Vince McMahon, the public face of American wrestling, stepped aside as chief executive and chairman of World Wrestling Entertainment Inc., WWE -3.64% under pressure from disclosure of a board investigation into alleged misconduct.
The Wall Street Journal reported this week that the WWE board was investigating a secret $3 million settlement the longtime CEO agreed to pay to a departing employee with whom he allegedly had an affair, according to documents and people familiar with the board inquiry.
WWE confirmed details of the Journal report in a news release Friday, saying a special committee of the board “is conducting an investigation into alleged misconduct” by Mr. McMahon and John Laurinaitis, head of WWE talent relations. The release also confirmed that the board had hired outside counsel to assist with the investigation.
A WWE spokesman has declined to say whether Mr. Laurinaitis remains with the company. Messrs. McMahon and Laurinaitis have declined to respond to requests for comment.
Mr. McMahon will retain his role and responsibilities related to WWE’s creative content during this period but will surrender his CEO and chairman duties until the investigation has concluded. On Friday night, Mr. McMahon briefly addressed the crowd at the live wrestling show “WWE SmackDown,” but didn’t mention the board’s investigation or his decision to step aside as CEO.
Mr. McMahon said in the news release that he would cooperate with and “do everything possible to support” the investigation, and he pledged to accept its findings, “whatever they are.”
The board appointed Stephanie McMahon as interim CEO. Ms. McMahon, Mr. McMahon’s daughter, had 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.
The 12-member board includes several WWE executives and members of the McMahon family, including Mr. McMahon, who is chairman; Ms. 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.
WWE, which runs the world’s most famous wrestling business, reported record revenue last year, with most of it from selling content rights. That revenue includes a five-year exclusive agreement with NBCUniversal’s Peacock streaming platform in 2021 that is valued at $1 billion.
The company also has TV licensing agreements with Fox Corp. and NBCUniversal, and it recently secured its first stand-alone international distribution deal with Disney Plus Hotstar in Indonesia. Fox and 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 Journal reported that 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. A WWE spokesman said the relationship with the ex-paralegal was consensual.
The board’s investigation began in April and has unearthed other, older nondisclosure agreements involving claims by former female WWE employees who alleged misconduct by Messrs. McMahon and Laurinaitis, the people said.
The board inquiry was prompted by a series of anonymous emails sent this spring, threatening to reveal the $3 million settlement between Mr. McMahon and the former WWE employee.
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