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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by a Party other than the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
WORLD WRESTLING FEDERATION ENTERTAINMENT, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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[WWF LOGO]
1241 EAST MAIN STREET
STAMFORD, CONNECTICUT 06902
August 17, 2001
To our Stockholders:
We are pleased to invite you to attend the 2001 annual meeting of
stockholders of World Wrestling Federation Entertainment, Inc. which will be
held at 10:00 a.m., local time, on September 21, 2001, at WWF New York(TM)*,
1501 Broadway, New York, New York 10036. The business to be conducted is
described in the enclosed Notice of Annual Meeting of Stockholders and Proxy
Statement.
Your vote is important. Whether or not you expect to attend, your shares
should be represented. Therefore, we urge you to complete, sign, date and
promptly return the enclosed proxy or deliver your proxy instructions via the
Internet or by telephone. If you attend the meeting and wish to vote in person,
you will have the opportunity to do so, even if you have already returned your
proxy.
On behalf of the Board of Directors, we would like to express our
appreciation for your continued interest in our Company.
Sincerely,
/s/ VINCENT K. MCMAHON
Vincent K. McMahon
Chairman
/s/ LINDA E. MCMAHON
Linda E. McMahon
Chief Executive Officer
PLEASE NOTE THAT THIS WILL BE A BUSINESS MEETING ONLY AND NOT AN ENTERTAINMENT
EVENT. NO SUPERSTARS WILL BE IN ATTENDANCE AT THE MEETING. The meeting will be
limited to stockholders as of the record date (or their authorized
representatives) having an admission ticket or evidence of their stock
ownership. If you plan to attend the meeting, please mark the appropriate box on
your proxy card, and we will mail an admission ticket to you. You may also
request an admission ticket if you are voting by telephone or via the Internet
by responding to the appropriate prompts offered in those methods. Registration
will begin at 8:30 a.m. and seating will begin at 9:30 a.m. Each stockholder may
be asked to present valid picture identification, such as a driver's license or
passport. If your stock is held in the name of a bank, broker or other holder of
record and you plan to attend the meeting, you can obtain an admission ticket in
advance by providing proof of your ownership, such as a bank or brokerage
account statement, to the Assistant Corporate Secretary at World Wrestling
Federation Entertainment, Inc., 1241 E. Main Street, Stamford, CT 06902. If you
do not obtain an admission ticket, you must show proof of your ownership of the
Company's Common Stock at the registration tables at the door. Cameras,
recording devices and other electronic devices will not be permitted at the
meeting.
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[WWF LOGO]
WORLD WRESTLING FEDERATION ENTERTAINMENT, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held September 21, 2001
To the Stockholders of World Wrestling Federation Entertainment, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of World
Wrestling Federation Entertainment, Inc., a Delaware corporation, will be held
at WWF New York, 1501 Broadway, New York, New York 10036, on September 21, 2001,
at 10:00 a.m. local time, for the following purposes, as described in the
attached Proxy Statement:
1. to elect seven Directors to serve for the ensuing year and until their
successors are elected; and
2. to ratify the selection of Deloitte & Touche LLP as our independent
auditors for the fiscal year ending April 30, 2002.
We have fixed the close of business on July 26, 2001 as the record date for
the determination of stockholders entitled to notice of and to vote at our
Annual Meeting and at any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Edward L. Kaufman
Edward L. Kaufman
Senior Vice President, General Counsel
and Secretary
Stamford, Connecticut
August 17, 2001
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
EITHER SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED OR DELIVER YOUR PROXY INSTRUCTIONS VIA THE INTERNET OR BY
TELEPHONE SO THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING.
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[WWF LOGO]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, SEPTEMBER 21, 2001
The enclosed proxy is solicited on behalf of the Board of Directors of
World Wrestling Federation Entertainment, Inc. in connection with our Annual
Meeting of Stockholders to be held on Friday, September 21, 2001, at 10:00 a.m.
local time (the "Annual Meeting"), or any adjournment or postponement of this
meeting. The Annual Meeting will be held at WWF New York, 1501 Broadway, New
York, New York 10036. We intend to mail this proxy statement and accompanying
proxy card on or about August 17, 2001, to each stockholder entitled to vote at
our Annual Meeting.
We will pay all costs of this proxy solicitation. Directors or officers, or
other employees of ours, may also solicit proxies in person or by mail,
telephone or telecopy.
Only holders of record of our Class A common stock and Class B common stock
at the close of business on July 26, 2001, will be entitled to notice of and to
vote at our Annual Meeting. At the close of business on July 26, 2001,
16,265,384 shares of Class A common stock and 56,667,000 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 outstanding shares of Common Stock, present in person or
represented by proxy, constitutes a quorum for the transaction of business at
the Annual Meeting. Our nominees for election to the Board will be elected by
plurality vote. A majority of the shares present and entitled to vote will be
required to ratify the selection of Deloitte & Touche LLP as our independent
auditors. Both abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum, but broker non-votes are not
considered present and entitled to vote on any matter. Consequently, only
abstentions will have the effect of a vote against Proposal 2. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH OF OUR NOMINEES AND FOR RATIFICATION
OF OUR INDEPENDENT AUDITORS.
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 which we receive prior to the Annual Meeting
stating that the proxy is revoked, by signing a subsequent proxy presented at
the Annual Meeting, or by attending our Annual Meeting and voting in person.
VOTE BY MAIL:
If you choose to vote by mail, simply mark your proxy, date and sign it,
and return it in the postage-paid envelope provided.
VOTE BY TELEPHONE:
You can vote your shares by calling the toll-free number 1-800-PROXIES.
Telephone voting is available 24 hours a day until 12:01 A.M. on September 21,
2001. The voice prompts allow you to vote your shares and
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confirm that your instructions have been properly recorded. Our telephone voting
procedures are designed to authenticate stockholders by using individual control
numbers. IF YOU VOTE BY TELEPHONE, YOU DO NOT NEED TO RETURN YOUR PROXY CARD. IF
YOU ARE LOCATED OUTSIDE THE US AND CANADA, PLEASE SEE YOUR PROXY CARD FOR
ADDITIONAL INSTRUCTIONS.
VOTE BY INTERNET:
You can also choose to vote via the Internet. The web site for Internet
voting is www.voteproxy.com. Internet voting is available 24 hours a day until
12:01 A.M. on September 21, 2001. As with telephone voting, you will be given
the opportunity to confirm that your instructions have been properly recorded.
IF YOU VOTE VIA THE INTERNET, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Stockholders will elect seven Directors at our Annual Meeting, each to
serve until the next Annual Meeting of Stockholders or 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 seven nominees listed below, unless
otherwise instructed in the Proxy. Each nominee is now 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 for
the remaining nominees and, if there is one, for another person duly nominated
by our Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
All four current executive officers and three non-employee Directors are
nominees for election.
VINCENT K. MCMAHON, 55, co-founder of our Company, has served as Chairman
of the Board of Directors and the board of directors of our predecessor entities
since 1980. He is Chairman of the Executive Committee.
LINDA E. MCMAHON, 52, co-founder of our Company, has served as our Chief
Executive Officer since May 1997, and was President from May 1993 through June
2000. She is a Director and a member of the Executive Committee.
LOWELL P. WEICKER, JR., 70, has been a Director since 1999 and is Chairman
of the Compensation Committee and a member of the Audit Committee. Mr. Weicker
served as Governor of the State of Connecticut from 1991 to 1995. He served as a
United States Senator representing the State of Connecticut from 1970 to 1988.
Mr. Weicker also serves as a director of Compuware Corporation, Fonda Group,
HPSC, Inc., Phoenix Mutual Funds, and UST Inc.
DAVID KENIN, 59, has been a Director since 1999 and is Chairman of the
Audit Committee and a member of the Compensation Committee. Mr. Kenin is
currently the General Partner of Kenin Partners, a consulting firm. He is also a
partner in Quadrant, a television production and distribution company. Mr. Kenin
is the former President of CBS Sports and former Executive Vice President of USA
Networks.
JOSEPH PERKINS, 66, has been a Director since 1999 and is a member of the
Audit and Compensation Committees. Mr. Perkins was a pioneer in the television
syndication of wrestling matches starting more than forty years ago. He is
President of Communications Consultants, Inc.
STUART C. SNYDER, 42, has served as our President and Chief Operating
Officer since June 2000. Mr. Snyder has been a Director since June 2000 and is a
member of the Executive Committee. Mr. Snyder was President of USA Home
Entertainment prior to joining our Company. From 1996 to 1999, he was President
and Chief Operating Officer of Feld Entertainment. Prior to that, Mr. Snyder
spent 13 years in the motion picture/home entertainment industry with Turner
Broadcasting Systems, Live Home Video/Carolco Pictures and MGM/UA in senior
executive positions.
AUGUST J. LIGUORI, 49, has served as our Executive Vice President, Chief
Financial Officer and Treasurer since September 1998. Mr. Liguori has been a
Director since 1999 and is a member of the Executive Committee. Prior to that,
Mr. Liguori was Chief Financial Officer of Marvel Entertainment Group, Inc.
since
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1996. From 1986 to 1996, he was employed by Atari Corporation, serving as Chief
Financial Officer and a member of the board of directors and executive committee
from 1991 to 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has standing Audit, Compensation and Executive Committees.
The Audit Committee acts as liaison between the Board and the independent
auditors and annually recommends to the Board the appointment of the independent
auditors. The Audit Committee reviews with the independent auditors the planning
and scope of the audits of the financial statements, the results of those audits
and the adequacy of internal accounting controls, and monitors other corporate
and financial policies. A copy of the Audit Committee's charter is attached as
Appendix A.
The Compensation Committee approves compensation arrangements for senior
management, approves and recommends to the Board of Directors the adoption of
any compensation plans in which officers and Directors are eligible to
participate, and grants options and other benefits under these plans.
The Executive Committee has all of the powers of the Board of Directors
(other than as prohibited under the Delaware General Corporation Law) in between
meetings of the Board of Directors. The Executive Committee is required to
report at any regular or special meeting of the Board of Directors on any
matters considered or acts taken by the Executive Committee since the prior
meeting of the Board.
We have no nominating committee or other committee of the Board performing
a similar function.
MEETINGS OF THE BOARD AND COMMITTEES
During fiscal 2001, there were three meetings of the Board of Directors,
four meetings of the Audit Committee, two meetings of the Compensation Committee
and three meetings of the Executive Committee. All Directors attended at least
75% of the aggregate number of meetings of the Board and committees on which he
or she served.
DIRECTORS' COMPENSATION
Each non-employee Director receives an annual fee of $25,000 and a fee of
$500 for each Board meeting that he or she attends and reimbursement of his or
her related expenses. In addition, during Fiscal 2001, each non-employee
Director was granted options to purchase 15,000 shares of Class A common stock
at an exercise price of $12.94 per share, which was the closing price of our
shares on December 1, 2000. Directors who are employees of the Company receive
no compensation for serving on either the Board or any committee.
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EXECUTIVE COMPENSATION
The following table sets forth the components of the total compensation
earned during fiscal 2001, 2000 and 1999 by our Chairman of the Board; Chief
Executive Officer; President and Chief Operating Officer; and Executive Vice
President, Chief Financial Officer and Treasurer, who were the only executive
officers of the Company during fiscal 2001. These people are referred to as the
"named executive officers."
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
FISCAL ----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS COMPENSATION($)
--------------------------- ------ ---------- --------- ------------ ---------------
Vincent K. McMahon............. 2001 1,000,000 900,000 -- 31,000(1)
Chairman 2000 855,769 1,344,800 -- 49,504(1)
1999 250,000 -- -- 46,557(1)
Linda E. McMahon............... 2001 750,000 675,000 -- 8,100(2)
Chief Executive Officer 2000 642,307 995,262 -- 20,200(2)
1999 190,000 -- -- 1,549(2)
Stuart C. Snyder............... 2001 530,769 555,000 300,000 5,100(2)
President and Chief Operating
Officer
August J. Liguori.............. 2001 350,000 725,000 35,000 5,100(2)
Executive Vice President, Chief 2000 350,000 651,800 300,000 20,200(2)
Financial Officer and Treasurer 1999 227,500 50,000 -- 1,615(2)
---------------
(1) Includes payments for certain insurance, the employer matching contributions
for our 401(k) plan, certain talent fees and, prior to December 2000,
contributions to our money purchase plan.
(2) Consists of matching contributions to our 401(k) plan and, prior to December
2000, contributions to our money purchase plan. In the case of Mrs. McMahon,
this number also includes certain talent fees relating to performances made
by her.
EMPLOYMENT AGREEMENTS
We have employment agreements with each of Vincent K. McMahon, Linda E.
McMahon, Stuart C. Snyder and August J. Liguori. Mr. McMahon's agreement is for
a term of seven years, and Mrs. McMahon's agreement is for a term of four years.
Mr. and Mrs. McMahon also have booking contracts that are coterminous with their
employment agreements and, in the case of Mr. McMahon, his booking contract
provides for a guaranteed minimum payment of $850,000 per year. Each agreement
will automatically extend for successive one-year periods unless either party
gives notice of non-extension at least 12 months, but no more than 18 months,
prior to the expiration date. Mr. McMahon's employment agreement provides for
him to be our Chairman at a base salary of $1.0 million per year. Mrs. McMahon's
employment agreement provides for her to be our Chief Executive Officer at a
base salary of $750,000 per year. Mr. and Mrs. McMahon are each entitled to an
annual bonus of up to 100% of base salary based upon the attainment of
performance goals and to participate in our various employee benefit plans and
programs. During the term of the employment agreements, the compensation package
of each of Mr. and Mrs. McMahon will be reviewed no less frequently than
annually by the Compensation Committee to determine whether or not it should be
increased or enhanced in light of the executive's duties, responsibilities and
performance.
Under the employment agreements with Mr. and Mrs. McMahon, in the event we
terminate either executive's employment other than for cause, death or
disability, or if the executive terminates his or her employment for good
reason, or if the executive terminates his or her employment for any reason
within the 90-day period beginning six months after the occurrence of a change
in control, we are obligated to pay to the executive compensation and benefits
that are accrued but unpaid at the date of termination, plus a lump sum cash
amount equal to the executive's base salary and bonus for the greater of the
balance of the contract term
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or two years and to continue his or her benefit plan participation for such
period. If Mr. or Mrs. McMahon dies during the term of his or her agreement, we
are obligated to pay to the executive's estate compensation and benefits that
are accrued but unpaid as of the date of the executive's death, plus a lump sum
amount equal to the executive's base salary and bonus for two years. If we
terminate Mr. or Mrs. McMahon's employment for cause, if either executive
resigns without good reason, or if either executive's employment is terminated
due the executive's disability, we are obligated to pay the executive
compensation and benefits accrued but unpaid as of the date of termination. If
either Mr. or Mrs. McMahon becomes subject to any change in control excise
taxes, we will be obligated to provide such executive a "gross-up" bonus
sufficient, on an after-tax basis, to cover any such excise taxes. The
employment agreements also contain confidentiality covenants and covenants that,
among other things, prohibit each executive from competing with us in
professional wrestling and our other core businesses during employment and for
one year after termination, unless the termination follows a change in control.
Mr. Snyder's employment agreement is for a three-year term. Pursuant to the
agreement, Mr. Snyder is entitled to a base salary of $600,000 for the first
contract year; $630,000 for the second contract year; and $661,500 for the third
contract year. He was granted options under our Long Term Incentive Plan to
purchase 200,000 shares of our Class A common stock at an exercise price of
$17.00. In addition, Mr. Snyder received a one-time signing bonus in the amount
of $75,000 net of taxes and, during each contract year, Mr. Snyder is eligible
for a bonus based on performance targets established for the year. These
potential bonuses range from 60% to 80% of Mr. Snyder's then current annual base
salary. If Mr. Snyder is terminated without cause, he is entitled to the
difference between $1,891,500 and what we have paid him in base salary plus all
accrued but unpaid bonuses, including a pro-rata bonus for any partial contract
year. If Mr. Snyder dies during the term of his agreement, we are obligated to
pay his estate (i) the difference between $1,891,000 and what we have paid him
in base salary up to the date of his death; and (ii) all accrued but unpaid
bonuses, including a pro-rata bonus for any partial contract year. The agreement
contains a confidentiality covenant and a covenant that prohibits Mr. Snyder
from competing with us in the professional wrestling business during his
employment and for one year after termination.
Mr. Liguori's employment agreement runs through August 31, 2001, and Mr.
Liguori and we are discussing terms for a renewal of the agreement. Pursuant to
the existing agreement, Mr. Liguori is entitled to: (i) an annual base salary of
$350,000; (ii) bonus payments of at least $175,000 on or before June 1 of each
year; (iii) quarterly bonus payments of at least $150,000 until March 1, 2001;
and (iv) a payment on or before August 31, 2001 of $475,000 less any
discretionary bonuses previously paid to Mr. Liguori and less any contributions
made by us on Mr. Liguori's behalf to any 401(k) or profit sharing plan. We may
terminate the agreement at any time for cause. We may terminate the agreement
without cause if we pay Mr. Liguori severance in the amount of $83,333
multiplied by the number of months he was employed by us, less amounts
previously paid to him. After termination without cause, we must also pay Mr.
Liguori $29,166 per month for six months or until Mr. Liguori secures other
employment, whichever is shorter. If Mr. Liguori dies during the term of his
agreement, we are obligated to pay to his estate $83,333 for each month Mr.
Liguori was employed, less any amounts previously paid to him. If any person
(other than a member of the family of or heir of Mr. McMahon or Mrs. McMahon)
acquires control of the Company, Mr. Liguori will be entitled to receive $3.0
million, less any amounts previously paid to him by us. The agreement contains a
confidentiality covenant and a covenant that prohibits Mr. Liguori from
competing with us in the professional wrestling business during his employment
and for one year after termination.
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STOCK OPTIONS
The following tables provide information on stock option grants to named
executive officers during fiscal 2001 and the value of options at April 30,
2001.
Option Grants
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION -------------------------------
NAME GRANTED(#) FISCAL 2001 PRICE($) DATE 0%($) 5%($) 10%($)
---- ---------- ---------------- -------- ---------- ------- --------- ---------
August J. Liguori..... 35,000 2.1% 12.94 12/01/10 -- 284,900 721,700
Stuart C. Snyder...... 200,000 12% 17.00 6/5/10 125,000 2,138,000 5,418,000
100,000 6% 12.94 12/01/10 -- 814,000 2,062,000
---------------
(1) At the end of the term of the options granted June 5, 2000 and December 1,
2000, the projected price of a share of Class A common stock would be $27.69
and $21.08, respectively, at an assumed annual appreciation rate of 5
percent and $44.09 and $33.56, respectively, at an assumed annual
appreciation rate of 10 percent.
Fiscal 2001 Year-End Option Values
VALUE OF
EXERCISABLE/UNEXERCISABLE
OPTIONS AT FISCAL
NAME EXERCISABLE/UNEXERCISABLE YEAR END($)(1)
---- ------------------------- -------------------------
August J. Liguori................ 75,000/260,000 0/24,150
Stuart C. Snyder................. 0/300,000 --/69,000
---------------
(1) The closing price of a share of Class A common stock on April 30, 2001 was
$13.63.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. McMahon is the sole stockholder of Shane Productions, Inc., an
affiliated company which is not included in our consolidated financial
statements and which holds a 21% partnership interest in Titan/Shane
Partnership, in which we hold a 79% interest. Mr. McMahon is also the sole
stockholder of Shane Distribution Co., an affiliated company which is not
included in our consolidated financial statements. As of April 30, 2001, we had
a receivable from Shane Distribution Co. in the amount of approximately
$307,000.
As of April 30, 2001, we had a receivable in the amount of approximately
$332,000 from a travel company with which we did business prior to the sale of
its assets in June 2000. This company is owned by Mrs. McMahon.
We have a tax indemnification agreement with Mr. McMahon which provides
for, among other things, the indemnification of us by Mr. McMahon for any
federal and state income taxes, including interest and penalties, that we incur
if, for any reason, we are deemed to be a Subchapter C corporation during any
period for which we reported our taxable income as a Subchapter S corporation,
or if an adjustment to one or more of our tax returns for a C taxable year
results in a net increase in our taxable income in a C taxable year and a net
decrease in our taxable income in an S taxable year. We are required to
indemnify Mr. McMahon for any federal and state income taxes, including interest
and penalties, that Mr. McMahon or a trust he established may incur if an
adjustment to one or more of our tax returns for an S taxable year results in a
net increase in our taxable income in an S taxable year and a net decrease in
our taxable income in a C taxable year.
In July 2001, we advanced to Mr. Snyder $195,000 in connection with his
acquisition of a primary residence. The advance is recoupable against bonuses
and otherwise is due on September 1, 2002 or upon the
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termination of his employment, whichever is earlier. The advance bears simple
interest at the rate of 7% per annum.
During fiscal 2001, we were a party to a venture with a subsidiary of
National Broadcasting Company, Inc. ("NBC") that, prior to the league's
cessation of business in April 2001, owned, funded and operated a professional
football league, the XFL. As part of the overall television coverage of the XFL,
NBC broadcasted XFL regular season and championship games. In June 2000, a
subsidiary of NBC purchased approximately 2.3 million shares of our Class A
common stock and entered into a registration rights agreement with us. Under
this agreement, among other things, we registered the shares under the
Securities Act of 1933 (the "Securities Act") and are required to maintain the
effectiveness of the registration until it is no longer required. We are
obligated to pay all expenses incident to the registration, offering and sale of
the shares, other than underwriting commissions, and to indemnify the
stockholder against certain civil liabilities, including liabilities under the
Securities Act.
In April 2000, we entered into a strategic alliance with Viacom Inc.
through September 2005, under which Viacom airs certain of our programming. In
July 2000, Viacom purchased approximately 2.3 million shares of our Class A
common stock and entered into a registration rights agreement with us which is,
in substance, identical to the arrangement with NBC described above.
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REPORT AND PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of our previous
filings under the Securities Act or the Securities Exchange Act of 1934 that
might incorporate future filings, in whole or in part, including our Annual
Report on Form 10-K for the fiscal year ended April 30, 2001 and the Company's
currently effective Registration Statements on Forms S-3 and S-8, the following
Report and Performance Graph and the Audit Committee Report set forth under
Proposal 2 -- Ratification of Selection of Independent Auditors shall not be
incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The primary goal of our compensation program is to enable us to attract,
retain and reward executive officers and other key employees. As an
entertainment company, the talents of our creative and performing personnel are
integral to our success and, by extension, the return on investment of our
stockholders. Mr. McMahon, our Chairman, plays a unique role -- he heads the
team that, among other functions, develops story lines, characters, live events
and televised programming. In addition, Mr. McMahon and Linda McMahon, our Chief
Executive Officer, are performers in our live and televised events. We believe
that our continued growth will result in a continuing need for talent and
managerial skills at the highest level.
Employment Agreements were entered into with Mr. and Mrs. McMahon in
connection with the initial public offering and the conversion of the Company
from a Subchapter S corporation to a Subchapter C corporation prior to the
formation of the Committee. These employment agreements recognize the importance
of incentive compensation by providing that one-half of the executive's pay is a
bonus based on performance goals and objectives. During fiscal 2001, the Company
recognized the continued importance of Mr. McMahon's performances in the
Company's television programming and live events by agreeing to a minimum annual
payment of $850,000 under his booking contract. The Committee believes that the
agreements with Mr. and Mrs. McMahon are consistent with the goal of the
Company's compensation program and are appropriate as to amount and mix of
compensation, maintaining a high level of incentive compensation. We believe
that future compensation will be paid under these agreements, and that
compensation payable beyond what is called for by the agreements will be made by
the Committee only when we deem it appropriate because of demonstrable changes
in the Company's or an individual's performance.
The Committee also approves grants of options under the Company's 1999
Long-Term Incentive Plan. This plan was implemented in connection with our
initial public offering and provides for the issuance of options to purchase up
to 10,000,050 shares. We believe that options are an excellent means by which to
align management interests with those of the Company's stockholders. Options
granted by the Committee in Fiscal 2001 vest in four equal annual installments
beginning on the first anniversary of the date of the grant. In determining the
number of options to be granted to Executive Officers, the Committee considered
the following criteria: (1) the position held by the individual; (2) his or her
performance; (3) the number of options granted to these individuals in previous
years; (4) the financial results of the Company; and (5) the price of a share of
Common Stock.
The Compensation Committee
Lowell P. Weicker, Jr., Chairman
David Kenin
Joseph Perkins
8
12
PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the period commencing
October 19, 1999 (the date our Class A common stock began trading) and ending
April 30, 2001, the cumulative total return on the Company's Class A common
stock compared to the cumulative total return of the Russell 2000 Index and the
S&P Entertainment Index, a published industry index. The graph assumes the
investment of $100 at the opening of trading on October 19, 1999 in our Class A
common stock, the Russell 2000 Index and the S&P Entertainment Index and the
reinvestment of all dividends.
WORLD WRESTLING
FEDERATION
ENTERTAINMENT, INC. RUSSELL 2000 S&P ENTERTAINMENT
------------------- ------------ -----------------
10/19/99 100.00 100.00 100.00
10/99 141.91 100.41 108.76
11/99 118.38 106.40 105.71
12/99 101.47 118.44 119.43
1/00 90.81 116.54 134.07
2/00 76.47 135.79 135.21
3/00 104.32 126.84 153.62
4/00 100.37 119.20 147.96
5/00 96.32 112.26 142.67
6/00 122.43 122.04 144.12
7/00 125.00 118.12 142.70
8/00 125.74 127.13 149.94
9/00 89.34 123.39 138.04
10/00 88.97 117.88 133.04
11/00 79.78 105.78 111.90
12/00 94.12 114.87 101.94
1/01 127.00 120.85 72.11
2/01 81.18 112.92 63.48
3/01 78.59 107.39 57.59
4/01 80.18 115.80 69.17
9
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us with respect
to beneficial ownership of the Company's Common Stock as of July 26, 2001 by (1)
each stockholder known by the Company to be the beneficial owner of more than
five percent of either class; (2) each of the Directors and named executive
officers and (3) the Directors and named executive officers as a group.
AMOUNT AND NATURE OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP % OF CLASS
-------------- ------------------------------------ -------------------- ----------
Class B(1).................. Vincent K. McMahon(2) 56,100,330 99.0%
Class A..................... General Electric Company(3) 2,307,692 14.2%
3135 Easton Turnpike
Fairfield, CT 06431
Class A..................... Viacom Inc.(4) 2,281,492 14.0%
1515 Broadway
New York, New York 10036
Class A..................... Citigroup Inc.(5) 1,133,976 7.0%
399 Park Avenue
New York, New York 10043
Class A..................... Capital Group International, Inc.(6) 1,409,750 8.7%
Capital Guardian Trust Company
11100 Santa Monica Blvd.
Los Angeles, CA 90025
Class A..................... Mario J. Gabelli and Marc J. Gabelli(7) 822,800 5.1%
One Corporate Center
Rye, New York 10580
Class B(1).................. Linda E. McMahon 566,770(8) 1.0%
Class A..................... Stuart C. Snyder 75,000(9) *
Class A..................... August J. Liguori 75,000(9) *
Class A..................... David Kenin 12,500(9) *
Class A..................... Joseph Perkins 12,500(9) *
Class A..................... Lowell P. Weicker, Jr. 14,500(9) *
Class A and Class B(10)..... All Named Executive Officers and 56,856,600 78.0%
Directors as a Group (7 persons)
---------------
* Less than one percent.
(1) Class B common stock is fully convertible into Class A common stock, on a
one-for-one basis, at any time at the option 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, at any time any shares of Class B
common stock are beneficially owned by any person other than Vincent
McMahon, 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. Assuming hypothetically that all shares of Class B were
converted into Class A, the only five percent stockholder would be Mr.
McMahon, who would beneficially own 76.9 percent of the Class A common
stock.
(2) Includes 12,774,419 shares of Class B common stock owned by The Vincent K.
McMahon Irrevocable Trust, for which Mr. McMahon acts as trustee with right
to vote and dispose of the shares. Excludes 566,670 shares of Class B
common stock and 100 Shares of Class A common stock owned by Linda McMahon,
set forth in the table opposite her name.
(3) The amount shown is derived from a Schedule 13G, dated June 22, 2000, filed
on behalf of General Electric Company and its direct and indirect
subsidiaries, National Broadcasting Company Holding,
10
14
Inc., National Broadcasting Company, Inc. and NBC-WWFE Holding, Inc.
NBC-WWFE Holding, Inc. is the record owner of these shares.
(4) The amount shown is derived from a Schedule 13G, dated February 12, 2001,
filed jointly on behalf of Viacom Inc. ("Viacom"), NAIRI, Inc. ("NAIRI"),
National Amusements, Inc. ("NAI") and Sumner M. Redstone. Approximately 68%
of Viacom's voting stock is owned by NAIRI, which in turn is a wholly owned
subsidiary of NAI. Beneficial ownership is attributed to Mr. Redstone who
is the Chairman of the Board and the beneficial owner of the controlling
interest in NAI and Chairman of NAIRI and Viacom.
(5) The amount shown is derived from a Schedule 13G, dated January 29, 2001.
Citigroup Inc is the parent company of investment advisors that hold shared
dispositive and voting power over the securities.
(6) The amount shown is derived from a Schedule 13G dated February 9, 2001.
Capital Group International, Inc., is the parent holding company of a group
of investment management companies that hold investment power and, in some
cases, voting power over the securities. The investment management
companies include a bank and several investment advisors.
(7) The amount shown is derived from a Schedule 13D, dated July 2, 2001. The
shares are beneficially owned by Mario J. Gabelli and Marc J. Gabelli and
various entities which either one directly or indirectly controls or for
which either one of them acts as chief investment officer.
(8) Excludes 43,325,911 shares of Class B common stock owned by Vincent McMahon
and 12,774,419 shares of Class B common stock owned by The Vincent K.
McMahon Irrevocable Trust, set forth in the table opposite Mr. McMahon's
name. Includes 100 shares of Class A common stock owned by Mrs. McMahon.
(9) Includes shares of common stock which currently may be purchased through
the exercise of options, and, in the case of Governor Weicker, 2,000 shares
owned directly by him.
(10) Assumes hypothetically that all shares of Class B common stock have been
converted into Class A common stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the filing of
reports of ownership of the Company's stock by directors, executive officers and
10% stockholders. Based on a review of reports received by the Company, we
believe that Viacom Inc. filed late its Initial Statement of Beneficial
Ownership of Securities and one report of nine dispositions of shares.
PROPOSAL 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has recommended that the stockholders ratify its
appointment of Deloitte & Touche LLP as our independent auditor for the fiscal
year ending April 30, 2002. Deloitte & Touche LLP has audited our financial
statements since 1984. We expect that a representative of Deloitte & Touche LLP
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.
INDEPENDENT AUDITORS FEES
The aggregate fees related to work performed by Deloitte & Touche LLP for
(1) auditing the Company's annual consolidated financial statements for fiscal
2001 and performing reviews of the consolidated financial statements included in
our Form 10-Q for each of the first three quarters in fiscal 2001, (2) providing
financial
11
15
information systems design and implementation services, and (3) all other
services rendered during fiscal 2001, are as follows:
(1) Audit Fees........................................... $ 355,000
(2) Financial Information Systems
Design and Implementation Fees....................... $ 0
(3) All Other Fees....................................... $2,288,000
The principal components of "All Other Fees" are fees billed by Deloitte &
Touche LLP for services related to income tax consulting, accounting
consultation procedures, employee benefit plan audits and due diligence
procedures on acquisitions.
The Audit Committee has determined that the services provided by Deloitte &
Touche LLP to the Company that were not related to its audit of the Company's
financial statements were at all relevant times compatible with that firm's
independence.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors consists of three outside
directors. During Fiscal 2001, the Audit Committee of the Board of Directors
developed an updated charter for the Committee, which was approved by the full
Board on September 22, 2000. The complete text of the new charter, which
reflects standards set forth in the new SEC regulations and New York Stock
Exchange rules, is attached to this proxy statement as Appendix A. Members of
the Audit Committee are independent (as independence is defined in Section
303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing standards).
The Audit Committee met with the independent auditors and management to
assure that all were carrying out their respective responsibilities. The Audit
Committee reviewed the performance and fees of the independent auditors prior to
recommending their appointment, and met with them to discuss the scope and
results of their audit work, including the adequacy of internal controls and the
quality of financial reporting. The Audit Committee discussed with the
independent auditors their judgments regarding the quality and acceptability of
the Company's accounting principles, the clarity of its disclosure and the
degree of aggressiveness or conservatism of its accounting principles and
underlying estimates.
We have reviewed and discussed with management and Deloitte & Touche LLP
the audited consolidated financial statements of the Company for fiscal 2001. We
also have discussed with Deloitte & Touche LLP the matter required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committee).
In addition, we discussed with Deloitte & Touche LLP its independence from
the Company and its management, including the written disclosures made to the
Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committee).
On the basis of these reviews and discussions, the Committee recommended to
the Board of Directors that the Board approve the inclusion of the Company's
audited financial statements in the Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 2001, for filing with the Securities and Exchange
Commission.
The Audit Committee
David Kenin, Chairman
Lowell P. Weicker, Jr.
Joseph Perkins
12
16
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals for consideration at the 2002 Annual Meeting must be
received at the Company's principal executive offices at 1241 East Main Street,
Stamford, CT 06902 on or before April 12, 2002. Under our By-laws, any
stockholder proposal received after that date will be considered timely for
purposes of the 2002 Annual Meeting only if the stockholder provides our
Secretary notice of the proposal not earlier than June 23, 2002, and not later
than July 23, 2002; provided, that if the 2002 Annual Meeting is held on or
before September 6, 2002, our 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.
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 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 2001 Annual Report
is being mailed with this Proxy Statement. A COPY OF OUR ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED APRIL 30, 2001, INCLUDING OUR CONSOLIDATED
FINANCIAL STATEMENTS, IS AVAILABLE 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: INVESTOR RELATIONS DEPARTMENT.
BY ORDER OF THE BOARD OF DIRECTORS,
[Edward L. Kaufman]
Edward L. Kaufman
Senior Vice President, General Counsel
and Secretary
---------------
* Because insertion of our stylized and highly distinctive scratch logo is
impracticable in the text of this document, we refer to the scratch logo as
"WWF" herein for explanatory purposes only. In commerce, we use the scratch
logo exclusively, rather than the initials in block letters.
13
17
APPENDIX I
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
ORGANIZATION
There shall be a committee of the Board of Directors to be known as the
Audit Committee. The Audit Committee of the Board of Directors shall be
comprised of at least three directors who are independent of management and the
Company. Members of the Audit Committee shall be considered independent if they
have no legal relationship to the Company that may interfere with the exercise
of their independence from management and the Company as specified in Rule
303.01(B)(3)(b) Clause (ii) of the NYSE Listed Company Manual. All Audit
Committee members will be financially literate and at least one member will have
accounting or related financial management expertise. The determination of the
independence of a director and his or her qualifications to serve as a member of
the Audit Committee shall be determined by the Board of Directors in its
discretion.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Directors in fulfilling
their responsibility to the stockholders, potential stockholders, and investment
community relating to corporate accounting, reporting practices of the Company,
and the quality and integrity of financial reports of the Company. In so doing,
it is the responsibility of the Audit Committee to maintain free and open
communication between the Directors, the independent auditor, the internal
auditors and the financial management of the Company.
DUTIES AND RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure the Directors and stockholders that the
corporate accounting and reporting practices of the Company are in accordance
with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
- Obtain the full Board of Director's approval of this Charter and review
and reassess this Charter as conditions dictate and at least annually.
- Review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the Company and its
divisions, subsidiaries and affiliates.
- Review with Management and the independent auditors the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
- Have a clear understanding with the independent auditor that they are
ultimately accountable to the Board of Directors and the Audit Committee,
as the stockholders' representatives, who have the ultimate authority in
deciding to engage, evaluate, and if appropriate, terminate their
services.
- Review and confirm the independence of the Company's auditors.
- Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the procedures to be utilized, the adequacy of the independent
auditor's compensation, and at the conclusion thereof review such audit,
including any comments or recommendations of the independent auditors.
- Review with the independent auditors, the financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the Company, and elicit any recommendations for the
improvement of such internal controls or particular areas where new or
more detailed controls
18
or procedures are desirable. Particular emphasis should be given to the
adequacy of internal controls to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper. Further,
the committee periodically should review Company policy statements to
determine their adherence to the applicable laws and regulations.
- Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related Company compliance policies.
- Review the independence and authority of the Company's reporting
obligations, the proposed audit plans for the coming year and the
coordination of such plans with the independent auditors.
- Inquire of management and the independent auditors about significant
risks or exposures and assess steps management has taken to minimize such
risks to the Company.
- Review the financial statements and management's discussion and analysis
contained in the annual report to shareholders with management and the
independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial statements to
be presented to the shareholders.
- Review with financial management and the independent auditors the results
of their timely analysis of significant financial reporting issues and
practices, including changes in, or adoptions of, accounting principles
and disclosure practices, and discuss any other matters required to be
communicated to the auditors their judgments about the quality of
accounting principles and the clarity of the financial disclosure
practices used or proposed to be used by the Company.
- Provide sufficient opportunity for the internal and independent Audit
Committee to meet without members of management present. Among the items
to be discussed in these meetings are the independent auditors'
evaluation of the Company's financial, accounting and auditing personnel,
and the cooperation that the independent auditors received during the
course of audit.
- Report the results of the annual audit to the Board of Directors and
recommend whether or not the audited financial statements should be
included in the Company's Annual Report on Form 10-K. If requested by the
Board of Directors, invite the independent auditors to attend a full
Board of Directors meeting to assist in reporting the results of the
annual audit or to answer other director's questions.
- On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services as required by Independence Standard No. 1, Independent
Discussions with Audit Committees. In addition, review with the
independent auditors the nature and scope of any disclosed relationships
or professional service and take, or recommend that the Board of
Directors take, appropriate action in response to the auditor's report to
satisfy itself of the auditor's independence.
- Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors.
- Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
PROCEDURE
Regular meetings of the Committee will be at such times during the year as
approved by the Committee. Meetings with members of Management and/or with
representatives of independent auditors may be scheduled at the request of the
Committee. Special meetings may be called and held subject to the Company's
By-laws.
The Chair of the Committee will regularly report the Committee's findings,
conclusions and recommendations to the Board of Directors.
19
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
WORLD WRESTLING FEDERATION ENTERTAINMENT, INC.
SEPTEMBER 21, 2001
[Arrow down] PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED [Arrow down]
A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS.
FOR all nominees listed at right (except as indicated to the contrary
below) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed at right [ ]
INSTRUCTION: To withhold authority to vote for any individual nominees, write
each such nominee's name in the space provided below)
______________________________________________________________________________
NOMINEES:
Vincent K. McMahon
Linda E. McMahon
Lowell P. Weicker, Jr.
David Kenin
Joseph Perkins
Stuart C. Snyder
August J. Liguori
2. Ratification of Deloitte & Touche LLP as the independent auditors for World
Wrestling Federation Entertainment, Inc.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
PLEASE MARK THIS BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING [ ]
SIGNATURE____________________ SIGNATURE____________________ DATE:_________, 2001
IF HELD JOINTLY
NOTE: 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.
20
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WORLD WRESTLING FEDERATION ENTERTAINMENT, INC.
FOR THE ANNUAL MEETING ON SEPTEMBER 21, 2001
By signing this card, I (we) hereby authorize AUGUST J. LIGUORI and EDWARD
L. KAUFMAN, or either of them each with full power to appoint his or her
substitute, to vote as Proxy for me (us) at the Annual Meeting of Stockholders
of World Wrestling Federation Entertainment, Inc. to be held at WWF New York,
1501 Broadway, New York, New York 10036 on Friday, September 21, 2001 at 10:00
a.m., or at 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.
(TO BE SIGNED ON REVERSE SIDE)