Dwayne “The Rock” Johnson will be receiving a substantial compensation package as part of his appointment to the TKO Group Holdings Board of Directors. This compensation includes $30 million worth of TKO stock, which is in part payment for his role in promoting the WWE brand.
The SEC filing related to Johnson’s appointment on January 22, 2024, outlined the following key details:
IP Assignment Agreement: WWE, a wholly-owned subsidiary of TKO, entered into an IP Assignment Agreement with certain affiliates of Dwayne Johnson. Under this agreement, WWE assigned to Johnson (via one of his affiliates) the “The Rock” trademark and related intellectual property assets.
Services Agreement: Simultaneously, WWE entered into an Independent Services Contractor and Merchandising Agreement with Dwayne Johnson and some of his affiliates. This Services Agreement outlines Johnson’s commitment to provide promotional and other services to WWE. It also includes a licensing agreement for the use of the assigned intellectual property and Johnson’s name and likeness for WWE-related licensed products for up to 10 years.
Compensation: In consideration for Dwayne Johnson’s services under the Services Agreement and the intellectual property grants and licenses made by Johnson and his affiliates, he is entitled to receive an award of restricted stock units in TKO’s Class A common stock. The value of this award is $30,000,007, based on a 30-day average of the daily volume-weighted average sales price per share of TKO’s common stock on the New York Stock Exchange, as reported by Bloomberg L.P. These restricted stock units will vest over time, with 25% vesting immediately on the Effective Date, 25% upon the completion of specific services described in the Services Agreement, and the remaining 50% vesting in installments throughout 2024 and 2025.
Royalties: Dwayne Johnson had been receiving annual royalties from WWE for his appearances in WWE-produced content, merchandise, and other services performed for the company. In 2023, he received approximately $491,000 in royalties. Following the Effective Date, Johnson will continue to receive annual royalties from WWE and will also receive royalties for licensed products that utilize the Assigned IP, his name, likeness, and other intellectual property rights, as per the Services Agreement.
It’s important to note that Johnson’s appointment to the TKO Board and the associated compensation are part of a broader arrangement, which includes WWE and the utilization of his intellectual property in wrestling-related products.
The filing also confirms that there are no other undisclosed arrangements or understandings between Johnson and any other individuals or entities regarding his directorship on the TKO Board, apart from the Amended Governance Agreement and WWE’s and Endeavor’s director designation rights.
On January 22, 2024 (the “Effective Date”), TKO and World Wrestling Entertainment, LLC (“WWE”), a wholly owned subsidiary of TKO, entered into an IP Assignment Agreement with certain affiliates of Mr. Johnson, pursuant to which WWE assigned to Mr. Johnson (via one of his affiliates) “The Rock” trademark and certain related trademarks, service marks, ring names, taglines and other intellectual property assets (the “Assigned IP”).
On the Effective Date, WWE also entered into an Independent Services Contractor and Merchandising Agreement with Mr. Johnson and certain of his affiliates (the “Services Agreement”), pursuant to which Mr. Johnson agreed to provide to WWE certain promotional and other services. Under the terms of the Services Agreement, Mr. Johnson further agreed to license the Assigned IP and Mr. Johnson’s name, likeness and certain other intellectual property rights to WWE for use in connection with certain categories of licensed products related to professional wrestling for up to 10 years, subject to certain earlier termination rights.
As consideration for Mr. Johnson’s services pursuant to the Services Agreement, and in respect of the intellectual property grants and licenses made by Mr. Johnson and his affiliates in connection therewith, Mr. Johnson is entitled to receive an award of restricted stock units in respect of TKO’s Class A common stock, par value $0.00001 per share (“Class A common stock”), in an amount equal to $30,000,007 based on a 30-day average of the daily volume-weighted average sales price per share of the Company’s common stock on the New York Stock Exchange, as such daily volume-weighted average sales price per share is reported by Bloomberg L.P. (the “Equity Award”). Subject to certain forfeiture and acceleration events, the Equity Award will vest as follows: 25% on the Effective Date; 25% upon completion of certain services described in the Services Agreement; 25% on December 31, 2024; and the remaining 25% in equal monthly installments from January 31, 2025 through December 31, 2025.
Prior to the Effective Date, Mr. Johnson received annual royalties from WWE in connection with his appearances in WWE-produced content, merchandise, and other services performed for WWE. For the year ended December 31, 2023, Mr. Johnson received royalties in an aggregate amount of approximately $491,000. Following the Effective Date, Mr. Johnson will continue to receive such annual royalties from WWE and will be entitled to receive royalties in connection with the sale of licensed products that utilize the Assigned IP and his name, likeness and other intellectual property rights in accordance with the Services Agreement.
Other than the Amended Governance Agreement and WWE’s and Endeavor’s director designation rights therein, there are no arrangements or understandings between either Mr. Johnson or Mr. Keywell and any other person pursuant to which such person was appointed as a director to the TKO Board.
How do you view the combination of intellectual property assignments, services agreements, and stock awards in Dwayne Johnson’s compensation for his role in promoting the WWE brand and serving on the TKO Group Holdings Board of Directors? Let us know in the comments below.