An update on the investigation into Vince McMahon.
In SEC filings, WWE revealed that a total of $19.6 million in unrecorded expenses by McMahon. In its 10-Q filing, WWE announced the investigation is “substantially complete.” WWE has spent $1.7 million on the investigation and expects to spend “approximately $10 million during the remainder of the year related to this investigation, the related costs could exceed this estimate.”
You can read the full press release from WWE below.
On June 17, 2022, the Company and its Board of Directors announced that a special committee of independent members of the Company’s Board of Directors (the “Special Committee”) was formed to investigate alleged misconduct by the Company’s former Chairman and Chief Executive Officer, Vincent K. McMahon, who resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest (“Mr. McMahon”), and another executive, who is also no longer with the Company.
The findings of the investigation identified agreements executed by Mr. McMahon which were previously unknown to the Company. On July 25, 2002, the Company 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 the Company’s Consolidated Financial Statements. The Company 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 Company’s Consolidated Financial Statements. Together, these unrecorded expenses total $19.6 million (the “Unrecorded Expenses”). The Company has evaluated the Unrecorded Expenses and has determined that such amounts should have been recorded as expenses in each of the periods in which they became probable and estimable. All payments underlying the Unrecorded Expenses were or will be paid by Mr. McMahon personally. The Special Committee investigation is substantially complete.
Management evaluated the quantitative and qualitative impact of these accounting errors on the Company’s previously issued unaudited interim Consolidated Financial Statements included in the Original Filing and concluded that the errors were not material to its previously issued financial statements. The Company has 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 in the second quarter of 2022.
Accordingly, the Company is revising its previously issued financial statements to record the Unrecorded Expenses in the applicable periods for the three months ended March 31, 2022 and 2021.
In addition, the Company re-evaluated the effectiveness of its internal controls over financial reporting and identified control deficiencies associated with the accounting errors, which the Company has concluded represent material weaknesses in the Company’s internal control over financial reporting as of March 31, 2022. Accordingly, the Company is filing this Form 10-Q/A to amend management’s assessment of the Company’s internal control over financial reporting and its disclosure controls and procedures to indicate that they were not effective as of March 31 2022.As a result of the determination to file this Form 10-Q/A, for the reasons outlined in the preceding paragraph, the Audit Committee of the Board of Directors (the “Audit Committee”) of the Company, after discussion with management and the Company’s independent registered public accounting firm, Deloitte & Touche LLP, determined that the Company will revise its unaudited interim Consolidated Financial Statements for the three months ended March 31, 2022 and 2021, included in the Original Filing, to disclose the existence of the related material weaknesses and to correct the accounting error for all periods presented. The correction of these accounting errors.
WWE Statement
Vince McMahon retired as CEO of WWE on July 22 amid the investigation. Time will tell if any other information will be revealed in the coming weeks.
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