit filed Tuesday night, the potential class size is thousands of WWE stock holders.
Fellows is accusing McMahon of using his 81% company voting control to remove three board members and replace them with his hand-picked people in addition to pushing through the aforementioned bylaw changes that include giving McMahon final say on any sale or media rights deal.
The suit says McMahon violated Delaware law by taking control over any major WWE corporate decision and "adding his cronies to the Board."
From the suit:
"McMahon lacks the power he purported to wield. Section 141(a) of the Delaware General Corporation Law (the “DGCL”) recognizes the inviolability of the board of directors’ power to make significant decisions respecting the business and affairs of the Company. The Board members have an unremitting obligation to discharge their fiduciary duties."
After making several requests to the Board to return to WWE to oversee any possible company sale and/or media rights deal, McMahon used his standing as the company's top shareholder to return officially last Friday as a Board member and was re-installed as Executive Chairman Tuesday.
That last act followed his daughter, Stephanie, resigning from the company Tuesday as co-CEO and Chairwoman. Nick Khan, who was co-CEO with her, now has the full title.
Vince McMahon resigned as Executive Chairman and CEO in July 2022 amid a scandal that arose in June 2022 caused by a revealed investigation into what turned out to be $20 million in unreported expenses, most of which were tied to hush money allegedly given to women due to sexual misconduct by McMahon himself.
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