Originally posted in Wall Street JournalWSJ News Exclusive WWE Board Probes Secret $3 Million Hush Pact by CEO Vince McMahon, Sources Say Company says relationship was consensual and is cooperating with the inquiry
The board of World Wrestling Entertainment Inc. is investigating a secret $3 million settlement that longtime chief executive Vince McMahon agreed to pay to a departing employee with whom he allegedly had an affair, according to documents and people familiar with the board inquiry.
The January 2022 separation agreement bars the now-former employee, who was hired as a paralegal in 2019, from discussing her relationship with Mr. McMahon or disparaging him, the people said.
The board’s investigation, which began in April, has unearthed other, older nondisclosure agreements involving claims by former female WWE employees of misconduct by Mr. McMahon and one of his top executives, John Laurinaitis, the head of talent relations at WWE, the people said. The Journal couldn’t determine how many previous agreements were being scrutinized.
The board’s outside counsel was still collecting information about the other NDAs this week but has determined that the payments totaled in the millions of dollars, the people said. The board’s eight independent directors have retained New York-based law firm Simpson Thacher & Bartlett LLP to conduct the investigation, one of the people said. The board’s preliminary findings are that Mr. McMahon used personal funds to pay the former female employees who signed the agreements, including the one involving allegations against Mr. Laurinaitis, this person said.
More broadly, the law firm also is assessing WWE’s compliance and human-resources programs and company culture, the person said.
A WWE spokesman said the company, which runs the world’s most-famous wrestling business, is cooperating fully with the board inquiry and that the relationship with the ex-paralegal was consensual. He added that the company takes the allegations seriously and is dealing with them appropriately. Messrs. McMahon and Laurinaitis didn’t respond directly to requests to comment.
In a letter to The Wall Street Journal, Mr. McMahon’s attorney, Jerry McDevitt, said that the former paralegal hadn’t made any claims of harassment against Mr. McMahon and that “WWE did not pay any monies” to the ex-employee “on her departure.”
WWE reported record revenue of $1.1 billion last year and net income of $180.4 million, with most of its revenue from selling content rights, including a five-year exclusive agreement with NBCUniversal’s Peacock streaming platform in 2021 that is valued at $1 billion.
WWE also has TV licensing agreements with Fox Corp. and NBCUniversal, and recently secured its first stand-alone international distribution deal with Disney Plus Hotstar in Indonesia. Fox Corp. and Wall Street Journal parent News Corp share common ownership.
WWE also is seeking to make more international deals and its negotiations closer to home. The company’s deal with Hulu, which streams WWE’s Monday Night Raw, is set to expire later this year. Walt Disney Co. holds a majority stake in the streaming platform.
The 12-member board of directors includes several WWE executives and members of the McMahon family, including Mr. McMahon, who is chairman; his daughter Stephanie McMahon; her husband, Paul Levesque, better known as the wrestler Triple H; and WWE President Nick Khan. Man Jit Singh, a former Sony Pictures Home Entertainment executive, is the lead independent director and is running the inquiry, according to people familiar with it.
Ms. McMahon stepped away from her role as WWE’s chief brand officer last month, writing in a LinkedIn post that she was “taking this time to focus on my family” but that she planned to return.
Though its stock is publicly traded, Mr. McMahon effectively controls the company, WWE securities filings show, as he owns a majority of the company’s Class B shares, giving him a majority of shareholders’ voting power. The Class B shares have 10 times the voting power of the Class A shares available to regular investors and are owned exclusively by Mr. McMahon, his family and trusts benefiting individual family members, the filings show.
Board members learned of the $3 million agreement in a series of anonymous emails they received from someone who said the former WWE paralegal was a friend.
The first email, sent to board members on March 30, alleged that Mr. McMahon, 76 years old, initially hired the woman at a salary of $100,000 but increased it to $200,000 after beginning a sexual relationship with her. The email to the board also alleged that Mr. McMahon “gave her like a toy” to Mr. Laurinaitis. The board is investigating the allegations in the email, the people familiar with the inquiry said. “My friend was so scared so she quit after Vince McMahon and lawyer Jerry paid her millions of dollars to shut up,” the initial email to the board said, referring to Mr. McMahon’s longtime lawyer, Mr. McDevitt, who negotiated the deal, according to people familiar with the board inquiry.
Mr. McDevitt, a Pittsburgh-based partner at law firm K&L Gates, has represented WWE and Mr. McMahon for decades. He defended them in the 1990s against federal charges of distributing and conspiring to distribute steroids to WWE wrestlers. A jury acquitted Mr. McMahon and WWE in 1994. WWE is partnering with production company Blumhouse to develop “The United States Vs. Vince McMahon,” a TV series about the steroids case.
The directors received a copy of the $3 million agreement from one of Mr. McMahon’s lawyers on June 12, one person familiar with the inquiry said. The nondisclosure agreement provided an upfront payment of $1 million to the former employee, with the remaining $2 million to be doled out over a period of five years, people familiar with the deal said. The former employee, 41, had fallen on hard times before joining the company and spoke of needing extra money, said people who spoke with her while she worked at WWE. She said she had a law degree but had never taken the bar exam, telling colleagues that her career got sidetracked while she tended to a sick parent, they said.
The former employee moved from the legal department in 2021 to become an assistant to Mr. Laurinaitis, according to the people familiar with the inquiry.
Near the outset of the inquiry, lawyers for the independent directors asked WWE, Mr. McMahon and Mr. Laurinaitis to turn over complaints or allegations about any relationships the executives may have had with company employees, one of the people said.
In recent days, the investigators learned of the other nondisclosure agreements involving allegations against Messrs. McMahon and Laurinaitis, the person said.
Mr. Laurinaitis, a former wrestler whose ring name was Johnny Ace, has been at WWE since 2001 in various roles and most recently as the company’s top talent recruiter. His biography on the WWE website describes him as “one of Mr. McMahon’s most trusted associates.”
Mr. McMahon bought Capitol Wrestling Co., the holding company that owned what was then known as the World Wrestling Federation, from his father in 1982, corporate records show. In partnership with his wife, Linda McMahon, who served as head of the Small Business Administration in the Trump administration, Mr. McMahon expanded the company into a colossus of the professional wrestling boom of the 1980s, turning performers like Hulk Hogan, “Rowdy” Roddy Piper and Jesse Ventura into household names.
Decades later, WWE continues to portray Mr. McMahon as critical to the company’s success. Mr. McMahon “leads the creative team that develops the story lines and the characters for our programming (including our television, WWE Network and other programming),” the company reported in a regulatory filing, which lists the potential loss of the CEO as a risk factor for investors.
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