WORLD WRESTLING ENTERTAINMENTINC filed this DEF 14A on 03/10/2017
WORLD WRESTLING ENTERTAINMENTINC (Form: DEF 14A, Received: 03/10/2017 16:18:26)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.            )
 
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[   ]   Soliciting Material Pursuant to §240.14a-12

  World Wrestling Entertainment, Inc.  
  (Name of Registrant as Specified In Its Charter)  
 
       
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 

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1241 East Main Street

Stamford, Connecticut 06902

Dear WWE Stockholder: March 10, 2017

You are cordially invited to attend WWE’s 2017 Annual Meeting of Stockholders. The meeting will be held on April 20, 2017, at Hilton Stamford Hotel, One First Stamford Place, Stamford, CT 06902 beginning at 10:00 a.m. Eastern Time. Details of the business to be conducted at this year’s Annual Meeting are described in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.

As a stockholder, you are being asked to vote on important matters. Whether or not you plan to attend the Annual Meeting of Stockholders, your vote is important. We therefore encourage you to vote. After reading the attached Notice of Annual Meeting of Stockholders and Proxy Statement, please promptly fill out and submit your proxy. We also invite you to utilize the convenience of Internet voting at the website indicated on the enclosed proxy card. Alternatively, you can vote by telephone or complete, sign, date and promptly return via mail the enclosed proxy card. If you attend the meeting and wish to vote in person, you will have the opportunity to do so, even if you have already voted, and any such in-person vote will supersede all of your prior votes.

On behalf of the WWE Board of Directors, I greatly appreciate your continued support.

  Sincerely,
   
 
   
  Vincent K. McMahon
  Chairman and Chief Executive Officer

PLEASE NOTE THAT THIS WILL BE A BUSINESS MEETING ONLY AND NOT AN ENTERTAINMENT EVENT. The meeting will be limited to stockholders (or their authorized representatives) having evidence of their stock ownership. If you plan to attend the Annual Meeting in person, you must show proof of your ownership at the registration tables at the door. Registration will begin at 9:00 a.m. and seating will begin at 9:30 a.m. Each stockholder may be asked to present valid government-issued photo identification, such as a driver’s license or passport, to enter the meeting. These procedures may require additional time, so please plan accordingly. Cameras, recording devices and other electronic devices will not be permitted, and cell phones may not be used for these purposes. The Annual Meeting will start promptly at 10:00 a.m. Eastern Time. To avoid disruption, admission may be limited once the meeting begins.

 

 

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT

The Annual Meeting (the “Annual Meeting”) of Stockholders of World Wrestling Entertainment, Inc., a Delaware corporation (“WWE” or the “Company”), will be held on April 20, 2017 at Hilton Stamford Hotel, One First Stamford Place, Stamford, CT 06902 at 10:00 a.m. Eastern Time. The purpose of the Annual Meeting, as described in the attached Proxy Statement is as follows:

1. To elect nine Directors to serve until the Company’s next Annual Meeting and until their successors are elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2017;
3. To hold an advisory vote to approve executive compensation;
4. To hold an advisory vote on the frequency of the advisory vote on executive compensation; and
5. To transact such other business as may properly come before the Annual Meeting.

The close of business on February 22, 2017 is the record date for determining stockholders entitled to notice of and to vote at our Annual Meeting and at any adjournment or postponement of the meeting.

Whether or not you plan to attend the Annual Meeting in person, your vote is important. We therefore urge you to vote by Internet, phone or mail by following the instructions set forth herein.

  By the Order of the Board of Directors,
   
 
   
  Blake T. Bilstad
  SVP, General Counsel & Secretary

Stamford, Connecticut

March 10, 2017

 

 

 

 

PROXY STATEMENT

Annual Meeting of Stockholders
Thursday, April 20, 2017

The enclosed proxy is solicited on behalf of WWE’s Board of Directors in connection with our Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, April 20, 2017, at 10:00 a.m. Eastern Time or any adjournment or postponement of this meeting. The Annual Meeting will be held at Hilton Stamford Hotel, One First Stamford Place, Stamford, CT 06902. Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), the Company has elected to provide electronic access to its proxy materials over the Internet. Accordingly, the Company is sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to the Company’s record and beneficial stockholders. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or to request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials electronically by email on an ongoing basis. The Company encourages you to take advantage of the availability of the proxy materials on the Internet in order to help reduce the costs and environmental impact of printing proxy materials. We intend to mail the Notice on or about March 10, 2017, to each stockholder entitled to vote at our Annual Meeting.

We will pay all costs of this proxy solicitation. Directors or officers, or other WWE employees, may also solicit proxies in person or by mail, telephone or fax.

Only holders of record of our Class A common stock and Class B common stock at the close of business on February 22, 2017 (the “record date”), will be entitled to notice of and to vote at our Annual Meeting. At the close of business on the record date, 38,499,514 shares of Class A common stock and 37,949,438 shares of Class B common stock were outstanding and entitled to vote, with each Class A share entitled to one vote on all matters and each Class B share entitled to ten votes. We sometimes refer to Class A common stock and Class B common stock together as “Common Stock.”

A majority of the collective voting power represented by our Common Stock, present in person or represented by proxy, constitutes a quorum for the transaction of business at the Annual Meeting. Election of nominees to the Board (Proposal 1) and the advisory vote on the frequency of the advisory vote on executive compensation (Proposal 4) are decided by plurality votes. The affirmative vote of a majority of the shares present and entitled to vote at the meeting is required to approve Proposals 2 and 3. Proposals 3 and 4 are advisory votes only and as discussed in more detail below, the voting result is not binding on us. Under New York Stock Exchange (“NYSE”) rules, if your broker holds your shares in its name as a nominee, and does not receive voting instructions from you, the broker is permitted to vote your shares only on the ratification of the appointment of the independent registered public accounting firm (Proposal 2). When a broker does not receive voting instructions and either declines to exercise discretionary voting or is barred from doing so under NYSE rules, the missing votes are referred to as “broker non-votes.” Other unvoted shares in returned proxies will be voted in accordance with the Board recommendations set forth in this proxy statement. Both abstentions and broker non-votes in returned proxies will be counted for purposes of determining the presence or absence of a quorum at the meeting. Broker non-votes are not, however, considered present and entitled to vote and will have no effect on the voting results of any of the proposals. An abstention in a returned proxy on any of Proposals 2 or 3 identified above will have the effect of a vote against that proposal. An abstention in a returned proxy will have no effect on the outcome of Proposals 1 or 4. The Board of Directors recommends that you vote FOR the election of each of the nominees for Director, FOR the ratification of our independent registered public accounting firm, FOR the advisory approval of our executive compensation, and FOR an ANNUAL advisory vote on executive compensation.

 

 

 

 

If you vote via any of the following methods, you have the power to revoke your vote before the Annual Meeting or at the Annual Meeting. You may revoke a proxy by mailing us a letter that is received by us no later than Wednesday, April 19, 2017 that states that the proxy is revoked, by timely executing and delivering, by mail, Internet or telephone, a later-dated proxy or by attending our Annual Meeting and voting in person. While the Company does not plan to disseminate information concerning your vote, proxies given by stockholders of record will not be confidential. The voting instructions of beneficial owners will only be available to the beneficial owner’s nominee and will not be disclosed to us unless required by law or requested by you. If you are a stockholder of record and write comments on your proxy card, your comments will be provided to us.

Vote by Internet:

The Company strongly prefers that you utilize our convenient Internet voting system which you can access and use whether you live in the United States or elsewhere. The website for Internet voting is printed on both the Notice and the proxy card. Internet voting is available 24 hours a day until 11:59 P.M. on April 19, 2017. You will be given the opportunity to confirm that your instructions have been properly recorded. While at the site, you will be able to enroll in our electronic delivery program, which will ensure that you will receive future mailings relating to annual meetings as quickly as possible and will help us to save costs. If you vote via the Internet, please do NOT return your proxy card.

Vote by Telephone:

You can also vote your shares by calling the toll-free number printed on your proxy card. Telephone voting is available 24 hours a day until 11:59 P.M. on April 19, 2017. The voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone, please do NOT return your proxy card.

Vote by Mail:

If you choose to vote by mail, please mark your proxy, date and sign it, and return it in the postage-paid envelope provided.

 

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PROPOSAL 1—ELECTION OF DIRECTORS

Stockholders will elect nine Directors at our Annual Meeting, each to serve until the next Annual Meeting of Stockholders and until a successor shall have been chosen and qualified. We intend to vote the shares of Common Stock represented by a proxy in favor of the nominees listed below, unless otherwise instructed in the proxy. Each nominee is currently a Director. We believe all nominees will be willing and able to serve on our Board. In the unlikely event that a nominee is unable or declines to serve, we will vote the shares represented by a proxy for the remaining nominees and, if there is one, for an alternate person duly nominated by our Board of Directors.

Director/Nominee(1)   Age   Current Position with Company   Committee   Director
Since
Vincent K. McMahon   71   Chairman of the Board and
Chief Executive Officer
  Executive
(Chair)
  1980
Stephanie McMahon   40   Chief Brand Officer   Executive   2015
Paul Levesque   47   EVP, Talent,
Live Events & Creative
  Executive   2015
Stuart U. Goldfarb(2)   62     Audit; Governance & Nominating   2011
Patricia A. Gottesman(2)   58     Governance & Nominating (Chair)   2011
Laureen Ong(2)   64     Compensation   2014
Robyn W. Peterson(2)   41     Governance & Nominating   2015
Frank A. Riddick, III(2)   60     Compensation (Chair); Audit   2008
Jeffrey R. Speed(2)   54     Audit (Chair); Compensation   2008

 

 

(1) Joseph H. Perkins is retiring from the Board on the day of the Annual Meeting and, accordingly, is not a nominee. Mr. Perkins has served on the Board since the Company went public in 1999.
(2) Independent Director.

Vincent K. McMahon, co-founder of our Company, is Chairman of the Board of Directors and Chief Executive Officer and Chair of the Executive Committee.

Stephanie McMahon has served as our Chief Brand Officer since November 2013. She is responsible for working with WWE’s business units to support key growth initiatives and represents WWE as its global brand ambassador among key constituencies. She is the primary spokesperson for WWE’s corporate social responsibility initiatives. Previously, Ms. McMahon was our Executive Vice President, Creative, from May 2007; Senior Vice President, Creative Writing, from June 2005 to May 2007; and before that, Vice President, Creative Writing. In these capacities, she was responsible for overseeing our digital and creative departments including the creative development of our television, print, digital and social media content. She has managed our talent, talent brand management and live event business. Ms. McMahon started with the Company in 1998. In 2014, Ms. McMahon and Mr. Levesque established Connor’s Cure, a fund dedicated to furthering pediatric cancer research. In 2015, Ms. McMahon was named one of nine U.S. leaders participating in the prestigious Eisenhower Fellowship. Ms. McMahon is also a TV personality, appearing regularly on WWE’s flagship programming. Ms. McMahon is a member of the Board of Directors of USO Metropolitan Washington and Children’s Hospital of Pittsburgh

 

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Foundation. She has been recognized as one of the “Most Powerful Women in Cable” by CableFAX magazine for the past five years. Most recently, Ms. McMahon was recognized as a “Wonder Woman” by Multichannel News for 2016 and was named to the Variety Digital Entertainment Impact List: 30 Execs to Watch and the Variety Power of Women Impact Report. Adweek also included Ms. McMahon in their inaugural list of the 2016 Most Powerful Women in Sports. Ms. McMahon is the wife of Paul Levesque and the daughter of Vincent McMahon. She is a member of the Executive Committee and has been a Director of the Company since February 2015.

Paul Levesque has been our Executive Vice President, Talent, Live Events & Creative since August 2011. In this role, he oversees our talent relations, talent development and live events. Mr. Levesque plays an integral role in the Company’s creative process, helping shape the creative direction and storylines of WWE’s programming. Mr. Levesque oversees our worldwide recruitment practices and developmental training processes. In 2013, Mr. Levesque established the Company’s state of the art training facility in Orlando, Florida. This performance center has helped shape the careers of many of our talent, and has also allowed for the creation of our third global touring brand, NXT. Mr. Levesque debuted as a WWE Superstar, “Triple H”, in 1995 and has held the WWE Heavyweight Championship title a record setting 14 times. He has headlined thousands of WWE events, and entertained millions around the world. Mr. Levesque is the husband of Stephanie McMahon and the son-in-law of Vincent McMahon. Together with Stephanie McMahon, they established Connor’s Cure, a fund dedicated to furthering pediatric cancer research. Mr. Levesque is a member of the Executive Committee and has been a Director of the Company since February 2015.

Stuart U. Goldfarb is a member of our Audit Committee and our Governance & Nominating Committee. Since January 2014, Mr. Goldfarb has been Co-founder and Partner of Melo7 Tech Partners, LLC, which was founded by Carmelo Anthony and Mr. Goldfarb to invest in and develop opportunities primarily in early stage digital media, consumer internet and technology ventures. Prior to this, from January 2012, Mr. Goldfarb was President of Fullbridge, Inc., a provider of an accelerated, rigorous business education program. From June 2011 until January 2012, Mr. Goldfarb was President and Chief Executive Officer of Atrinsic, Inc., a marketer of direct-to-consumer subscription products and an Internet search marketing agency. Mr. Goldfarb served as a director of Atrinsic from January 2010 until December 2012. In June 2012, Atrinsic filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The filing was precipitated by Atrinsic’s cessation of certain businesses and its inability to raise financing. From November 2009 to June 2011, Mr. Goldfarb was a Partner in Unbound Partners LLC, a marketing and management consulting firm. From 2001 to 2009, Mr. Goldfarb was President and Chief Executive Officer of Direct Brands, Inc. Under his leadership, the company grew to be the world’s largest direct marketer of music, DVDs and books, with household brands such as Columbia House, BMG Music, Doubleday Book Club, Book-of-the-Month-Club and cdnow.com. Prior to that, Mr. Goldfarb was President and Chief Executive Officer of bol.com, Bertelsmann’s premier online retailer of books and music, doing business in 18 European and Asian countries. Before joining Bertelsmann, he was Vice Chairman of Value Vision International, a cable TV home shopping and e-commerce company. He was formerly Executive Vice President, Worldwide Business Development at NBC.

Patricia A. Gottesman is Chair of our Governance & Nominating Committee. From February 2011 until August 2012, Ms. Gottesman was President and Chief Executive Officer of Crimson Hexagon, a social intelligence company in the vanguard of online media monitoring and analysis. From April 2008 to January 2011, she was founder and principal of Omnibus, an international media and technology practice. Prior to that, Ms. Gottesman was with Cablevision Systems Corporation for almost 30 years, most recently as Executive Vice President, Digital Marketing and Commerce. From August 2014 until its merger with comScore, Inc. in January 2016, Ms. Gottesman was a member of the Board of Directors and the Audit and Nominating & Governance Committees of Rentrak Corporation, a media measurement and advanced consumer targeting company. Subsequent to this merger, until November 2016, Ms. Gottesman was a director of comScore, Inc., a public company that provides digital media analytics services. Ms. Gottesman served as comScore’s Chair, Nominating and Governance Committee and Co-Chair of its Special Investigation Subcommittee and member of its Audit Committee.

 

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Laureen Ong is a member of our Compensation Committee. She has been a Director of the Company since June 2014. From April 2010 to October 2013, Ms. Ong served as President, Travel Channel LLC, a subsidiary of Scripps Networks Interactive, Inc., which operates a television network focusing on travel entertainment. From March 2007 to October 2009, she was Chief Operating Officer of Star Group Limited, which produces, broadcasts and distributes television programming via satellite in Asia. From April 2000 to April 2007, Ms. Ong was President of National Geographic Television, during which time she was the chief architect of the launch of its cable television network. Prior to that, she was a senior executive in several sports and media companies.

Robyn W. Peterson is a member of our Governance & Nominating Committee. Since May 2011, Mr. Peterson has been Chief Technology Officer of Mashable, Inc., a leading source of news information and resources for the connected generation. From January 2011 to March 2011, Mr. Peterson was Vice President of Product, News and Info for AOL, responsible for product strategy and development of the news, finance and sports sites until AOL’s acquisition of the Huffington Post. From March 2010 to January 2011, Mr. Peterson was Product Director for Next Issue Media LLC, a company formed by five major U.S. publishers to develop, market and deliver interactive digital editions of magazines. Prior to that, from November 2008, Mr. Peterson was Vice President, Technology and Product for NBC Universal, Inc. From 2001-2004, and from 2005-2008, Mr. Peterson was an executive at Ziff Davis Media, where he was Chief Technology Officer when it both filed for bankruptcy and emerged in 2008. Mr. Peterson was previously involved in other digital companies since 1998.

Frank A. Riddick, III is Chair of our Compensation Committee and a member of our Audit Committee. Mr. Riddick has been Chief Executive Officer of FloWorks International LLC (formerly named Shale-Inland Group LLC), a leading supplier of pipe, valves and related products (“FloWorks”) since September 2013, and prior to that, was Chairman and then Executive Chairman of FloWorks since March 2012. Mr. Riddick is also currently a member of the Management Advisory Board of Tower Brook Capital Partners, L.P. (“TowerBrook”), a private equity firm. From August 2009 until joining FloWorks, Mr. Riddick was Chief Executive Officer of JMC Steel Group, the largest independent steel tubular manufacturer in North America. Prior to that, he was a consultant to TowerBrook. Before joining TowerBrook, he served as President and Chief Executive Officer of Formica Corporation, a manufacturer of surfacing materials, from January 2002 to April 2008. He served as President and Chief Operating Officer of Armstrong Holdings, Inc. from February 2000 to November 2001, and as Chief Financial Officer at Armstrong and its subsidiaries from 1995 to 2000. Until its sale in July 2015, Mr. Riddick was a member of the board of directors, Chair of the Audit Committee and a member of the Compensation Committee of Geeknet, Inc., the owner and operator of ThinkGeek, an online retailer. Mr. Riddick is also a former director of GrafTech International Ltd, a manufacturer of graphite and carbon products, as well as related technical services.

Jeffrey R. Speed is Chair of the Audit Committee and a member of our Compensation Committee. He served as Executive Vice President and Chief Financial Officer of Six Flags, Inc., the world’s largest regional theme park operator, from April 2006 until October 2010. In June 2009, Six Flags, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware, and it emerged from those proceedings in May 2010. Prior to joining Six Flags, Mr. Speed spent approximately 13 years with The Walt Disney Company, serving from 2003 until 2006 as Senior Vice President and Chief Financial Officer of Euro Disney SAS, the publicly-traded operator of the Disneyland Resort Paris, the number one tourist destination in Europe. Prior to that, Mr. Speed spent approximately nine years with the public accounting firm of Price Waterhouse (now PriceWaterhouseCoopers).

 

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Other Executive Officers

The following table provides information regarding our executive officers as of March 2, 2017.

Name   Age   Position with Company   With Company Since
Michelle D. Wilson   51   Chief Revenue & Marketing Officer   2009
George A. Barrios   51   Chief Strategy & Financial Officer   2008
Kevin Dunn   56   Executive Producer & Chief Global Television Production   1984
Blake T. Bilstad   47   SVP, General Counsel & Secretary   2015
Casey Collins   44   EVP, Consumer Products   2012
Basil V. DeVito, Jr.   62   Sr. Advisor, Business Strategy   1985
Michael J. Luisi   51   President, WWE Studios   2011

Michelle D. Wilson has served as our Chief Revenue & Marketing Officer since November 2013, and Chief Marketing Officer since February 2009. From 2001 to 2009, Ms. Wilson was Chief Marketing Officer of the United States Tennis Association where she was instrumental in making the US Open the highest attended annual sporting event in the world. Ms. Wilson developed innovative advertising and promotional campaigns that significantly elevated the image and awareness of tennis in the United States, resulting in record television viewership and ticket sales. She was also pivotal in the implementation of several innovations for the sport, including in-stadium video screens, blue courts, instant replay and the 2004 launch of the US Open Series. From 2000 to 2001, she was Vice President of Marketing for the XFL, our former professional football league (the “XFL”). Before that, Ms. Wilson held positions at the National Basketball Association in its domestic and international consumer products groups.

George A. Barrios has served as our Chief Strategy & Financial Officer since November 2013, and Chief Financial Officer since March 2008. Before that, Mr. Barrios was Vice President and Treasurer of The New York Times Company since January 2007. Mr. Barrios joined The New York Times Company in 2002 as Chief Financial Officer of a subsidiary which published, among other things, The Boston Globe. Prior to that, he was President and Chief Operating Officer of Netsilicon, Inc., a publicly-held software development company, where he helped to stabilize the business prior to its merger. From 1994 to 2000, Mr. Barrios served in several senior capacities for Praxair, Inc., a large supplier of industrial gasses.

Kevin Dunn has been Executive Producer & Chief Global Television Production since July 2014 and, prior thereto Executive Producer since November 2013, and Executive Vice President, Television Production, since July 2003. Before that, Mr. Dunn served as our Executive Producer for 11 years.

Blake T. Bilstad has served as our Senior Vice President, General Counsel and Secretary since June 2015 and was our acting Senior Vice President - Human Resources from October 2015 until April 2016. Prior to joining us, from April 2004 to March 2015, Mr. Bilstad worked with Provide Commerce, Inc., an e-commerce group specializing in the direct-to-consumer delivery of perishable and personalized gifts, serving as Senior Vice President – Legal & Public Affairs, General Counsel and Secretary. Provide Commerce was publicly-held until its acquisition in 2006 by Liberty Media Corporation. From June 1999 to April 2004, Mr. Bilstad worked with MP3.com, Inc., a publicly-held digital media company acquired in 2001 by Vivendi Universal S.A., a global entertainment and telecommunications conglomerate, where he helped form VUNet USA and served as the group’s Senior Vice President of Legal Affairs and Secretary. Mr. Bilstad held previous legal positions at Cooley Godward LLP, the U.S. Department of Justice – Antitrust Division, the Harvard Negotiation Project and two other major law firms.

 

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Casey Collins has served as our Executive Vice President, Consumer Products since July 2012. Prior to joining WWE, Mr. Collins was Executive Vice President, Global Licensing & Entertainment at MGA Entertainment, where he oversaw the entertainment, consumer products, retail development and promotions divisions. Before joining MGA Entertainment, Mr. Collins spent 10 years at Lucasfilm Ltd. beginning March 2001, where he was responsible for the management of Lucasfilm’s domestic and international licensing and retail merchandise programs.

Basil V. DeVito, Jr. has served as our Senior Advisor, Business Strategies since 2003, in which role he has assisted in obtaining placement for WWE television programming in North America. Prior to that, he managed several WWE departments and served as our Chief Operating Officer and as President of the XFL. Mr. DeVito has been with the Company in various capacities over the past 25 years.

Michael J. Luisi has served as President, WWE Studios since September 2011, and was previously our Executive Vice President of Business Development, General Counsel and Secretary from January 2011 to January 2013. Before that, Mr. Luisi was with Miramax Films, a film production and distribution company which, until late 2010, was a subsidiary of The Walt Disney Company (“Miramax”). At Miramax, Mr. Luisi was Executive Vice President, Worldwide Operations, beginning October 2008. Before that, he was Executive Vice President, Business Affairs and Operations, from January 2006. Mr. Luisi joined Miramax in 1998.

The Board and Committees

Our Board has standing Audit, Compensation, Governance & Nominating and Executive Committees. During the year ended December 31, 2016, there were 9 meetings of the Board of Directors, 13 meetings of the Audit Committee, 6 meetings of the Compensation Committee, and 3 meetings of the Governance & Nominating Committee. Under our Corporate Governance Guidelines, Directors are expected to prepare for and attend meetings of the Board and committees on which they sit. Each Director attended more than 75% of the aggregate number of meetings of the Board and committees on which he or she served. Directors are also expected to attend the Company’s Annual Meeting of Stockholders, and all members attended last year’s meeting except for Mr. Levesque, who was traveling outside the country for business.

Independent Directors. Each year our Board conducts a review to determine which of our Directors qualify as independent. Based on our most recent review, the six members of our Board noted in the table above (Stuart U. Goldfarb, Patricia A. Gottesman, Laureen Ong, Robyn W. Peterson, Frank A. Riddick, III and Jeffrey R. Speed) qualified as independent under the NYSE and SEC regulations for Board members as well as those regulations, as applicable, relating to their role on the Audit, Compensation and/or Governance & Nominating Committee(s). Joseph H. Perkins, who is retiring on the day of the Annual Meeting, also qualified as independent under these regulations. These are the standards we use to determine independence. One of our independent directors in 2016 served as an outside director of a public company which provides certain services to the Company in the ordinary course; another independent director has a small stock ownership in a public company which is a licensee of the Company; and a third independent director has a cousin who is an employee of the Company. The Board considered these relationships and affirmatively determined that none of them is material. None of the other independent Directors has any relationship with the Company other than his or her Director/Committee membership(s). Our Audit, Compensation and Governance & Nominating Committees consist solely of independent Directors. The Company does not currently have a lead independent director.

NYSE Listing Standards. Certain provisions of the corporate governance rules of the NYSE are not applicable to “controlled companies.” “Controlled companies” under those rules are companies of which more than 50 percent of the voting power is held by an individual, a group or another company. The Company currently is a “controlled company” under this definition by virtue of the beneficial ownership by Mr. McMahon of approximately 46% of the Company’s outstanding equity and approximately 85% of the combined voting power of our Common Stock. As a “controlled company,” the Company is exempt from

 

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the NYSE listing standards of having a majority of independent directors and independent compensation and governance & nominating committees. However, the Company currently does not avail itself of these “controlled company” exemptions.

Board Structure and Risk Management . Mr. McMahon serves as both our Chairman and Chief Executive Officer. The Board believes that the unique blend of creativity, entrepreneurship and management skills required to act as Chief Executive Officer at the Company would make filling this position extremely difficult. As a practical matter, Mr. McMahon’s combined role as Chairman and Chief Executive Officer reflects the larger reality that as the owner of a majority of the Company’s voting power, management of the Company is within his ultimate control. This notwithstanding, the Board recognizes the critical role it plays in risk oversight and believes that it works well with management to understand and give clear guidance on matters that it considers to pose possible risks to the Company, such as entering into new business ventures, cybersecurity and other matters disclosed as risk factors in the Company’s Annual Report on Form 10-K. In addition, as described elsewhere in this proxy, certain committees of the Board have primary oversight responsibility for specific risk factors. Examples include (i) Audit Committee oversight of, among other things, SEC filings, internal and external audit functions and related party transactions; (ii) Compensation Committee oversight of compensation matters, including limiting instances where compensation could be tied to excessive risk taking by management; and (iii) Governance & Nominating Committee oversight of corporate governance and the recommendation of a slate of nominees for Director and Committee memberships. The Board believes that the administration of its risk oversight function has not been negatively affected by the Board’s current leadership structure, and the Board believes it appropriately addresses risk factors facing the Company.

Executive Sessions . Under our Corporate Governance Guidelines, the non-management/independent members of the Board meet at least quarterly in executive sessions ( i.e. without the presence of management). In practice, most Board and Committee meetings include an executive session. Executive sessions are presided over by the chair of the appropriate Committee, if the principal item to be considered is within a Committee’s scope and, if not, such chairs alternate executive sessions.

Communications with Directors. Interested parties who wish to communicate with a member or members of the Board of Directors, including Committee chairs and the non-management/independent Directors as a group, may do so by addressing their correspondence to such members or group c/o WWE, 1241 East Main Street, Stamford, CT 06902, Attention: Corporate Secretary, and all such communications, which are not solicitations, bulk mail or communications unrelated to Company issues, will be duly forwarded.

Corporate Governance Guidelines. Our Corporate Governance Guidelines are posted on our corporate website (corporate.wwe.com).

Code of Business Conduct. We have adopted a Code of Business Conduct (the “Code”) which applies to all of our Directors, officers and employees, including our Chairman and Chief Executive Officer and senior financial and accounting officers. Our Code requires, among other things, that all of our Directors, officers and employees comply with all laws, avoid conflicts of interest, conduct business in an honest and ethical manner and otherwise act with integrity and in the Company’s best interest. In addition, our Code imposes obligations on all of our Directors, officers and employees to maintain books, records, accounts and financial statements that are accurate and comply with applicable laws and with our internal controls. A copy of our Code is posted on our corporate website (corporate.wwe.com). We also plan to disclose any amendments to, and waivers from, the Code on this website.

Audit Committee. We have an Audit Committee meeting the definition of “audit committee” under Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee consists of its Chair, Mr. Speed, and Messrs. Goldfarb and Riddick. Each of these members satisfies the independence requirements of applicable NYSE and SEC rules relating to independence generally and to audit committees specifically, and is financially literate, with a working familiarity with basic finance

 

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and accounting practices within the meaning of the listing standards of the NYSE. Messrs. Speed and Riddick have accounting and related financial management expertise and are qualified as audit committee financial experts within the meaning of the applicable rules and regulations of the SEC. Pursuant to the charter of our Audit Committee, no Audit Committee member may simultaneously serve on the audit committee of more than three public companies.

The primary purpose of our Audit Committee is to provide assistance to the Board in fulfilling its responsibilities to our stockholders and the investment community relating to our corporate accounting and reporting practices and the quality and integrity of our financial reports. The Audit Committee’s charter is posted on our corporate website (corporate.wwe.com). The Audit Committee charter states that the Committee will, among other things, fulfill the following obligations:

· Review and discuss with management and the independent auditors our audited financial statements, quarterly financial statements and all internal control reports (or summaries thereof).
· Review any other relevant reports or financial information submitted by the Company to any governmental body, or the public, including management certifications as required by the Sarbanes-Oxley Act of 2002 (Sections 302 and 906) and relevant reports rendered by the independent auditors (or summaries thereof).
· Review with financial management and the independent auditors each Quarterly Report on Form 10-Q and each Annual Report on Form 10-K (including, without limitation, the Company’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) prior to its filing.
· Review and discuss earnings press releases with management, including the type and presentation of information, paying particular attention to any use of “pro-forma,” “adjusted” or other information which is not required by generally accepted accounting principles.
· Review and discuss with management financial information and earnings guidance provided to analysts and rating agencies. Such discussions may be on general terms ( i.e. , discussion of the types of information to be disclosed and the type of presentation to be made) and need not be in advance of each earnings release or earnings guidance.
· Review the regular internal reports (or summaries thereof) to management prepared by the internal auditor(s) and management’s response.
· Recommend to the Board whether the audited financial statements should be included in the Company’s Annual Report on Form 10-K.
· Obtain from the outside auditors assurance that the audit was conducted in a manner consistent with Section 10A of the Exchange Act, which sets forth certain procedures to be followed in any audit of financial statements required under the Exchange Act.
· Have sole authority to appoint (subject to stockholder ratification), compensate, retain and oversee the work performed by the independent auditor engaged for the purpose of preparing and issuing an audit report or performing other audit, review or attest services for the Company. The Audit Committee has the ultimate authority to approve all audit engagement fees and terms. The Audit Committee has sole authority to review the performance of the independent auditors and remove the independent auditors if circumstances warrant. The independent auditors report directly to the Audit Committee and the Audit Committee shall oversee the resolution of any disagreement between management and the independent auditors in the event that any may arise.

 

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· Review with the independent auditor (without representatives of management when deemed necessary) reports or communications (and management’s and/or the internal audit department’s response thereto) submitted to the Audit Committee by the outside auditors required by or referred to in Auditing Standard No. 1301 and SEC Rule 2-07 of Regulation S-X; review any problems or difficulties with an audit and management’s response, including any restrictions on the scope of the independent auditor’s activities or any access to requested information, and any significant disagreements with management; and review and hold timely discussions with the independent auditors.
· Review audit services and approve in advance non-audit services to be provided by the independent auditors, taking into consideration SEC rules regarding permissible and impermissible services by such independent auditors. This duty may be delegated to one or more designated members of the Audit Committee with any such pre-approval reported to the Audit Committee at its next regularly scheduled meeting. Approval of non-audit services will be disclosed to investors in periodic reports to the extent required by the Exchange Act.
· Review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies.
· Prepare the Audit Committee report that the SEC requires be included in this proxy statement.
· Discuss policies with respect to risk assessment and risk management.
· Maintain procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

Compensation Committee. The Compensation Committee consists of its Chair, Mr. Riddick, and Ms. Ong and Mr. Speed. Each of these members satisfies the independence requirements of applicable NYSE and SEC rules relating to independence generally and compensation committees specifically. The primary purpose of the Compensation Committee is to provide assistance to the Board in evaluating and approving the structure, operation and effectiveness of the Company’s compensation plans, policies and procedures. The Compensation Committee’s charter is posted on our corporate website (corporate.wwe.com). The Compensation Committee charter states that the Committee will, among other things, fulfill the following obligations:

· Approve all employment agreements for the Chairman and Chief Executive Officer and all officers of the Company who (i) have a title of Executive Vice President or have equal or higher seniority; (ii) are “officers” as defined in Rule 16a – 1(f) promulgated under the Exchange Act; or (iii) are other senior executives who report directly to the Company’s Chairman and Chief Executive Officer (collectively, the “Senior Executives”).
· Annually review and approve corporate goals and objectives relevant to the compensation of the Chairman and Chief Executive Officer, evaluating his performance in light of those goals and objectives, and either as a Committee or together with the other independent Directors determine and approve the Chairman and Chief Executive Officer’s compensation level based on this evaluation. In determining the long-term incentive component of the Chairman and Chief Executive Officer’s compensation, the Compensation Committee will consider the Company’s and the individual’s performance, relative total shareholder return, the value of similar incentive awards to chairs and chief executive officers at comparable companies and awards given in past years, among other factors.

 

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· Annually review and approve for Senior Executives: (i) the annual base salary level, (ii) the annual incentive opportunity level, (iii) the long term incentive opportunity level, (iv) severance arrangements and change in control agreements/provisions in each case when and if appropriate, and (v) any special or supplemental benefits.
· Annually review management’s recommendations and make recommendations to the Board of Directors with respect to the compensation of all Directors and Senior Executives, including all compensation, incentive compensation plans, equity-based plans as well as the individuals or groups of individuals receiving awards under incentive and equity-based compensation plans; provided, however, that the Compensation Committee has full decision-making powers with respect to compensation intended to be performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code.
· Administer the Company’s 2016 Omnibus Incentive Plan and any successor or other incentive compensation plans of the Company.

The Compensation Committee has authority to hire compensation consultants, independent counsel and other advisors. For the past several years, the Committee has retained the services of Frederic W. Cook & Co., Inc. (the “Compensation Consultant”). The Compensation Committee annually reviews the Compensation Consultant’s independence and has determined that no conflicts of interest exist.

Compensation Committee Interlocks and Insider Participation. During 2016, no member of the Compensation Committee was an officer or employee of the Company or any of our subsidiaries nor is any such person a former officer of the Company or any of our subsidiaries. In addition, no “compensation committee interlocks,” as described under SEC rules, existed during 2016.

Governance & Nominating Committee. The Governance & Nominating Committee consists of its Chair, Ms. Gottesman, and Messrs. Goldfarb and Peterson. In addition, during 2016, Mr. Perkins, who is retiring from the Board on the day of the Annual Meeting, served on the Committee. Each of these members satisfies the independence requirements of applicable NYSE and SEC rules relating to independence generally.

The Governance & Nominating Committee operates under a charter. This charter is posted on our corporate website (corporate.wwe.com). Under its charter, the Governance & Nominating Committee responsibilities include:

· Monitoring the implementation and operation of the Company’s Corporate Governance Guidelines.
· Reviewing from time to time the adequacy of the Corporate Governance Guidelines in light of broadly accepted practices of corporate governance, emerging governance issues and market and regulatory expectations, and advising and making recommendations to the Board with respect to appropriate modifications.
· Preparing and supervising the implementation of the Board’s annual review of director independence.
· Developing an annual self-evaluation process for the Board and Committees, which process is overseen by the Governance & Nominating Committee, and recommending such process to the Board for its approval.
· Identifying, reviewing and evaluating candidates for election as Director, consistent with criteria approved by the Board, including appropriate inquiries into the background and qualifications of candidates, interviewing potential candidates to determine their qualification and interest, and recommending to the Board nominees for any election of Directors.
· Recommending to the Board the appointment of Directors to serve as members, and as chairs, of the standing Committees and any other Committees established by the Board.

 

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· Recommending to the Board appropriate changes to the governance of the Company, including changes to the terms or scope of the Governance & Nominating Committee charter and the Committee’s overall responsibilities.
· Making recommendations to the Board regarding any duly submitted stockholder proposal.
· Overseeing the Company’s continuing education program for our Directors.

Nominees for Director . The Board may discuss whether or not to find a replacement for the Board seat that, until the Annual Meeting, has been held by Mr. Perkins. If any search for new members were to occur, the Board would consider candidates, and would follow the same process and use the same criteria for evaluating candidates, irrespective of whether they are suggested by Board members, management and/or stockholders. Any stockholder recommendations would need to be submitted to the Board at our principal address in care of the Corporate Secretary and would need to include a personal biography of the proposed nominee, a description of the background or experience that qualifies such person for consideration and a statement that such person has agreed to serve if nominated and elected. If stockholders wish to nominate a person for election to the Board, as contrasted with recommending a potential nominee to the Board for its consideration, they would need to fulfill the requirements detailed under “Stockholder Proposals for 2018 Annual Meeting.”

If the Board were to perceive the need for new or additional independent members, it would review potential nominees and decide whether to conduct a full evaluation of any one or more candidates. If additional consideration of one or more nominees were deemed by the Board to be warranted, the Board would request its third party search firm to gather additional information about the prospective nominee’s background and experience. The Board would then evaluate the prospective nominee taking into account whether the prospective nominee is independent within the meaning of the listing standards of the NYSE and applicable regulations of the SEC and such other factors as it deems relevant, including the current composition of the Board, the need for Committee expertise, and the evaluations of other prospective nominees. While there is a general desire at least to maintain, and preferably enhance, the mixture of viewpoints among its members, the Board does not have any specific policy relating to diversity. The Board would also determine when or how to interview the prospective nominee. Each Director would have the opportunity to participate in the consideration of the prospective nominee. The Governance & Nominating Committee oversees this process and recommends any nominees to the full Board. After the Governance & Nominating Committee has completed this process, the Board makes a determination.

The Board believes that its members comprise an appropriate mix of background, diversity and expertise. In particular, Mr. McMahon is a seasoned manager who understands what is necessary for the Company to thrive in the dynamic and competitive markets in which we compete. In particular, he has significant expertise in creative matters, television, talent development and live events, each of which is a critical aspect of our business. As our co-founder, Mr. McMahon has decades of experience overseeing all of our revenue streams. He is familiar with every aspect of our business and industry. Similarly, Ms. McMahon and Mr. Levesque have decades of experience in our Company and have both been important players in all aspects of our creative process, including television, talent and live events. They also have extensive practical experience with many of our revenue streams and are critically involved in our brand development. Of the independent directors, Mr. Goldfarb has more than 25 years of experience in media companies with revenue streams similar to those of the Company. For more than 12 years of his tenure, Mr. Goldfarb has served at the CEO level. He has significant e-commerce and digital experience. Ms. Gottesman has nearly 30 years of senior level experience with a cable television operator. This experience provides the Company insight into the television industry. She also has relevant digital and social networking experience. Ms. Ong has decades of experience as a senior executive in television, and Mr. Peterson adds further expertise in the digital space. The digital expertise added to the Board by Messrs. Goldfarb and Peterson and Ms. Gottesman are of particular note in light of WWE Network, the Company’s most important recent undertaking. The television expertise added by Mses. Gottesman and Ong are of note because television (together with live events) has traditionally, and for the

 

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foreseeable future will continue to be, at the core of the Company’s business. Messrs. Riddick and Speed bring financial and auditing acumen as both have been chief financial officers of large companies. In the case of Mr. Speed, approximately 20 years of his experience has been spent in media and entertainment companies. The foregoing experience, qualifications and skills led the Board to conclude that each of these members should serve and be nominated for re-election at this year’s Annual Meeting.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Summary

World Wrestling Entertainment is an integrated media and entertainment company. We have been involved in the sports entertainment business for more than 35 years, and have developed WWE into one of the most popular brands in global entertainment today. We develop unique and creative content centered around our talent and present it via our subscription network, television, online and at our live events. At the heart of our success are the athletic and entertainment skills and appeal of our Superstars and our consistently innovative and multi-faceted storylines. Our WWE Network, live and televised events, digital media, home entertainment, consumer products and feature films provide significant cross-promotion and marketing opportunities that reinforce our brands while effectively reaching our fans.

2016 Highlights. 2016 was another record-breaking year for the Company. We believe management was highly effective in achieving the following results:

· Revenue increased 11% to $729.2 million, the highest in the Company’s history, including record levels of revenue from our Network, Television, Live Event, Venue Merchandise, and WWE Shop segments.
· Total international revenue increased by 11% to a record $189.3 million.
· Operating income increased 44% to $55.7 million, and Adjusted OIBDA as described below increased 17% to $80.1 million. See page 28 of our Annual Report on Form 10-K for the year ended December 31, 2016 for a reconciliation of OIBDA to operating income.
· WWE Network subscribers watched an estimated total of 294 million hours of content (up 15% from 2015), representing an average of 194 hours per household, placing it among the top cable and broadcast networks.
· Digital engagement continued to grow with video views up 56% to more than 15.1 billion and social media engagements up 45% to 1.1 billion from the prior year.

We believe our record-setting revenue and other strong results in 2016 point to a validation of our ongoing investment to support the Company’s long-term objectives.

For the Company to achieve the level of success for which it is striving, we must continue to retain and incentivize management. The incentive compensation package for senior management in 2016 is described in detail below and was structured for precisely that purpose. On balance, we believe the ongoing compensation structure, when enhanced with the three special equity compensation grants described below (made in 2015 and 2016), envisions and appropriately incentivizes achievement of long-term growth and transformation while continuing to tie a meaningful portion of management’s compensation to annual financial and strategic performance. Equally important, we also believe that this incentive for transformation moderates the risk to drive short-term results by promoting greater management focus on long-term performance.

 

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Named Executive Officers. Our named executive officers for 2016 are:

Name Title
Vincent K. McMahon Chairman & Chief Executive Officer
Michelle D. Wilson Chief Revenue & Marketing Officer
George A. Barrios Chief Strategy & Financial Officer
Paul Levesque EVP, Talent, Live Events & Creative
Kevin Dunn Executive Producer & Chief Global Television Production

Elements of WWE’s Compensation Program. In general, the compensation package provided to senior management of the Company consists of three major components: 

  Reward
Component
Objectives Determination of Component Value
Fixed Compensation Base Salary Provides a fixed element of compensation paid in cash to reward day-to-day contributions to the Company. Serves as an attraction and retention tool. Salary for each executive is determined based on a number of factors including: job responsibilities, tenure and experience, individual performance, internal parity and a broad-based assessment of the market.
Variable Compensation Short-Term Cash Incentive Compensation Provides cash-based reward for achievement of annual performance measures that are integral to the success of the Company and reinforce its business strategy and vision. Executives are assigned a target annual incentive opportunity expressed as a percentage of his or her base salary. Performance is measured against a detailed set of financial, strategic and individual performance measures. Payouts may be above or below target based on a rigorous assessment of performance relative to the goals established at the beginning of the performance period.
  Longer-Term Equity Incentive Compensation As a complement to the annual incentive plan, provides equity-based awards that are linked to the longer-term performance of the Company thereby aligning executives’ and stockholders’ interests. In general, an executive receives 100% of his or her longer-term incentive opportunity in the form of Performance Stock Units (“PSUs”). Consistent with the pay for performance principles of our compensation plan, the PSU awards may be earned at levels above or below target based on actual performance relative to pre-established goals.

The Compensation Committee believes that this program constitutes the appropriate mix of fixed and variable compensation as well as short-term and longer-term compensation, a significant portion of which is tied to Company performance, aligning the interests of management with those of our stockholders. Further, we believe our compensation program incentivizes management and serves our attraction, retention and

 

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motivation goals while remaining fiscally prudent and not encouraging excessive risks. We also believe that the design of our compensation program is generally consistent with other companies in the entertainment industry. The Company does not provide a defined benefit plan or other similar retiree benefits and generally does not provide its executive officers perquisites such as cars, club memberships or personal services. Therefore, these three components (base salary, short-term cash incentive through our management incentive plan, and longer-term equity incentive), when added together, reflect an accurate picture of the total compensation opportunity available to our senior executives.

As further described below, given the importance of the success of WWE Network, the Compensation Committee during 2014 concluded that a special longer-term equity compensation grant was essential to reward and further solidify the retention of three key members of the management team: Ms. Wilson and Messrs. Barrios and Dunn. These special grants were made in 2015 and 2016 as described below.

Mr. Levesque, as a key performer for the Company, has certain additional compensation made pursuant to his agreement described below.

Aligning Interests with Stockholders. The table below highlights key executive compensation practices that the Compensation Committee has implemented to encourage a high level of performance and alignment of management and our stockholders’ interests. The table also highlights compensation practices that the Committee has expressly avoided or rejected. We believe these efforts support a strong governance culture and are in the long-term interests of our stockholders.

What We Do... What We Do Not Do ...
þ Pay for Performance ý No Gross-up Payments to Cover Excise Taxes
þ Tie Significant Levels of Compensation to Corporate and Individual Goals ý No Guaranteed Annual or Multi-Year Bonuses
þ Caps on Annual Bonuses and Long-Term Incentives ý No Special Executive Retirement Programs
þ Stock Ownership and Stock Holding Requirements ý No Repricing of Underwater Stock Options
þ Multiple Performance Metrics under Short-term and Longer-term Incentive Plans ý No Excessive Perquisites for Executives
þ Double Trigger for Change in Control Provisions ý No Dividend Equivalents Paid Prior to Vesting of Performance Awards (and Never on Unearned Portion of Awards)
þ Use an Independent Consultant who Reports Directly to the Compensation Committee ý No Incentives to Excessively or Inappropriately Encourage Risk Taking Through our Compensation Program
þ Review Tally Sheets When Making Executive Compensation Decisions    
þ Mitigate Undue Risk in Compensation Programs    

 

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Compensation Components

Salary. As part of our continuing effort to manage our fixed costs responsibly, we generally attempt to limit salary increases, restricting large increases to instances of promotions or extraordinary contributions to the Company’s performance. We expect to continue this practice. In the most recent annual performance review, which occurred in February 2017, salaries were set for 2017. The table below highlights recent annual base salaries for the named executive officers:

Name   2015   2016   2017
Vincent K. McMahon   $1,250,000   $1,325,000   $1,400,000
Michelle D. Wilson   $735,000   $771,750   $791,044
George A. Barrios   $728,000   $764,400   $783,510
Paul Levesque   $577,500   $606,375   $650,000
Kevin Dunn   $866,250   $909,560   $909,560

Annual Incentive Bonuses. We believe that an annual management incentive bonus plan (“MIP”) that is based on personal and company-wide performance is generally an effective format to incentivize executives to focus on critical financial and strategic short and mid-term goals. Our approach ties the participant’s interests to those of stockholders without the structural cost increases inherent in salary escalation and without encouraging unnecessary and excessive risk-taking. It acknowledges both individual efforts as well as the collective effort of all participants. For our named executive officers, MIP bonus targets in 2016 ranged from 50% to 100% of salary. Actual bonuses paid under the MIP to our named executive officers in respect of 2016 are set forth in column (g) of the Summary Compensation Table.

For 2016, the Company established a two-prong test for purposes of determining funding of the MIP.

· 20% of funding was based on the Company’s progress toward four strategic objectives which relate to the Company’s brand strength, its growth initiatives and its business development. In order to fund this factor, the Company must achieve net revenues in excess of $500 million for the fiscal year, regardless of the achievement of the strategic objectives.
· 80% of funding was based solely on financial objectives, with 20% based on total revenues and 60% based on Adjusted OIBDA.

 

 

 

2016 Incentive Plan Payout

 

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The following table shows the MIP funding calculation with actual results for 2016 shaded.

Determination of MIP Funding Level (2016)

Strategic Milestones with Revenue
Test Funding Factor
(20% of MIP Funding)(1)
Revenue (20% of MIP
Funding)
Adjusted OIBDA (60% of MIP Funding)(2)
Below Threshold 0-2.9 out of 10. No funding for this factor. Less than $681 million. No funding for this factor. Less than $60 million. No funding for this factor.
Threshold 3 out of 10 (60% of factor is funded). $681 million (60% of factor is funded). $60 million (60% of factor is funded).
Between Threshold and Target Each additional 1/10 of a point results in an additional 2% of this funding factor Each additional $1 million results in an additional 1.7% of this funding factor. Each additional $1 million results in an additional 2.0% of this funding factor.
Target 5 out of 10 (100% of factor is funded). $705 million (100% of factor is funded). $80 million (100% of factor is funded). Actual result: Adjusted OIBDA of $80.0 million for 99% of factor.
Between Target and Maximum Each additional 1/10 of a point results in an additional 2% of this funding factor. Actual Result: 7.9 out of 10 for 158% of factor. Each addition $1 million results in an additional 4.2% of this funding factor. Each additional $1 million results in an additional 5.0% of this funding factor.
Maximum 200% funding of this factor at a strategic goal score of 10 out of 10. 200% funding of this factor at $729 million or higher. Actual Result: revenue of $729.2 million for 200% of factor. 200% funding of this factor at $100 million or higher.

 

 

(1) Regardless of achievement of any of the strategic milestones, no funding on this portion of the MIP would occur unless the revenue test ($500 million) was met. Revenues for 2016 were $729.2 million so this revenue test was met.
(2) Adjusted OIBDA is a non-GAAP figure which is the primary measure of profitability used by the Company. It consists of operating income before depreciation and amortization (excluding feature film and television production asset amortization and impairments, as well as the amortization of costs related to content delivery and technology assets utilized for WWE Network).

 

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The determination of the strategic objectives score for the foregoing purposes is set forth in the following table. Though these objectives are not calculable on a purely mathematical basis, they are scored by the Compensation Committee based on certain measures of success. The Compensation Committee reviews this scorecard on a quarterly basis.

Strategic Objectives Benchmarks
Grow WWE Network (30%) Average hours consumed per subscriber.
Drive International Growth (30%) Revenue growth.
Brand Strength (20%) Certain television ratings, social media metrics, sponsorships and net promoter score.
New Product Introduction (10%) Revenue from 2015 new product initiatives.
Business Development (10%) Actionable plans for initiatives with potential to generate revenues; social media followers in certain new markets.
Management Overall Score 7.9 (158% of factor funding)

The following table compares MIP funding for 2016 with that of prior two years:

Calendar Year         Strategic
Goal Score(1)
       Adjusted
OIBDA Target
       Revenue Target        Aggregate Funding of
Incentive Pool
2014   6.0   $4.0 million   $573 million   103%
2015   7.2   $46.0 million   $592 million   164%
2016   7.9   $80.0 million   $705 million   131%

 

 

(1) Includes minimum revenue target.

Once funding is established based on achievement of the performance and strategic factors described above, a participant is entitled to participate if his or her individual performance rating for the year is at or above a threshold of 2.5 out of 5.0. The aggregate amount of funding does not increase based upon individual payouts, with the result that the aggregate payout to all participants must be less than or equal to the established funding. Actual payouts are based on an individual’s target, which is a percentage of his or her salary at the end of 2016 (this percentage is established based on the executive’s title/position) multiplied by the MIP funding percentage for the Company as a whole with a possible multiplier for exceptional performance (generally an individual performance rating higher than 4.0 out of 5.0), in each case subject to the exercise of negative discretion by the Compensation Committee. The use of negative discretion to one executive will not necessarily result in an increased bonus to another executive. The overall MIP funding for the Company, and the overall payment to any individual, will not exceed 200% of target. In addition to the 200% of target cap, maximum payments under the MIP are capped at $5 million to any named executive officer. The Committee also retains discretion to pay amounts outside of the plan but has rarely exercised this discretion in the past and did not do so in respect of 2016.

Performance Stock Units (“PSUs”) . Our compensation program includes a longer-term component consisting of stock unit grants. Consistent with past practice, our normal annual grant of stock units in 2016 had a performance requirement under the 2016 Omnibus Incentive Plan which reinforces our pay for performance philosophy. There is also a service-based vesting requirement which extends beyond the performance period. The performance targets for our PSUs mirror those set for the MIP described above. For the 2016 grants if at least one of the three threshold performance criteria - strategic score goal coupled with a minimum net revenue test, total revenues or Adjusted OIBDA - were satisfied, the PSUs would begin to accrue

 

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dividends and vest in three equal annual installments, with the first vesting occurring on or about July 20, 2017. The PSUs have a sliding scale of 12% of the target units for a single performance test met at threshold up to a maximum cap of 200% of target if all three performance criteria are achieved at the maximum level. We believe this cap mitigates the potential risk that accompanies performance-based equity compensation. As referenced above under the description of our MIP, management performed at a level of 131% of overall target and this is the percentage of PSUs that were earned, subject to continued service vesting.

We expect to continue to make annual grants of PSUs for our senior executives. The Committee closely monitors share usage through the approval of an annual share budget or “pool” that management may use. From this pool, management proposes individual grants at a separate meeting of the Compensation Committee and these individual grants are reviewed and approved by the Committee. The awards (assuming we meet performance criteria) are subject to service vesting, generally in equal annual installments over three years in July beginning the year after the year in which the grant was made (and performance measures met). We do not plan grants or vesting dates of stock units around material news releases in order to provide any special benefits to our employees.

We believe that equity compensation for executive officers is different from salary and short-term cash incentives in that, due to its performance and time-vesting requirements, stock units serve both a retention and incentive purpose. Equity compensation (particularly where it has both performance and time-vesting requirements) aligns interests of management with stockholders. We also hope that stock units, together with our 401(k) Plan, will be utilized by employees for retirement planning, as we do not provide a defined benefits retirement plan.

The following table shows the aggregate number of stock units granted to all eligible employees (executive officers and all others) as part of our normal annual grant for the past two years and, for 2015 and 2016, the table includes the special grants under the Performance Stock, Retention and Non-Competition Agreements entered into with three senior executives in 2015 and described below. For grants in periods before 2017, the table also shows the number of shares earned based on performance achieved. The table does not include grants for new hires/promotions:

Calendar Year        Aggregate target units in Annual
Grant (unadjusted)
       Aggregate target units in Annual
Grant (adjusted to reflect
forfeitures)
      Aggregate units earned in
respect of such year
2014   368,991   309,815   319,569
2015   1,210,606   1,157,056   1,783,400
2016   1,155,447   1,089,159   1,371,821
2017   851,831   To be Determined Based on 2017 Performance   To be Determined Based on 2017 Performance

For our named executive officers, the 2017 target number of units granted as a part of the normal annual grant are as follows. Mr. McMahon historically has not participated in any equity grants due to his significant stock ownership in the Company; however, the Compensation Committee plans to review this practice in the upcoming months and, if it decides to change this practice, could start awarding equity compensation to Mr. McMahon which, if it occurs, would likely commence at the time of the normal annual grant in February 2018.

  Target (#)
Vincent K. McMahon 0
Michelle D. Wilson 35,642
George A. Barrios 35,291
Paul Levesque 35,954
Kevin Dunn 43,385

 

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Performance Stock, Retention and Non-Competition Agreements. The development and launch of WWE Network and the renegotiation of principal television agreements in several key markets around the world brought about a significant transformation at the Company in 2014 and 2015 along with substantial growth in our net revenues. While more work is required, important strides have been made. In recognition of these efforts, as well as the need for continued focus, which will require considerable commitment by these executive officers over and above their regular duties, the Committee approved special Performance Stock, Retention and Non-Competition Agreements (the “Performance Agreements”) with three of its named executive officers: Michelle D. Wilson, George A. Barrios and Kevin Dunn. Under the Performance Agreements, the executives were each awarded grants of (x) 174,095 performance shares (at target levels) in February 2015, which stock units were calculated based on $2.5 million of value at the closing price of $14.36 per share on the date of approval by the Compensation Committee, February 12, 2015; and (y) 146,972 performance shares (at target levels) in February 2016, which stock units were calculated based on $2.5 million of value at $17.01 per share, the average closing price over the thirty trading days preceding their grant date. The Performance Agreements were entered into in March 2015 and the grants provided for in them appear as compensation for 2015 and 2016 in this proxy statement. The performance measures for the special grants under the Performance Agreements are the same three performance measures as are used for our MIP and the PSUs granted as a part of our normal annual grant. The minimum and maximum percentages of target at various performance levels and vesting periods are also the same as the annual grants however, instead of equal thirds, the shares will vest annually (beginning in July of the year after the performance tests are met) in 20%, 30% and 50% tranches, which we believe will strengthen the longer-term orientation and retention feature of these grants. Under the Performance Agreements, if the executive is terminated without cause, as defined in the Performance Agreement, for any PSUs granted thereunder that have met their performance tests before the termination, the shares that would otherwise vest at the next vesting date will vest, and all other PSUs and related dividend units under the Performance Agreement will be forfeited.

The Performance Agreements provide important protections for the Company including non-competition covenants and covenants prohibiting the solicitation of Company employees and/or business partners during employment and for a period of 12 months thereafter. The agreements also require the executives to abide by non-disclosure obligations, which covenants continue indefinitely. Any breach of the non-competition, non-solicitation or non-disclosure obligations would result in a clawback of the shares or proceeds therefrom without limiting any other remedies the Company may have at law.

Other Compensation Matters

Employment and Other Agreements. We have an amended and restated employment agreement with our Chairman and Chief Executive Officer, Vincent K. McMahon, under which we pay him an annual salary of $1,400,000 in respect of 2017 and he is entitled to participate in our management incentive plan with a target bonus of 100% of base salary. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table.”

While we generally attempt to avoid entering into employment agreements with our other executives, we have individual severance arrangements with many of our executive officers including our named executive officers, which provide for a specified period of severance in the event of an involuntary termination of employment without cause. The Company also has a severance plan for all eligible employees (generally full-time employees and part-time employees who regularly work in excess of 30-hour weeks and, in either case, have at least one year of employment with the Company) which provides for severance in the case of involuntary termination of employment without cause, ranging, depending on length of service, from a minimum of four weeks to a maximum of one year. The employee is also entitled to a prorated bonus for the year of termination (assuming the Company meets its performance tests), at rates to be determined, if his or her termination occurs after July 1 of the year. Employee health insurance is also provided during the severance period. The Company believes that these severance arrangements are important for the Company to attract and retain high caliber employees.

 

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Since he joined the Company as a performer in 1995, Mr. Levesque has been party to a booking agreement with the Company under which he is one of our top talent.

Stock Ownership Guidelines & Holding Requirements . We believe that it is in the best interests of our stockholders for management and directors to own a significant amount of our Common Stock. We have stock ownership guidelines for our Directors and our executive officers with a title of Executive Vice President or higher. Under the guidelines, the individual must attain the following multiple of base salary (or annual cash retainer, in the case of Directors):

Title       Multiple
Chairman and Chief Executive Officer   6x
Director   3x
EVP   2x

Valuations of ownership are made at the beginning of each year based on the average of the prior calendar year’s month-end closing stock prices. Until the required multiple of ownership is attained, 50% of the after-tax shares received upon the vesting of performance and restricted stock units must be held by the individual. Once the respective multiple is attained, so long as none of the shares required for such attainment are disposed, the obligation remains met despite any subsequent decline in stock price.

Anti-Hedging Policy : Under the Dodd-Frank Act, the SEC is required to promulgate disclosure rules relating to hedging practices in Company securities granted as compensation by insiders. The Company does not believe that hedging to reduce investment risk of owning Company securities is an issue among its directors or executive officers, and to the Company’s knowledge, none of its directors or named executive officers has engaged in such hedging or pledged any of his or her Company securities. As a result, the Company has decided to await the adoption of these rules by the SEC prior to formulating an anti-hedging policy.

Clawbacks. The Company has not been faced with the situation of, and has no formal policies governing what would happen in the event of, a restatement or adjustment of financial statements on which prior bonuses or stock performance decisions have been made. However, the NYSE is expected to revise its listing standards in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) to require listed issuers to adopt and disclose clawback policies. Under such policies, an accounting restatement due to material noncompliance with any financial reporting requirements under the securities laws would trigger a clawback. The Company will be required to recover any erroneously awarded compensation payments that would not have been made had the restated accounting numbers been used. Payments made to current or former executive officers during the three-year period preceding the date of a restatement will be subject to this policy. Our existing incentive compensation plans will be reviewed and updated for consistency with the final clawback rules when they are adopted by the SEC.

Tax Considerations . Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to publicly held corporations for annual compensation over $1 million paid to certain executives of that corporation. The Internal Revenue Code generally excludes from the $1 million limitation, any compensation paid based on the attainment of pre-established, objective performance goals established under a stockholder-approved plan. The Compensation Committee uses, where practical, compensation policies and programs that are intended to preserve the tax deductibility of executive compensation; however, the Compensation Committee in its sole discretion may approve payment of nondeductible compensation from time to time if the Compensation Committee determines that it is in the best interest of our Company to do so.

Tally Sheets . Tally sheets are provided to the Compensation Committee annually to supplement its review of aggregate compensation for each executive officer in connection with setting salary, granting performance-based incentive compensation and longer-term equity incentive compensation for the year. Total compensation is reviewed from time to time vis-à-vis broad-based published market data to determine

 

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whether the compensation paid to our executives is generally competitive relative to the market. It should be noted that this market data is not obtained from a specified peer group but rather is a combination of both general industry and industry-specific (media) information. It is not the same as either of the groups used for comparison in the Cumulative Total Return Chart included in the Company’s Annual Report on Form 10-K. Given the challenges associated with benchmarking our compensation against direct competitors, we do not attempt to maintain an established target percentile compensation level within a designated peer group.

Management’s Role in the Compensation-Setting Process . The Chairman and Chief Executive Officer and the Human Resources Department annually review the performance of each officer shortly after the financial results for a fiscal year are known. The conclusions and recommendations resulting from this review, including proposed salary, bonuses and equity-based grants, to Executives are presented to the Compensation Committee for its final approval.

Role of Compensation Consultant and Use of Market Data . During 2016, the Committee consulted with the Compensation Consultant who is paid by the Company and has access to management, but is hired by and reports directly to the Compensation Committee. To date, design aspects of compensation have been proposed by management, with the Compensation Consultant advising on the appropriateness of the design and market competitive levels of compensation. The Compensation Committee, however, does not specify limits either on the scope of the Compensation Consultant’s inquiry or on areas on which the Compensation Consultant is allowed to comment, other than to prohibit the Compensation Consultant from undertaking work on behalf of management without the Committee’s consent. The Compensation Consultant has never provided consulting services to the Company other than for executive and Director compensation. The Committee has reviewed the Compensation Consultant’s independence and has determined that no conflicts of interest exist. The Committee annually reviews the Compensation Consultant’s independence (most recently in February 2017) and has affirmatively determined that no conflicts of interest exist.

2016 Say-on-Pay Advisory Vote Outcome . The Compensation Committee considered the results of the 2016 advisory, non-binding vote to approve executive compensation in connection with the discharge of its responsibilities. In excess of 99% of the vote of our shareholders in 2016 was in favor of the compensation of our named executive officers. In 2011, our stockholders voted in an advisory vote to hold these advisory votes to approve executive compensation annually. We are again requesting the advisory vote on executive compensation as described in “Proposal 3 – Advisory Vote to Approve Executive Compensation.” We are also again recommending that stockholders vote in an advisory vote to continue to vote on executive compensation annually. See “Proposal 4 – Advisory Vote on Frequency of Advisory Vote on Executive Compensation.”

Conclusion

The Compensation Committee of the Board understands its responsibility for evaluating and approving the Company’s compensation programs, including reviewing and approving the Company’s compensation philosophy as well as corporate goals and objectives relative to incentive compensation, evaluating performance in light of those goals and determining compensation levels based on this evaluation. Management and, in particular, the Chairman and Chief Executive Officer and Human Resources Department, are instrumental in developing recommendations relating to the compensation program, subject to final approval by the Compensation Committee. The Compensation Committee is assisted in this regard by its independent Compensation Consultant.

We believe that we have an appropriate mix of compensation components along with competitive compensation levels that incentivize management and serve our attraction, retention and motivation goals while remaining fiscally prudent and not encouraging excessive risks. Going forward, while we may adjust certain aspects of the compensation program, we believe that it is fundamentally sound and abides by a strong pay for performance philosophy.

 

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Compensation Committee Report

Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate future filings, in whole or in part, including our Annual Report on Form 10-K for the year ended December 31, 2016 and the Company’s currently effective Registration Statements on Form S-8, the following Report, and the Audit Committee Report set forth under Proposal 2 —Ratification of Selection of Independent Registered Public Accounting Firm, shall not be incorporated by reference into any such filings.

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

  The Compensation Committee
Frank A. Riddick, III, Chair
Laureen Ong
  Jeffrey R. Speed

 

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Summary Compensation Table

The following table sets forth certain information about the compensation of our Principal Executive Officer, our Chief Financial Officer and our three next most highly compensated executive officers who were serving as executive officers at December 31, 2016. These individuals are referred to as the “named executive officers.”

Name and Principal Position (a)      Year (b)      Salary
($)(c)
     Bonus
($)(d)
     Stock
Awards
($)(e)
     Non-Equity
Incentive Plan
Compensation
($)(g)
     All Other
Compensation
($)(i)(1)
     Total
($)(j)
Vincent K. McMahon   2016   1,313,462   0   0     1,739,063   19,075     3,071,600
Chairman & Chief Executive Officer   2015   1,239,923   0   0     2,050,000   19,075     3,308,998
    2014   1,179,192   0   0     1,220,035   14,658     2,413,885
                                 
Michelle D. Wilson   2016   766,096   0   3,014,478 (2)   527,851   9,192     4,317,617
Chief Revenue & Marketing Officer   2015   729,615   0   3,099,994     669,000   9,192     4,507,801
                                 
George A. Barrios   2016   758,800   0   3,009,579 (2)   523,037   19,640     4,311,056
Chief Strategy & Financial Officer   2015   723,692   0   3,099,994     662,000   9,192     4,494,878
    2014   700,000   0   600,000     360,360   8,610     1,668,970
                                 
Paul Levesque   2016   601,933   0   499,992 (2)   419,531   2,471,961 (3)   3,993,417
EVP, Talent, Live Events & Creative   2015   573,269   0   299,995     526,000   1,713,360 (3)   3,112,624
    2014   544,615   0   300,000     283,140   1,647,431 (3)   2,775,186
                                 
Kevin Dunn   2016   902,897   0   3,106,366 (2)   618,117   10,272     4,637,652
Executive Producer   2015   859,904   0   3,099,994     788,000   10,272     4,758,170
    2014   757,692   0   600,000     424,710   9,090     1,791,492

 

(1) Consists of matching contributions under our 401(k) plan and certain life insurance payments.
(2) Represents the aggregate grant date fair value of awards of performance stock units pursuant to our 2016 Omnibus Incentive Plan consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For these purposes, performance stock units, including the special grants made in 2015 and 2016 to Ms. Wilson and Messrs. Barrios and Dunn (see Compensation Discussion and Analysis -- Compensation Components; Performance Stock, Retention and Non-Competition Agreements), are assumed to have been granted in amounts that would occur if the Company had met all performance criteria at 100% of target. Assuming hypothetically that the highest level of performance conditions had been achieved, the number of performance shares would have been 200% of the numbers included in the table which for 2016 would result in maximum grant date values of $6,028,956 for Ms. Wilson, $6,019,158 for Mr. Barrios; $999,984 for Mr. Levesque; and $6,212,732 for Mr. Dunn. For disclosure on assumptions made in the valuation of these awards, see “Note 18 -- Stock-based Compensation” to our Consolidated Financial Statements. For 2016, the Company achieved a score of 7.9 out of ten on its strategic objectives and met the related revenue threshold, achieved 99% of its Adjusted OBIDA funding factor and 200% of its Revenue funding factor. Accordingly, 131% of the target stock awards were earned, subject to vesting in three annual installments beginning July 2017. To the named executive officers, this totaled as follows: for Ms. Wilson – 232,157 shares; for Mr. Barrios – 231,780 shares; for Mr. Levesque – 38,507 shares; and for Mr. Dunn – 239,233 shares.
(3) Consists principally of performance fees and royalties paid to Mr. Levesque as one of the Company’s top talent. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table – Employment and Booking Agreements.”

 

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Grants of Plan-Based Awards for 2016

        Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1)
  Estimated Possible Payouts Under
Equity Incentive Plan Awards(2)
  Grant Date
Fair Value
of Stock
          Grant Date          Threshold          Target          Maximum         Threshold          Target         Maximum        Awards(3)
Name (a)   (b)   ($)(c)   ($)(d)   ($)(e)   (#)(f)   (#)(g)   (#)(h)   ($)(l)
Vincent K. McMahon   2/10/16   159,000   1,325,000   2,650,000   0   0   0   0
Michelle D. Wilson   2/10/16   46,305   385,875   771,750   21,266   177,218   354,436   3,014,478
George A. Barrios   2/10/16   45,864   382,200   764,400   21,232   176,930   353,860   3,009,579
Paul Levesque   2/10/16   36,383   303,188   606,375   3,527   29,394   58,788   499,992
Kevin Dunn   2/10/16   54,574   454,780   909,560   21,914   182,620   365,240   3,106,366

 

(1) The amounts shown in column (c) reflect the generally applicable minimum payment level under the Company’s 2016 management incentive plan administered under the 2016 Omnibus Incentive Plan which is 60% of 20% (which equals 12%) of the target amount shown in column (d) (this assumes the threshold of either the strategic objectives or the revenue tests are met and the other two performance measures are below thresholds). Actual minimums could be lower due to a restricted bonus pool available to the Company as a whole or due to the exercise of negative discretion. The amount shown in column (e) is 200% of the individual’s target, which was the maximum payment under the bonus plan.
(2) The amounts shown in column (f) reflect the number of performance units that would be earned (subject to vesting) if the Company had met the threshold level of either the strategic objectives test or the revenue test and, in each case, performed below its minimum for the other two performance measures in 2016 which would result in a minimum performance level equal to 60% of 20% (which equals 12%) of the target number of shares shown in column (g). If the Company exceeds these thresholds, there is an increase to 100% of the target units at 100% attainment of all three funding factor targets, which is reflected in column (g). Above those targets, the units increase up to a maximum possible grant under the plan of 200% of target units. This maximum number is shown in column (h). For 2016, the Company achieved a score of 7.9 out of ten on its strategic objectives and met the related revenue threshold, achieved 99% of its Adjusted OBIDA funding factor and 200% of its Revenue funding factor. Accordingly, 131% of the target stock awards were earned, subject to vesting in three annual installments beginning July 2017. To the named executive officers, this totaled as follows: for Ms. Wilson – 232,157 shares; for Mr. Barrios – 231,780 shares; for Mr. Levesque – 38,507 shares; and for Mr. Dunn – 239,233 shares.
(3) Reflects the full grant date fair value under FASB ASC Topic 718 of grants of stock units and is based upon the probable outcome of such conditions on the date of grant. The amounts are consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures, and correspond with the 2016 stock award values in the Summary Compensation Table. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” for more information about our restricted and performance stock units. For additional disclosure on assumptions made in the valuation of these awards, see “Note 18 – Stock-based Compensation” to our Consolidated Financial Statements.

 

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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

The Summary Compensation Table and Grants of Plan-Based Awards Table above provide certain information regarding compensation of our named executive officers. This narrative provides additional explanatory information regarding compensation of our named executive officers and should be read in conjunction with those tables.

Employment and Booking Agreements . Vincent K. McMahon. We have an amended and restated employment agreement with Mr. McMahon. This employment agreement has a term ending December 31, 2017, but automatically extends for successive one-year periods unless either party gives notice of nonextension at least 180 days prior to the expiration date. Under his employment agreement, Mr. McMahon is entitled to salary in the initial annual amount of $1,100,000, subject to increase in the discretion of the Compensation Committee (the Compensation Committee increased Mr. McMahon’s salary most recently to $1,400,000 in respect of 2017), and is entitled to participate in the Company’s incentive bonus plan with an annual target bonus of 100% of salary.

In the event we terminate Mr. McMahon’s employment other than for cause (as defined in his employment agreement) or if he terminates his employment for good reason (as defined) within the two-year period following a change in control (as defined), we are obligated to pay to Mr. McMahon compensation and benefits that are accrued but unpaid as of the date of termination, plus a payment equal to two times his base salary and, assuming the Company meets its minimum (threshold) performance targets for the year in which the termination occurs, two times his target bonus for that year. Payment of severance is conditioned on Mr. McMahon’s release of any claims against the Company and its affiliates. Mr. McMahon will also continue his health, accident, and life insurance benefit plan participation for a two-year period following such termination, unless he obtains substantially similar coverage with a new employer. The Company does not provide Mr. McMahon a tax gross up -- under his employment agreement, if any severance pay or benefits would constitute a “parachute payment,” the Company would reduce such payments to Mr. McMahon to the extent required so that they do not subject Mr. McMahon to excise taxes and such payments shall be deductible by the Company, unless the full parachute payments would result in a greater net benefit to Mr. McMahon after he pays all related excise taxes.

If Mr. McMahon dies or becomes disabled (as defined in the agreement) during the term of his agreement, or if we terminate Mr. McMahon’s employment for cause or if he resigns other than for good reason following a change in control, we are obligated to pay him (or his estate, as applicable) compensation and benefits accrued but unpaid as of the date of termination. The agreement also contains confidentiality covenants and covenants that, among other things, grant to the Company intellectual property ownership in his ideas, inventions and performances and prohibit him from competing with the Company and its affiliates in professional wrestling and our other core businesses during employment and for one year after termination. The agreement allows Mr. McMahon and members of his immediate family to use the Company’s aircraft for personal travel when it is not being used for business purposes. Personal use of the jet is paid for by Mr. McMahon so that no incremental cost is incurred by the Company. Mr. McMahon historically has not participated in any equity grants due to his significant stock ownership in the Company; however, the Compensation Committee plans to review this practice in the upcoming months and, if it decides to change this practice, could start awarding equity compensation to Mr. McMahon which, if it occurs, would likely commence at the time of the normal annual grant in February 2018.

Paul Levesque. Since he joined the Company as a performer in 1995, we have had a booking agreement with Mr. Levesque under which he is one of our top talent as an independent contractor. Under his current booking agreement, Mr. Levesque is entitled to a minimum guaranteed annual payment of $1 million which the Company recoups from all payments under the agreement including pay for performing in live and televised events and royalties for merchandise sold utilizing Mr. Levesque’s name and/or likeness. Mr. Levesque has out-earned this minimum guarantee in each of the past several years. The agreement currently runs until March 30, 2019, and thereafter extends for successive one-year periods unless either party gives notice of nonextension at least 90 days prior to the expiration date.

 

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Other Agreements and Programs . While we generally attempt to avoid entering into employment agreements with our other executives, we have severance arrangements with many of our executive officers including our named executive officers, which provide for a specified period of severance (and, in certain instances, the vesting of equity beyond what is required by the plan) in the event of an involuntary termination of employment without cause. The Company also has a severance plan for all eligible employees (generally full-time employees and part-time employees who regularly work in excess of 30-hour weeks and, in either case, have at least one year of employment with the Company) which provides for severance in the case of involuntary termination of employment without cause, ranging, depending on length of service, from a minimum of four (4) weeks to a maximum of one year. The employee is also entitled to a prorated bonus for the year of termination, at rates to be determined at the time of termination, if his or her termination occurs after July 1 of the year. Employee health insurance is also provided during the severance period. This policy covers any executive officers who do not have individual severance agreements. The Company believes that these severance provisions are necessary for the Company to attract and retain high caliber employees.

Performance Stock Units . Under the terms of our stock units, dividends accrue after the performance test has been met at the same rate as are paid on our shares of Class A common stock. This ensures that, to the extent shares are not earned due to a performance shortfall, no dividends will be paid on the units. Dividend accruals vest at the same time as the vesting of the stock units on which they accrue. Under their standard terms, stock units generally vest over three years (assuming that the performance test has been met). The units have a double trigger accelerated vesting provision so that in the event of a change of control, if the employee is terminated without cause or terminates his or her employment as a result of a decrease in base salary, a change in responsibility or reporting structure or a change in employment location of more than 25 miles, such vesting is accelerated. For the special PSU grants to three of our named executive officers in 2015 and 2016 (see Compensation Discussion and Analysis -- Compensation Components; Performance Stock, Retention and Non-Competition Agreements), vesting is in 20%, 30% and 50% tranches, which we believe will strengthen the longer-term orientation and retention feature of these grants. Also under these special grants, if a termination of employment without cause occurs, the portion of the performance-adjusted PSUs scheduled to vest on the next annual vesting date (including any related dividend equivalent units) will vest at that date, and the remainder of the award will be forfeited.

Management Incentive Plan . Our management incentive plan is administered under the 2016 Omnibus Incentive Plan and provides for incentive cash bonuses to be made annually based upon Company-wide and individual performance. The plan provides guidelines for the calculation of bonuses subject to Compensation Committee oversight and approval. For 2016, participants’ bonuses were based on two components, individual performance and Company performance. The participant had to meet threshold targets for both components in order to receive any bonus under the management incentive plan. Individual performance was scored based on many factors, such as competency, creativity, leadership and communication, with scores in each area and a final score, summarizing such factors, of between 0 and 5 and a threshold of 2.5. At the beginning of 2016, the Compensation Committee set a Company-wide performance target for Revenue, Adjusted OIBDA and a series of strategic objectives relating to the Company’s brand strength, growth initiatives and its business development, all as described above in the “Compensation Discussion and Analysis.” As an additional performance requirement, the strategic objectives funding factor was deemed met only if the Company achieved net revenues in excess of $500 million for the year. Bonuses paid under the management incentive plan to named executive officers are included in the Summary Compensation Table.

 

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Outstanding Equity Awards at December 31, 2016

    Stock Awards(1)  
Name(a)        Number of Shares or
Units of Stock That
Have Not Vested (#)(g)
          Market Value of
Shares or Units of
Stock That Have Not
Vested ($)(h)(2)
 
Vincent K. McMahon     0       0  
Michelle D. Wilson     522,526       9,614,478  
George A. Barrios     522,149       9,607,542  
Paul Levesque     66,481       1,223,250  
Kevin Dunn     529,602       9,744,677  

 

 

(1) Includes dividends that have accrued (at a non-preferential rate) as additional units but were not vested at December 31, 2016. Performance stock units vest in installments on or about July 20 of 2017, 2018 and 2019. Includes shares underlying 2016 annual grant of performance share units earned in 2016 at 131% of target.
(2) These amounts are calculated by multiplying the closing price of the Company’s Common Stock of $18.40 on December 30, 2016, the last trading day in 2016, by the number of unvested stock units on that day.

Stock Vested during 2016

    Stock Awards  
Name (a)         Number
of Shares
Acquired on
Vesting
(#)(d)(1)
         Value
Realized
on Vesting
($)(e)(2)
 
Vincent K. McMahon     0       0  
Michelle D. Wilson     102,013       2,047,401  
George A. Barrios     102,013       2,047,401  
Paul Levesque     16,050       322,124  
Kevin Dunn     105,901       2,125,433  

 

 

(1) The number of shares acquired on vesting reflects the gross number of shares that vested, including shares withheld by the Company to cover the withholding tax payable upon such vesting.
(2) The amounts are calculated by multiplying the number of shares vested by $20.07, the closing price on July 20, 2016.

Potential Payments Upon Termination or Change in Control.

Certain agreements with our named executive officers provide for severance and/or accelerated vesting of equity in the event of an involuntary termination without cause or a termination following a change in control. The Company also has a severance plan for all eligible employees (generally full-time employees and part-time employees who regularly work in excess of 30-hour weeks and, in either case, have at least one year of employment with the Company) which provides for severance in the case of involuntary termination of employment without cause, ranging, depending on title and length of service, from a minimum of four (4) weeks to a maximum of one year. The employee is also entitled to a prorated bonus for the year of termination, at rates to be determined (based on actual Company performance), if his or her termination occurs after July 1 of the year. Employee health insurance is also provided during the severance period. Under the standard terms of our PSUs, in the event that, within 24 months after a change of control, as defined in the agreement, an employee is

 

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terminated without cause or terminates his or her employment as a result of a decrease in base salary, a change in responsibility or reporting structure or a change in employment location of more than 25 miles (“Constructive Termination”), such stock units and accrued dividend units will vest at the target level. Under their Performance Agreements, if Ms. Wilson, Mr. Barrios or Mr. Dunn is terminated without cause, as defined in his or her Performance Agreement, for any PSUs granted thereunder that have met their performance tests before the termination, the shares that would otherwise vest at the next vesting date will vest, and all other PSUs and related dividend units under the Performance Agreement will be forfeited. The following is a quantification of such provisions, assuming hypothetically that the triggering event took place on the last business day of 2016 with the closing price per share of the Company’s Common Stock on that date of $18.40.

Name        Executive Benefit
and Payments
Upon Separation
         Involuntary
Not For Cause
Termination
($)
        Constructive
Termination
Following
Change in
Control
($)
Vincent K. McMahon   Compensation:            
    Salary   2,650,000 (1)   2,650,000 (1)
    Bonus   2,650,000 (1)(2)   2,650,000 (1)(2)
                 
    Long-Term Incentive
Compensation:
Accelerated Vesting of
           
    Stock Units   0     0  
    Continuation of health,
accident and life insurance
  48,624 (3)   48,624 (3)
    Total :   5,348,624     5,348,624  
Michelle D. Wilson   Compensation:            
    Salary   771,750 (4)   0  
    Bonus   385,875 (2)   0  
                 
    Long-Term Incentive            
    Compensation:            
    Accelerated Vesting of            
    Stock Units   3,548,440     1,222,441  
    Continuation of health,
accident and life insurance
  24,312 (3)   0  
    Total:   4,730,377     1,222,441  
                 
George A. Barrios   Compensation:            
    Salary   764,400 (4)   0  
    Bonus   382,200 (2)   0  
                 
    Long-Term Incentive            
    Compensation:            
    Accelerated Vesting of            
    Stock Units   3,543,141     1,217,142  
    Continuation of health,
accident and life insurance
  38,550 (3)   0  
    Total:   4,728,291     1,217,142  

 

  29  
     

 

 

Name        Executive Benefit
and Payments
Upon Separation
       Involuntary
Not For Cause
Termination
($)
       Constructive
Termination
Following
Change in
Control
($)
Paul Levesque   Compensation:            
    Salary   606,375 (4)   0  
    Bonus   303,188 (2)   0  
                 
    Long-Term Incentive            
    Compensation:            
    Accelerated Vesting of            
    Stock Units   0     873,816  
    Continuation of health, accident and life insurance   38,550 (3)   0  
    Total:   948,113     873,816         
                 
Kevin Dunn   Compensation:            
    Salary   909,560 (4)      0  
    Bonus   454,780 (2)   0  
                 
    Long-Term Incentive            
    Compensation:            
    Accelerated Vesting of            
    Stock Units   3,647,837     1,321,838  
    Continuation of health, accident and life insurance   38,550 (3)   0  
    Total:   5,050,727     1,321,838  

 

 

(1) Includes voluntary resignation for good reason. Under his employment agreements, Mr. McMahon is required to maintain the confidentiality of Company information indefinitely after his termination and has a one-year non-compete covenant.
(2) The Company met its minimum (threshold) performance targets under our MIP for 2016. Otherwise, this number would have been $0.
(3) Estimate based on current rates and premiums for the Company under the Consolidated Omnibus Reconciliation Act (“COBRA”).
(4) Payable over severance period.

 

  30  
     

 

 

Equity Compensation Plan Information

The following table sets forth certain information with respect to securities authorized for issuance under equity compensation plans as of December 31, 2016.

Plan Category        Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
(a)
        Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
       Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security holders:                    
2012 Employee Stock Purchase Plan     0     N/A     1,658,486  
2007 Omnibus Incentive Plan                    
Performance and Restricted stock units     1,392,841     N/A     0  
2016 Omnibus Incentive Plan                                                          
Performance and Restricted stock units     1,125,231 (1)   N/A     4,223,237 (1)
Equity compensation plans not approved by security holders     N/A     N/A     N/A  
Total     2,518,072 (1)         5,881,723 (1)

 

 

(1) For 2016, calculated using target numbers. Information relating to aggregate units earned in respect of 2016 is found in “Executive Compensation – Compensation Discussion and Analysis -- Performance Stock Units (“PSUs”).”

Director Compensation for 2016

For 2016, we paid our non-employee Directors a retainer at an annual rate of $100,000, payable in equal quarterly installments in arrears. In addition, we paid our Audit and Compensation Committee Chairs an annual fee of $15,000, and our Governance & Nominating Committee Chair an annual fee of $10,000, in each case in equal quarterly installments in arrears. Non-employee Directors also received a fee of $1,500 for each Board and Committee meeting that they attended in person or by telephone. Fifty percent of a Director’s retainer is paid in unrestricted shares of our Class A common stock and, at the election of the Director, the remaining 50% of such retainer, together with all chair and meeting fees, may be paid either in such shares or in cash. All Directors receive reimbursement of expenses incurred in connection with participation in our Board and Committee meetings. Management Directors do not receive additional compensation for their services as a Director. The Company has Indemnification Agreements with its outside directors which, together with our Charter and By-laws, provide for indemnification to the fullest extent allowed by applicable law.

 

  31  
     

 

 

The following table sets forth the components of total compensation earned during 2016 by our non-employee Directors.

Name (a)       Fees Earned or
Paid in Cash(b)
       Stock
Awards
($)(c)(1)
        Total
($)(h)
Stuart U. Goldfarb   78,541   57,500   136,041
Patricia A. Gottesman   70,541   57,500   128,041
Laureen Ong   65,041   57,500   122,541
Joseph H. Perkins   57,541   57,500   115,041
Robyn W. Peterson   60,541   57,500   118,041
Frank A. Riddick, III   98,041   57,500   155,541
Jeffrey R. Speed   96,541   57,500   154,041

 

 

(1) Represents the aggregate grant date fair value under FASB ASC Topic 718. See “Security Ownership of Certain Beneficial Owners and Management” for a description of the number of shares of our Class A common stock owned by each of our Directors.

Certain Relationships and Related Transactions

Stephanie McMahon is the daughter of Vincent McMahon, and Paul Levesque is her husband. Both Stephanie McMahon and Paul Levesque are executive officers and directors of the Company and are nominated for election to the Board of Directors at the upcoming Annual Meeting. Each is a performer for the Company. These executives receive compensation in their capacities as employees and as independent contractor performers for the Company including participating in talent royalties for certain Company products bearing his or her name and/or likeness. Each has a booking contract with the Company. Ms. McMahon’s total compensation in 2016 in all these capacities was approximately $2.0 million. Mr. Levesque’s compensation is detailed in the Summary Compensation Table. While, under its charter, the Audit Committee is responsible for reviewing and approving related party transactions, which the Company defines as those required to be disclosed by applicable SEC regulations, the Audit Committee does not review the retention of Stephanie McMahon or Paul Levesque each year, nor does it approve their levels of compensation. Instead, as to levels of their compensation as employees, the Audit Committee relies on the approval procedures of the Compensation Committee. Their pay as performers, as well as that of Shane B. McMahon as noted below, is negotiated by the Company’s Chairman/Chief Executive Officer, the Company’s Talent Relations Department and/or the Company’s film studio, as applicable. The Audit Committee believes this oversight to be consistent with relevant industry expertise and good business practice. While no written policies exist, the Audit Committee believes it would apply a standard of reasonable business practices to any other related party transactions.

Shane B. McMahon is the son of Vincent McMahon, brother of Stephanie McMahon and brother-in-law of Paul Levesque. In 2016, Shane McMahon returned as a performer for the Company for which he received performance fees and royalties aggregating approximately $2.15 million.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our Directors, executive officers, and persons who own more than 10% of our common stock to file reports of their ownership and changes in ownership of our common stock with the SEC. Based on information available to us during 2016, we believe that all Section 16(a) filings were made timely.

 

  32  
     

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to us with respect to beneficial ownership of our Common Stock as of March 1, 2017 by (1) each stockholder known by us to be the beneficial owner of more than five percent of either Class A common stock or Class B common stock; (2) each of the Directors and named executive officers; and (3) the Directors and executive officers as a group. Unless otherwise indicated, the address of each stockholder listed in the table below is 1241 East Main Street, Stamford, Connecticut 06902.

Title of Class         Name and Address of Beneficial Owner       

Amount and Nature
of Beneficial

Ownership

        % of Class
Class B(1)   Vincent K. McMahon   35,533,375(2)   93.6
Class B(1)   Linda E. McMahon   566,770(3)   1.5
Class B(1)   Stephanie McMahon   1,914,749(4)   5.0
Class A   Lindsell Train Limited(5)   6,697,681   17.4
    66 Buckingham Gate        
    London SW1E 6AU UK        
Class A   BlackRock, Inc.(6)   4,065,088   10.6
    55 East 52nd Street        
    New York, NY 10022        
Class A   The Vanguard Group(7)   3,546,411   9.2
    100 Vanguard Blvd.        
    Malvern, PA 19355        
Class A   Eminence Capital, LP(8)   3,465,939   9.0
    65 East 55th Street, 25th Floor        
    New York, NY 10022        
Class A   Talpa Beheer B.V. (9)   1,961,219   5.1
    Burgemeester A. Colijnweg 2        
    1182 AL Amstelveen        
    The Netherlands        
Class A   Morgan Stanley (10)   1,934,087   5.0
    1585 Broadway        
    New York, NY 10036        
Class A   Michelle D. Wilson   44,522   *
Class A   George A. Barrios   244,600   *
Class A   Paul Levesque   64,174(11)   *
Class A   Kevin Dunn   0   *
Class A   Stuart U. Goldfarb   19,000   *
Class A   Patricia A. Gottesman   19,969   *
Class A   Laureen Ong   7,352   *
Class A   Joseph H. Perkins   18,654   *
Class A   Robyn W. Peterson   5,248   *
Class A   Frank A. Riddick, III   31,330   *
Class A   Jeffrey R. Speed   28,205   *
Class A and Class B(12)   All Executive Officers and Directors as a   38,033,657   49.8
    (Group (17 Persons)        

 

 

* Less than one percent.

 

  33  
     

 

 

(1) Class B common stock is fully convertible into Class A common stock, on a one-for-one basis, at any time at the election of the holder. The two classes are entitled to equal per share dividends and distributions and vote together as a class with each share of Class B entitled to ten votes and each share of Class A entitled to one vote, except when separate class voting is required by applicable law. If any shares of Class B common stock are beneficially owned by any person other than Vincent McMahon or his wife, Linda McMahon, any descendant of either of them, any entity which is wholly owned and is controlled by any combination of such persons or any trust, all the beneficiaries of which are any combination of such persons, each of those shares will automatically convert into shares of Class A common stock.
(2) Excludes 566,670 shares of Class B common stock and 100 Shares of Class A common stock owned by Mr. McMahon’s wife, Linda McMahon.
(3) Includes 100 shares of Class A held directly by Mrs. McMahon.
(4) Includes (i) 65,356 shares of Class A common stock held by Ms. McMahon; and (ii) 1,849,393 shares of Class B common stock held by the Stephanie McMahon Levesque Trust u/a Vincent K. McMahon Irrev. Trust dtd. 12/23/2008 (the “2008 Trust”). Ms. McMahon is a beneficiary of the 2008 Trust. She has sole investment power over the shares held by the 2008 Trust. Excludes shares held by Paul Levesque, Ms. McMahon’s husband.
(5) The amount shown is from an Amendment No. 3 to Schedule 13G, filed February 14, 2017. Lindsell Train Ltd, (“Lindsell”) is an investment adviser with shared power to dispose of these shares and shared power to vote 5,817,681 of the shares. Messrs. Michael James Lindsell and Nicholas John Train each owns a significant membership interest in Lindsell and therefore may be deemed to control shares held in managed accounts by Lindsell. Each of the reporting persons disclaims beneficial ownership in such shares except to the extent of his pecuniary interest therein.
(6) The amount shown is from an Amendment No. 2 to Schedule 13G, filed January 17, 2017. BlackRock, Inc. is a parent holding company with sole power to vote 4,000,614 of the shares and sole power to dispose of all of the shares.
(7) The amount shown is from an Amendment No. 2 to Schedule 13G, filed February 10, 2017. The Vanguard Group is an investment adviser with sole dispositive power over 3,475,397 shares, shared dispositive power over 71,014 shares, sole voting power over 70,914 shares, and shared voting over 1,800 shares.
(8) The amount shown is from an Amendment No. 3 to Schedule 13G, filed February 14, 2017. Eminence Capital, LP (“Eminence Capital”) is a management company to several Eminence funds owning shares, and Eminence GP, LLC (“Eminence GP”), is the general partner or manager of certain partnerships and master funds owning shares, and each therefore may be deemed to have voting and dispositive power over those shares. Ricky C. Sandler is CEO of Eminence Capital and managing member of Eminence GP and may be deemed to have voting and dispositive power over the shares.
(9) The amount shown is from an Amendment No. 2 to Schedule 13G, filed February 14, 2017, jointly on behalf of Talpa Beheer B.V., a private company (“TBBV”), Theatrum Novum C.V., a limited partnership (“TNCV”), Theatrum Novum Management B.V., a private company (“TNMBV”), Stichting Administratiekantoor Talpa Beheer, a foundation (“SATB”), and Johannes Hendrikus Hubert de Mol (“Mr. de Mol”). TNCV owns a majority of the shares of TBBV, and TNMVB is the general partner of TNCV. SATB is the limited partner of TNCV and owns a majority of the shares of TNMBV. Mr. de Mol is Chairman and owns a majority of the shares of SATB and is sole managing director of TNMBV and TBBV, which has sole right to vote and dispose of the shares listed above.
(10) The amount shown is from a Schedule 13G, filed February 17, 2017. Morgan Stanley is a holding company.
(11) Excludes shares held by Stephanie McMahon, Mr. Levesque’s wife.
(12) Assumes hypothetically that all shares of Class B common stock have been converted into Class A common stock.

 

  34  
     

 

 

PROPOSAL 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

The Board of Directors has recommended that the stockholders ratify the Audit Committee’s appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the year ending December 31, 2017. Deloitte has audited our consolidated financial statements since 1984. In recommending to the Board of Directors the reappointment of Deloitte, the Audit Committee took into consideration a number of factors including the length of time Deloitte has been engaged, the quality of the Audit Committee’s discussions with representatives of Deloitte, reports of the Public Company Accounting Oversight Board (“PCAOB”) on Deloitte, Deloitte’s fees and the performance of the lead audit and consulting partners. Under SEC rules and Deloitte’s practice, the lead engagement audit partner, as well as consulting partner, are each required to change every five years, and a new lead audit partner has been appointed beginning 2017. The consulting partner will change in 2018. The Committee interviewed and approved the incoming audit partner, and will do so for the consulting partner as well. Although ratification of this selection is not legally required, the Board of Directors believes that it is appropriate for the stockholders to ratify such action as a matter of good corporate governance. If the stockholders do not ratify the selection of Deloitte, the Audit Committee will reconsider their appointment as our independent registered public accounting firm. We expect that a representative of Deloitte will be present at the Annual Meeting, will have an opportunity to make a statement if he or she wishes and will be available to respond to appropriate questions.

 

  35  
     

 

 

Independent Auditors Fees

The following table presents fees for professional audit services rendered by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte & Touche”) for the audit of our financial statements for calendar years 2015 and 2016, and fees for other services rendered by Deloitte & Touche during those periods.

    2015          2016
Audit Fees (a)   $1,235,100   $1,385,079
Audit-Related Fees (b)   0   0
Tax Fees (c)   0   0
All Other Fees (d)   0   0
Total   $1,235,100   $1,385,079

 

 

(a) “Audit Fees” were for the audit of the Company’s annual financial statements (and a stand-alone audit of one of WWE’s subsidiaries required for an existing financing), reviews of the Company’s quarterly financial statements and other services related to SEC matters including attestation of management’s assessment of internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
(b) No “Audit-Related Fees” were paid to Deloitte & Touche during 2015 or 2016.
(c) No fees were incurred for tax compliance, tax advice or tax planning during 2015 or 2016.
(d) No other services were rendered by Deloitte & Touche during 2015 or 2016.

The Audit Committee has adopted policies and procedures for pre-approving all non-audit work performed by Deloitte & Touche. In general, the provision of such services must be compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. The Audit Committee annually reviews and pre-approves services on a list of generally pre-approved services, subject to projected dollar fees, and the Committee is updated from time to time at regularly scheduled meetings as to the actual fees vis-à-vis these projections. All of the services provided by Deloitte & Touche in the table above were pre-approved by the Audit Committee and the Committee has concluded that the provisions of these services at these costs is compatible with the maintenance of Deloitte’s independence. If additional services are identified throughout the year, they are taken to the Audit Committee’s Chair for pre-approval. The Audit Committee Chair is designated to pre-approve them, reporting such pre-approval to the entire Audit Committee at its next meeting, unless such services have projected fees in excess of $25,000, in which case they are to be pre-approved by the entire Audit Committee.

Audit Committee Report

The primary purpose of the Audit Committee is to assist the Board in monitoring the integrity of our financial statements, our independent auditor’s qualifications and independence, the performance of our independent auditors and our compliance with legal and regulatory requirements. The Board, in its business judgment, has determined that all members of the Committee are “independent,” as required by applicable listing standards of the New York Stock Exchange and applicable regulations of the SEC. The Audit Committee operates pursuant to a charter, a copy of which is available on the Company’s corporate website (corporate. wwe.com). For a description of this charter and the Audit Committee’s responsibilities under it, please also refer to “Proposal 1 – Election of Directors -- The Board and Committees.”

Management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors were responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards.

 

  36  
     

 

 

In performing its oversight role, the Audit Committee has, among other things covered in its charter, reviewed and discussed the audited financial statements with management and the independent auditors. The Audit Committee has also discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 1301, Communication with Audit Committees , and Rule 2-07, Communication with Audit Committees, of Regulation S-X. The Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence. The Audit Committee has also considered whether the provision of non-audit services by the independent auditors is compatible with maintaining the auditors’ independence and has discussed with the auditors their independence.

Based on the reports and discussions described in this Report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to in this Report and in the charter, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

While the members of the Audit Committee meet the independence, financial experience and other qualification requirements of the New York Stock Exchange and applicable securities laws, they are not professionally engaged in the practice of auditing or accounting. Members of the Committee rely without independent verification on the information provided to them and on the representations made by management and the independent auditors. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations, efforts and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that Deloitte is in fact independent.

  The Audit Committee
Jeffrey R. Speed, Chair
Stuart U. Goldfarb
Frank A. Riddick, III

 

  37  
     

 

 

PROPOSAL 3—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

We are asking stockholders for a non-binding vote to approve the compensation for our named executive officers. As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation program, values the opinions expressed by stockholders and will continue to consider the outcome of the vote when making future compensation decisions for named executive officers.

As required by SEC compensation disclosure rules, we have described our executive compensation program in the “Executive Compensation” section of this proxy statement (which disclosure includes the “Compensation Discussion and Analysis,” the compensation tables and the narrative disclosures that accompany the compensation tables).

The Company’s goal for its executive compensation program is to attract, motivate and retain a talented and creative team of executives who provide leadership for the Company and drive success across our numerous competitive revenue streams. We seek to accomplish this goal of rewarding performance while remaining aligned with the Company’s stockholders’ long-term interests. We want to avoid rewarding inappropriate risk taking. The Company believes that its executive compensation program satisfies this goal.

Our Board of Directors strongly endorses the Company’s executive compensation program and recommends that stockholders vote in favor of the following resolution:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, which disclosure shall include the “Compensation Discussion and Analysis” section and the related compensation tables and narrative disclosures, is hereby APPROVED.

PROPOSAL 4 — ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE
COMPENSATION

We are required to include a separate non-binding vote on whether the type of non-binding vote on executive compensation included in Proposal 3 should occur every one, two or three years. Stockholders have the option to vote for any one of the three alternatives, or to abstain on the matter.

The Company believes that an advisory vote on executive compensation should be conducted every year so that stockholders will have a regular and frequent opportunity to express their views on the Company’s executive compensation program. Stockholders are not voting to approve or disapprove of the recommendation of the Board of Directors .

The frequency of vote chosen by a plurality of the shares present in person or represented by proxy and entitled to vote on this proposal at the 2017 Annual Meeting of Stockholders will be the one approved by stockholders. This means that the option for holding an advisory vote on executive compensation every one year, two years or three years receiving the greatest number of votes will be considered the preferred frequency of the stockholders. Although this advisory vote is non-binding, the Board of Directors will take into account the outcome of the vote when making future decisions about the frequency of the advisory vote on execute compensation.

The Board of Directors recommends that stockholders vote to hold an advisory vote on executive compensation ANNUALLY .

 

  38  
     

 

 

STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING

Stockholder proposals for inclusion in our proxy materials for our 2018 Annual Meeting must be received at the Company’s principal executive offices, 1241 East Main Street, Stamford, CT 06902 Attention: Corporate Secretary on or before November 10, 2017. Under our By-laws, any stockholder proposal received after that date will be considered timely for purposes of the 2018 Annual Meeting only if the stockholder provides our Corporate Secretary notice of the proposal no earlier than January 22, 2018, and not later than February 19, 2018; provided that if the 2018 Annual Meeting is held on or before April 5, 2018, our Corporate Secretary must receive a stockholder’s notice no later than the close of business on the fifth business day following the day on which we make a public announcement of the meeting date.

“HOUSEHOLDING” OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and cost savings for companies. The Company and some brokers household proxy materials, delivering a single proxy statement or Notice to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate set of proxy materials or if you are receiving multiple copies of the proxy materials and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to WWE, 1241 East Main Street, Stamford, CT 06902, Attention: Corporate Secretary or by telephoning a request to our Corporate Secretary at (203) 352-8600.

OTHER MATTERS

The Board of Directors knows of no other matters to present at the Annual Meeting. If any other matter is properly brought before the Annual Meeting, the persons named as proxies will exercise their discretionary authority to vote on such matters in accordance with their best judgment. A copy of the 2016 Annual Report (which includes our Form 10-K for the year) is available on the website that is accessible as provided in the Notice. A copy is being sent with this Proxy Statement to all stockholders who requested them as provided in the Notice. Our Annual Report on Form 10-K for the year ended December 31, 2016 is also available on our corporate website at corporate.wwe.com. We will also mail a copy of the Form 10-K to each record and beneficial owner of our securities without charge upon written request to us at 1241 East Main Street, Stamford, CT 06902; Attention: Corporate Secretary. To register for electronic delivery for future mailings, you can go to proxyvote.com.

  By Order of the Board of Directors,
   
   
   
  Blake T. Bilstad
  SVP, General Counsel & Secretary

 

  39  
     

 

 

 

WORLD WRESTLING ENTERTAINMENT, INC.

1241 EAST MAIN STREET

STAMFORD, CT 06902

ATTN: INVESTOR RELATIONS

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

 

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

 

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.

 

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E18806-P87692                      KEEP THIS PORTION FOR YOUR RECORDS
  THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY

 

WORLD WRESTLING ENTERTAINMENT, INC. For Withhold For All  

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.

     
    The Board of Directors recommends you vote FOR the following: All All Except                       
     1.       Election of Directors ¨ ¨ ¨          
    Nominees:                
   

0 1)   Vincent K. McMahon

0 2)   Stephanie McMahon Levesque

0 3)   Paul Levesque

0 4)   Stuart U. Goldfarb

0 5)   Patricia A. Gottesman

06)   Laureen Ong

07)   Robyn W. Peterson

08)   Frank A. Riddick, III

09)   Jeffrey R. Speed

 

               
                     

 

        For    Against    Abstain
             
  2.       Ratification of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm.   ¨ ¨ ¨
             
  3.       Advisory vote to approve Executive Compensation.   ¨ ¨ ¨
             
  The Board of Directors recommends you vote 1 year on the following proposal: 1 Year   2 Years   3 Years   Abstain
  4.       Advisory vote on frequency of advisory vote on Executive Compensation.       ¨             ¨             ¨             ¨      
             
  NOTE: Such other business as may properly come before the meeting or any adjournment thereof.        

 

 

      For addr ess changes and/or comments, please check this box and write them on the back where indicated. ¨      
  Please indicate if you plan to attend this meeting. ¨ ¨        
    Yes No        
  Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such.      

 

             
  Signature [PLEASE SIGN WITHIN BOX]           Date   Signature (Joint Owners) Date  

 

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.

E18807-P87692

 

PROXY/VOTING INSTRUCTION CARD

WORLD WRESTLING ENTERTAINMENT, INC.

ANNUAL MEETING TO BE HELD ON APRIL 20, 2017 AT 10:00 A.M. EASTERN TIME

FOR HOLDERS AS OF FEBRUARY 22, 2017

This proxy is solicited on behalf of the Board of Directors

By signing this card, I (we) hereby authorize GEORGE A. BARRIOS and BLAKE T. BILSTAD, or either of them, each with full power to appoint his substitute, to vote as Proxy for me (us) at WWE's Annual Meeting of Stockholders to be held at Hilton Stamford Hotel, One First Stamford Place, Stamford, Connecticut 06902, on Thursday, April 20, 2017 at 10:00 a.m. Eastern Time, or any adjournment thereof, the number of shares which I (we) would be entitled to vote if personally present. The proxies shall vote subject to the directions indicated on the reverse side of this card and proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting and any adjournments thereof.

By signing this card, I (we) instruct the proxies to vote as the Board of Directors recommends where I (we) do not specify a choice.

Address Changes/Comments: ________________________________________________________________________
__________________________________________________________________________________________________

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

 

Continued and to be signed on reverse side

 

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