Writers Guild Criticizes Endeavor's All-Male Board Leadership Amid IPO Plans

Co-CEO of William Morris Endeavor Ari Emanuel -Getty-H 2019
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Endeavor, led by CEO Ari Emanuel, had a heavily leveraged strategy which led to an IPO plan that was scrapped last September. 

The guild says the company's large stakeholders will not be aligned with those of rank-and-file investors after an IPO, which could come in a matter of weeks.

Writers still seeking a meaningful portion of "packaging fees" from the agencies that represent them — or in many cases, used to represent them — are attacking Endeavor's goal of an initial public offering again, this time by listing several reasons for not investing in the company because the top stakeholders will wield too much power.

"Endeavor's dual-class stock structure gives CEO Ariel Emanuel, executive chairman Patrick Whitesell, and affiliates of private equity owner Silver Lake Partners control of most of the company's non-traded Y shares, which carry 20 votes compared to the single-vote public Class A shares," the Writers Guild of America West says in a document made public Thursday.

The WGA has lambasted Endeavor's IPO plans perviously, though this time it also invokes Harvey Weinstein, the former Hollywood executive who has become a pariah in the industry since numerous accusations of decades of sexual abuse were revealed.

The WGA document also brings up allegations against Endeavor by writing of "a former operating board member" accused of harassment. Presumably, it's a reference to Adam Venit, who resigned last year amid accusations he inappropriately grabbed Terry Crews, the host of America's Got Talent and former NFL player.

The WGA also hones in on a lack of "diversity" among Endeavor's directors. 

"Endeavor must add a woman to its board of directors by the end of 2019 in order to comply with California law," the WGA said Thursday. 

Mostly, though, the WGA hammers the theme that the motives of the large stakeholders will not be aligned with those of rank-and-file investors after an IPO, which could come in a matter of weeks.

The planned corporate governance structure "provides little independent oversight," says the WGA, and it includes a "poison pill" initiative that will "insulate Endeavor's board from accountability to shareholders."

Such conflicts of interest between small and large investors, says the WGA, could lead to the dismissal of attempts by larger companies to acquire Endeavor even though any such deal would lead to a higher stock price.

"This is not a theoretical concern as Endeavor's conflicts of interest with its clients are currently having an impact on the company's representation segment, where it has lost 1,400 writer-clients since April," says the WGA.

Endeavor, which is in a quiet period due to its impending IPO, declined to comment.

While dual-class shares are not uncommon — it's how Sumner and Shari Redstone maintain control over CBS and Viacom, for example — the WGA notes that they oftentimes do not generate "long-term returns for public shareholders."