WWE filed a Form 8-K with the SEC (Securities & Exchange Commission) earlier today that details how WWE Chairman Vince McMahon has entered into a variable prepaid forward contract to pledge approximately 3.5 million shares of his Class B common stock. The filing notes that Vince entered into the contract to provide WWE more liquidity while the company is dealing with fallout from the ongoing coronavirus pandemic.
This was designed to provide current liquidity to WWE while maintaining Vince's voting and dividend rights in the stock, as well as price appreciation during the contract, and after if he settles in cash, according to Seeking Alpha. The contract is set to settle on specified dates in March 2024, at which times the number of Class A shares to be delivered by Vince will be determined based on price at the time. Shares covered by the contract represent around 4.5% of total outstanding shares of Class A and Class B common stock. The deal does not apply to another 25.2 million shares of Class B stock beneficially owned by Vince, which is about 70.5% of company voting power.
The filing also notes that Vince has confirmed that he intends to continue in his role as the WWE Chairman and CEO for the foreseeable future.
WWE stock was up 3.50% today, closing at $39.04 per share after opening at $39.60. Today's high was $41.79 and the low was $37.34. The stock is currently down 2.54% in after-hours trading, at $38.05 per share.
You can see the full filing on the WWE Corporate website at this link. Below is the detailed "Other Events" section from the filing:
Item 8.01. Other Events.
On March 24, 2020, Vincent K. McMahon ("Mr. McMahon"), Chairman and Chief Executive Officer of World Wrestling Entertainment, Inc. (the "Company"), entered into a variable prepaid forward contract with an unaffiliated bank (the "Bank") covering approximately 3.5 million shares of the Company's Class B common stock. The variable prepaid forward contract is scheduled to settle on specified dates in March 2024, at which time the actual number of shares of the Company's Class A common stock to be delivered by Mr. McMahon will be determined based on the price of the Company's Class A common stock on such dates, with the aggregate number not to exceed approximately 3.5 million shares, which is the number of shares of Class B common stock pledged by Mr. McMahon to secure his obligations under the contract. Subject to certain conditions, Mr. McMahon can also elect to settle the variable prepaid forward contract in cash and thereby retain full ownership of the pledged shares.
Mr. McMahon entered into the variable prepaid forward contract to provide current liquidity while allowing him to maintain voting and ordinary dividend rights in the stock, as well as the ability to participate in future stock price appreciation, during the term of the contract and thereafter if Mr. McMahon settles the variable prepaid forward contract in cash.
The shares covered by the variable prepaid forward contract represent approximately 4.5% of the Company's total outstanding shares of Class A and Class B common stock. The variable prepaid forward contract does not apply to the approximately 25,198,344 other shares of Class B common stock beneficially owned by Mr. McMahon. Those shares represent approximately 70.5% of the Company's total voting power. The variable prepaid forward contract contains a 60-day lock-up restricting Mr. McMahon's ability to sell or transfer additional shares of the Company's common stock during such period without the Bank's prior approval. Mr. McMahon has informed us that he intends to continue in his capacity as the Company's Chairman and Chief Executive Officer for the foreseeable future.