WWE’s parent company knew Vince McMahon — the founder of the wrestling behemoth — was a potential liability. It said so itself in government filings.
McMahon, who resigned Friday from his role as executive chairman of WWE parent company TKO following accusations of sexual assault and trafficking, posed such a risk to his company that it recently called McMahon a major risk factor, listing the company leader alongside the possibility of another pandemic and class-action lawsuits. That raises serious questions about why McMahon was allowed to return to the company early last year.
Companies are required by the US Securities and Exchange Commission to detail to shareholders the risks that pose existential threats to their stakes in the company. These risks commonly include legal actions, shifting consumer demand and other run-of-the-mill corporate concerns.
In TKO’s most recent quarterly regulatory filing with the SEC, filed in September, the company noted that McMahon’s position on the 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,” the company noted in the filing. “His membership also may result in additional scrutiny.”
Although companies frequently detail potential liabilities to business, it’s extraordinary to include the very presence of the company’s leader as a risk.
That risk was realized Thursday when a former WWE employee accused McMahon of sexual assault and trafficking in a disturbing and graphic lawsuit. Janel Grant, who worked at the headquarters of the wrestling behemoth McMahon founded, alleged that McMahon promised a job — and later promotions — at WWE in exchange for sex. Grant’s lawsuit also includes allegations that McMahon trafficked her to other men inside and outside of the company.
McMahon has denied the allegations, and said he is prepared to defend himself in court. But, in a statement Friday, McMahon said that he resigned “out of respect for the WWE Universe.”
TKO did not respond to CNN’s questions about why it allowed McMahon to return to the company.
In an email to staff and in a statement to the media, TKO addressed only McMahon’s job status with the company but did not discuss the specifics of the allegations. In an email to staff Friday, obtained by CNN, WWE President Nick Khan said simply that McMahon tendered his resignation from his executive chairmanship and board member positions.
A history of accusations
McMahon’s potential risk to the company was not a secret - indeed, he had already resigned once following similar, if less detailed, allegations.
The WWE in 2022 appointed an independent committee to investigate McMahon’s alleged misconduct while serving as chairman and CEO of the company. The company said McMahon has since repaid the company about $20 million for misappropriated corporate funds and for the legal fees TKO and WWE paid to investigate McMahon.
Although the company has not gone into any more detail about the results of its investigation, the Wall Street Journal has reported that the millions of dollars McMahon misappropriated from company’s coffers were used for hush money to cover up affairs with multiple former employees. He also reportedly spent millions of company dollars to donate to former President Donald Trump’s charity, the Donald J. Trump Foundation, in 2007 and 2009.
WWE commented in June 2022 that it takes “all allegations of misconduct very seriously.” McMahon retired from his role amid the investigation in July 2022.
But his retirement lasted just a few months. He returned in 2023 and helped his company merge with UFC and Endeavor to form TKO in April. The merger closed in September.
A larger-than-life figure
In his decades as CEO of the WWE, McMahon was known as such an intense micromanager that he barely slept, rarely took vacations and almost never stopped putting his own spin on every single aspect of the company’s output. Many longtime followers of the company simply assumed he’d die in the role rather than retire.
WWE has always been a family business — Vince McMahon Sr. handed over the reins to his son in the 1980s — and it seemed set to continue that way. Vince McMahon’s daughter, Stephanie, who had taken a leave of absence from the company only weeks before McMahon’s first resignation, stepped into the role of co-CEO with Nick Khan, a longtime executive in the entertainment and media industry.
Vince McMahon, Jr., was more akin to a king than a business executive in the world of WWE, his fingerprints on everything. He had molded the industry in his image, running most of his competition out of business and turning his company into the destination for pro wrestling. For most of two decades, he had a monopoly on the business.
His most stunning move came in January 2023, however, when he managed to muscle his way back to the leadership ranks of the WWE despite a disgraceful exit that would have disqualified just about any other executive from returning.
How McMahon returned to the WWE
As revealed in a filing with the Securities and Exchange Commission, McMahon said he had to return to the company because negotiations over media rights and a “strategic alternatives review” required his “direct participation, leadership and support.” He told the SEC he was putting himself back on the company’s board of directors, along with two longtime allies - both of whom McMahon had fired from the company in 2020.
McMahon accomplished that feat because he never sold his stock in the company, and he had remained WWE’s controlling shareholder.
“The only way for WWE to fully capitalize on this opportunity is for me to return as Executive Chairman and support the management team in the negotiations for our media rights and to combine that with a review of strategic alternatives,” McMahon said in a news release. “My return will allow WWE, as well as any transaction counterparties, to engage in these processes knowing they will have the support of the controlling shareholder.”
Just days after reinstalling himself on the company’s board, WWE’s board of directors unanimously returned him to his old job as executive chairman.
His daughter, Stephanie McMahon — who had seemed groomed to take over the company for years and played prominent roles on screen and off — resigned as chairwoman and co-CEO of WWE, leaving the company altogether.
Khan was left as the company’s lone CEO. But the corporate machinations showed that, once again, McMahon was the real power in WWE.
What’s next?
It’s unlikely that McMahon will be able to return again. Although he retains a massive stake in the company, he no longer controls a majority of it.
McMahon faces a hefty legal battle ahead. And Grant is just one of several former employees with whom McMahon is accused of paying to cover up relationships while he was running the company.
He remains under federal investigation, and he has not commented on the reported hush money payments, specifically. But in July 2022, McMahon said that he promised to cooperate with the investigation.
“I have pledged my complete cooperation to the investigation by the special committee, and I will do everything possible to support the investigation,” McMahon said in a statement at the time. “I have also pledged to accept the findings and outcome of the investigation, whatever they are.”
Whatever happens next, one thing is clear: The WWE knew keeping McMahon as head of the company was risky. It said as much months ago.
CNN’s Sam Delouya and Elizabeth Wagmeister contributed to this report.
