01—Abstract
Summary
Summary of the 8-K filed January 23, 2024. Cited figures are marked; the original filing is the authoritative source.
On January 23, 2024, the TKO Board of Directors of TKO Group Holdings, Inc. increased the size of the board from eleven to thirteen directors and appointed Dwayne Johnson as a WWE director designee and Bradley A.
Keywell as an EDR director designee, effective the same day. Under the Amended Governance Agreement among TKO, Endeavor Group Holdings, Endeavor Operating Company, January Capital entities, TKO Operating Company and Vincent K. McMahon, Endeavor's designation right increased from six to seven directors, and WWE's (inclusive of Mr. McMahon's designees) increased from five to six.
The filing also discloses a related-party arrangement with Mr. Johnson. On January 22, 2024, TKO and WWE entered into an IP Assignment Agreement transferring "The Rock" trademark and related intellectual property to Mr. Johnson's affiliate, and a Services Agreement under which Mr. Johnson provides promotional services and licenses his name, likeness and IP to WWE for licensed wrestling-related products for up to 10 years. As consideration, Mr. Johnson is to receive restricted stock units valued at $30,000,007,a vesting 25% on the Effective Date, 25% upon completion of certain services, 25% on December 31, 2024, and the remaining 25% in monthly installments from January 31, 2025 through December 31, 2025.
Mr. Johnson also received approximately $491,000b in royalties from WWE for 2023 and will continue to receive royalties under the Services Agreement. Mr. Keywell will receive standard non-employee director compensation: a $107,000 annual cash retainer, an initial prorated RSU award with a grant date value of $182,000, and an annual RSU award of $182,000. Both directors have signed the company's standard indemnification agreement.
02—Key points
Key Highlights
- Board expanded from 11 to 13 directors; Dwayne Johnson (WWE director designee) and Bradley A. Keywell (EDR director designee) appointed effective January 23, 2024
- Amended Governance Agreement raises Endeavor's designation rights from six to seven directors and WWE's (including Vincent K. McMahon's designees) from five to six
- WWE assigned "The Rock" trademark and related IP to an affiliate of Dwayne Johnson under an IP Assignment Agreement effective January 22, 2024
- Services Agreement grants WWE a license to Johnson's name, likeness and IP for professional wrestling-related licensed products for up to 10 years, subject to earlier termination rights
- Johnson's equity award of RSUs valued at $30,000,007, vesting 25% at signing, 25% on completion of certain services, 25% on December 31, 2024, and the remainder monthly through December 31, 2025
- Johnson received approximately $491,000 in royalties from WWE for the year ended December 31, 2023, and will continue to receive royalties under the Services Agreement
- Keywell's director compensation includes a $107,000 annual cash retainer and RSU awards with a $182,000 grant date value (initial prorated award and annual award)
03—Questions
Frequently Asked Questions
Why did TKO expand its board to thirteen directors?
The filing states the board increased its size from eleven to thirteen directors to fill newly created vacancies, which were filled by Dwayne Johnson and Bradley A. Keywell, under the Amended Governance Agreement that increased Endeavor's and WWE's designation rights.
What is TKO giving Dwayne Johnson in the Services Agreement and IP transaction?
WWE assigned "The Rock" trademark and related intellectual property assets to an affiliate of Mr. Johnson, and Mr. Johnson agreed to provide promotional and other services and license his name, likeness and IP to WWE for certain wrestling-related licensed products for up to 10 years. In return, he is entitled to RSUs valued at $30,000,007 and continuing royalties.
What vesting schedule applies to Mr. Johnson's $30,000,007 equity award?
The award vests 25% on the January 22, 2024 Effective Date, 25% upon completion of certain services under the Services Agreement, 25% on December 31, 2024, and the remaining 25% in equal monthly installments from January 31, 2025 through December 31, 2025, subject to forfeiture and acceleration events.
How much did Mr. Johnson earn from WWE before the agreement?
Mr. Johnson received royalties from WWE totaling approximately $491,000 for the year ended December 31, 2023, for appearances in WWE content, merchandise and other services.
What compensation will Mr. Keywell receive as a director?
Under the non-employee director compensation policy, Mr. Keywell receives a $107,000 annual cash retainer paid quarterly, an initial RSU award with a prorated grant date value of $182,000, and an annual RSU award with a grant date value of $182,000.
04—Continue