WWE will revise financial statements going back to 2019, saying that a total of $14.6 million of “certain payments” that Vince McMahon made while chairman and CEO should have been recorded as expenses.
McMahon on Friday announced that he was retiring from WWE. That came five weeks after he said he would be stepping down as the company’s chairman and CEO amid an ongoing investigation into allegations that he paid millions of dollars to multiple women to keep quiet about alleged affairs and misconduct.
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On Monday, WWE disclosed in an SEC filing that it “has made a preliminary determination that certain payments that Vince McMahon agreed to make during the period from 2006 through 2022 (including amounts paid and payable in the future), and that were not recorded in the WWE consolidated financial statements, should have been recorded as expenses in the quarters in which those agreements were made.”
WWE said the investigation into the allegations of McMahon’s misconduct by the board’s special committee (comprising independent members) “remains ongoing.” It also disclosed that it has received “regulatory, investigative and enforcement inquiries, subpoenas [and] demands” in connection with McMahon’s alleged misconduct.
Those payments were or will be paid by McMahon personally, according to the company. While WWE said while those were not material in any individual period, the aggregate amount of $14.6 million “would be material if recorded entirely in the second quarter of 2022.” As such, the company currently anticipates that it will revise its previously issued financial statements to record McMahon’s payments in the applicable periods for 2019, 2020 and 2021, as well as the first quarter of 2022, when it issues its financial statements for the second quarter of 2022.
Given that the payments McMahon made over the course of 16 years while leading company were not reflected in its financial statements, “the company expects to conclude that its internal control over financial reporting was not effective as a result of one or more material weaknesses.”
WWE said is aiming to issue the revised financial statements by Aug. 9, 2022, but “there is no assurance that it will be able to meet this deadline.”
The company Monday issued preliminary results for the second quarter of 2022. WWE expects revenue of $328 million for the period (up 23% year-over-year), operating income of $70 million (up 52%) and adjusted operating income before depreciation and amortization of $92 million (up 35%). Adjusted OIBDA for Q2 2022 is above the high end of the company’s previous guidance of $80 million-$90 million.
Shares of WWE were up more than 8% in morning trading on the better-than-expected Q2 results.
WWE also officially announced Monday that its board of directors appointed Stephanie McMahon and Nick Khan as co-CEO following Vince McMahon’s resignation. Stephanie McMahon, who is Vince’s daughter, has also been appointed chairwoman of the board, and Khan will continue to serve as a member of the board.
Additionally, WWE EVP of talent talent relations Paul Levesque — aka Triple H — will assume all responsibilities related to WWE’s creative in the wake of Vince McMahon’s exit in addition to his regular duties, the company said. Levesque is married to Stephanie McMahon.
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