Former WWE CEO Vince McMahon reaches deal with SEC over undisclosed settlement agreements
The Securities and Exchange Commission recently announced that it has reached a settlement with former World Wrestling Entertainment (WWE) CEO Vince McMahon regarding charges related to his failure to disclose two settlement agreements totaling $10.5 million US to the company’s board and other stakeholders. These agreements were made with two women to prevent them from disclosing potential claims against McMahon and the company.
McMahon’s resignation from WWE’s parent company in January 2024 came after a former employee filed a federal lawsuit alleging serious sexual misconduct against him and another former executive. Despite denying any wrongdoing, McMahon stepped down from his position as executive chairman of the board of directors at TKO Group Holdings. He had previously resigned as WWE’s CEO in 2022 amidst similar allegations.
The SEC revealed that one of the settlement agreements was signed in 2019, while the other was signed in 2022. The first agreement required McMahon to pay a former employee $3 million US in exchange for her silence regarding her relationship with McMahon and the release of potential claims against WWE and McMahon. The second agreement obligated McMahon to pay a former WWE independent contractor $7.5 million US in exchange for her agreement not to disclose her allegations against McMahon and the release of potential claims against the company.
The SEC found that McMahon’s failure to disclose these agreements to WWE’s board and other key personnel circumvented the company’s internal accounting controls, leading to material misstatements in the company’s 2018 and 2021 financial statements. As a result, WWE overstated its net income by approximately eight percent in 2018 and 1.7 percent in 2021. Following the discovery of the agreements, WWE issued a restatement of its financial statements in August 2022.
In response to the SEC’s findings, McMahon agreed to cease-and-desist from violating certain provisions, pay a $400,000 US civil penalty, and reimburse WWE approximately $1.3 million US. Despite not admitting or denying the findings, McMahon has taken responsibility for his actions as part of the settlement.
McMahon’s legacy at WWE is undeniable, having transformed the company from small venue matches to large-scale events held in professional sports stadiums. The weekly live television program, “Raw,” has become a global phenomenon, with its recent debut on Netflix garnering 4.9 million views worldwide and averaging 2.6 million households in the US, according to VideoAmp.
Overall, the settlement with the SEC marks a significant chapter in McMahon’s career and underscores the importance of transparency and accountability in corporate governance. While his contributions to the wrestling industry are undeniable, this episode serves as a reminder of the consequences of failing to disclose material agreements and the impact it can have on a company’s financial integrity.
