Vince McMahon’s membership on TKO Holdings’ Board of Directors is listed as a “risk factor.”
In a new SEC filing made as part of its Q3 earnings report for 2023, TKO lists McMahon’s presence on the board under “Risk Factors.” The company says his presence “could have adverse financial and operational impacts on our business… [and] could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.”
The filing added that TKO expects continued “significant” costs from the investigation into McMahon over sexual misconduct and hush payments related to those incidents.
You can check out the official SEC filing below:
“The special committee of independent members of WWE’s Board of Directors’ investigation into allegations of misconduct by Mr. McMahon, and any further allegations and investigations may have an adverse financial and operational impact on our business performance.
On June 17, 2022, WWE and its then Board of Directors announced that a special committee of independent members of its Board of Directors (the “Special Committee”) was formed to investigate alleged misconduct by WWE’s then-Chief Executive Officer, Vincent K. McMahon. On July 22, 2022, Mr. McMahon resigned from all positions held with WWE but remained a stockholder with a controlling interest. On January 9, 2023, WWE’s Board of Directors elected Mr. McMahon as Executive Chairman thereto, and Mr. McMahon subsequently returned to WWE.
On July 25, 2022, based on the findings of the Special Committee investigation, WWE announced that it had determined that certain payments that Mr. McMahon agreed to make during the period from 2006 through 2022 (including amounts paid and payable in the future totaling $14.6 million) were not appropriately recorded as expenses in WWE’s consolidated financial statements. WWE subsequently identified two additional payments totaling $5.0 million unrelated to the alleged misconduct by Mr. McMahon that led to the Special Committee investigation, that Mr. McMahon made in 2007 and 2009 that were not appropriately recorded as expenses in the WWE’s consolidated financial statements. Together, these unrecorded expenses total $19.6 million (the “Unrecorded Expenses”). All payments underlying the Unrecorded Expenses have been or will be paid by Mr. McMahon personally. WWE determined 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 when identified in the second quarter of 2022. Accordingly, WWE revised its previously issued financial statements to record the Unrecorded Expenses in the applicable periods for the years ended December 31, 2019, 2020 and 2021, as well as the first quarter of 2021 and 2022. In light of the Unrecorded Expenses and related facts, WWE concluded that its internal control over financial reporting was not effective as a result of one or more material weaknesses. Although the Special Committee investigation was completed, WWE also received, and the Company may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas, demands and/or other claims and complaints arising from, related to, or in connection with these matters.
Subsequent to WWE’s restatement for the Unrecorded Expenses, WWE was informed of certain additional claims, which have been settled by Mr. McMahon. When the amounts became probable and estimable in the fourth quarter of 2022, including consideration of events that occurred subsequent to December 31, 2022, WWE recorded an additional $7.4 million of expenses. Mr. McMahon has made or will make all related payments personally.
Professional costs resulting from WWE’s Special Committee’s investigation have been significant and are expected to continue to be significant as the Company continues to incur costs arising from ongoing and/or potentially new regulatory, investigative and enforcement inquiries, subpoenas and demands and claims. We expect Mr. McMahon to reimburse the Company for reasonable expenses incurred in connection with the investigation. Although we are not aware that significant business has been lost to date, it is possible that a change in the perceptions of our business partners could occur as a result of the investigation or other matters described above. In addition, as a result of the investigation or other matters described above, certain other operational changes, including without limitation other personnel changes, have occurred and may continue to occur in the future, which may have adverse financial and operational impacts on our business. Any adverse impacts as a result of the investigation and related matters, and any further allegations or investigations, could exacerbate any of the risks described herein.
Mr. McMahon’s membership on our Board could have adverse financial and operational impacts on our business.
Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.”
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Vince McMahon’s Membership on TKO Holdings’ Board of Directors Listed as a Risk Factor
In a recent Securities and Exchange Commission (SEC) filing, TKO Holdings identified Vince McMahon’s membership on their Board of Directors as a “risk factor.” The filing states that McMahon’s presence on the board could have adverse financial and operational impacts on the company’s business. It also mentions the potential for negative publicity and additional scrutiny that could result from McMahon’s involvement.
The filing comes in the wake of an ongoing investigation into McMahon over allegations of sexual misconduct and hush payments related to those incidents. TKO expects to incur significant costs from this investigation, which could further impact their financial performance.
The investigation into McMahon’s alleged misconduct began in June 2022 when WWE’s Board of Directors formed a special committee to look into the matter. McMahon resigned from all positions held with WWE but remained a stockholder with a controlling interest. However, in January 2023, he was elected as Executive Chairman and returned to WWE.
Based on the findings of the special committee’s investigation, WWE announced that certain payments agreed upon by McMahon between 2006 and 2022 were not appropriately recorded as expenses in the company’s financial statements. WWE revised its financial statements to include these unrecorded expenses, totaling $19.6 million.
In addition to the investigation, McMahon settled certain additional claims, resulting in an additional $7.4 million of expenses for WWE. The professional costs associated with the investigation have been significant and are expected to continue as the company deals with ongoing and potentially new regulatory inquiries and claims.
While TKO states that they are not aware of any significant business being lost to date, they acknowledge the possibility of a change in the perceptions of their business partners due to the investigation. They also mention that operational changes, including personnel changes, have occurred and may continue to occur in the future, which could have adverse financial and operational impacts on their business.
Overall, TKO highlights the potential risks associated with McMahon’s membership on their Board of Directors. They acknowledge the possibility of adverse financial and operational impacts, negative publicity, and additional scrutiny. These factors could directly or indirectly affect their business.
It is important to note that this SEC filing provides insight into the potential risks TKO Holdings faces due to McMahon’s involvement. The investigation and its outcomes are ongoing, and it remains to be seen how they will ultimately impact McMahon, WWE, and TKO Holdings.