Several employees released, WWE discloses $39 million settlement from class action lawsuit related to Saudi Arabia business
There were several office departures this week and a $39 million lawsuit settlement announced in a disclosure on Friday.
Mark Kowal is being replaced by Karen Mullane as the new Controller and Principal Accounting Officer. Senior VP/General Counsel & Secretary Brian Nurse and Executive Vice President, Global Head of Sales and Partnership and Head of International John Brody have also been released by WWE.
The $39 million settlement is for a class action lawsuit filed by the City of Warren (Michigan) Police and Fire Retirement System that alleged that WWE executives deceived investors regarding their business in Saudi Arabia.
The lawsuit alleged that WWE executives artificially inflated their stock and that senior execs sold more than $280 million of their shares at “fraud inflated prices.”
As part of the lawsuit, it was alleged that WWE did not disclose failed negotiations with the Saudi government over their TV deal and that WWE was not able to expand in that region, despite claiming otherwise to their investors.
WWE issued this statement: “The Company believes that resolving the matter is the right business decision and that it is prudent to end the protracted and uncertain class action process.”
Here is the disclosure on the settlement:
On November 18, 2020, World Wrestling Entertainment, Inc. (the “Company”) entered into a term sheet (the “Term Sheet”) to settle the previously disclosed action titled City of Warren Police and Fire Retirement System, individually and on behalf of all others similarly situated, v. World Wrestling Entertainment, Inc., Vincent K. McMahon, George A. Barrios, and Michelle D. Wilson, No. 1:20-cv-02031-JSR, currently pending in the United States District Court for the Southern District of New York (the “Court”). Plaintiffs in the lawsuit alleged securities law violations by the Company, its current Chief Executive Officer and its former Co-Presidents, related to certain disclosures concerning the Company’s business relationship in and with the Kingdom of Saudi Arabia. The Term Sheet was reached in connection with a voluntary mediation which involved the Plaintiffs and their counsel, the Company and its counsel, and the Company’s insurance carriers. Aside from the Term Sheet, there will be other standard and customary terms of class action settlements in the stipulation of settlement. The settlement is subject to notice to the class and preliminary and final approval by the Court.
The settlement will include a full release of all Defendants in connection with the allegations made in the lawsuit, and will not contain any admission of liability or admission as to the validity or truth of any or all allegations or claims by any of the Defendants.
The Term Sheet provides for a settlement payment, subject to Court approval, of $39 million (inclusive of all Plaintiffs’ attorneys fees and expenses and settlement costs), all of which the Company expects will be paid by the Company’s insurance carriers.
The Company believes that resolving the matter is the right business decision and that it is prudent to end the protracted and uncertain class action process.
Cautionary Note Regarding Forward-Looking Statements
This Report on Form 8-K contains forward-looking statements. Forward-looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning. Forward-looking statements made by the Company speak only as of the date made, are subject to change without any obligation on the part of the Company to update or revise them, and undue reliance should not be placed on these statements. For more information about risks and uncertainties associated with the Company’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s Form 10-Q for the quarter ended September 30, 2020, and the Company’s other SEC filings, including, but not limited to, its annual report on Form 10-K.