Endeavor staff members outraged at IPO, saying it mainly made boss Ari Emanuel rich

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Talent agents and executives at entertainment conglomerate Endeavor rant at their boss, Hollywood super agent Ari Emanuel, claiming they were cheated in the company’s IPO this spring as he was impersonating for a bandit.

Some 300 top Endeavor players – which owns the Ultimate Fighting Championship and Miss Universe Pageant, in addition to powerful talent agencies WME and IMG – were told just before Endeavor’s initial public offering in April that their options to purchase shares were worthless, sources told The Post. .

The shocking news came during a conference call with company president Mark Shapiro, who told agents and executives their Endeavor options were seriously “underwater,” according to a source with direct knowledge of the call.

According to sources, Shapiro left out the fact that employee options had been diluted well below the company’s share price not only because of the pandemic that hit Endeavor’s business, but also because of a huge amount of stock awards that had been given to Emanuel, the fast-talking Hollywood negotiator whose brash style inspired the character of Ari Gold in HBO’s “Entourage”.

Emanuel with Mark Shapiro and UFC President Dana White ahead of Endeavor’s public listing on the NYSE on April 29, 2021.
REUTERS

Adding insult to outrage, Shapiro claimed that while Endeavor could have chosen to make employee options obsolete, he and the other senior executives at the company devised a plan to make them whole since they were ” good guys, ”the source recalled bitterly.

The stunned staff members were then given entirely new stock options which they learned, via an online portal, to have harder to attain strike prices and longer vesting periods. long, sources said. Indeed, some have said that shares already vested have been replaced by unvested options.

Endeavor declined to comment.

“No one is happy. There are a lot of complaints, ”an employee told The Post. “They’ve reduced my equity from what I was told when I got it, but it doesn’t look like Ari has been cut.”

UFC Fight Night Brandon Royval
In order to go public this year, Endeavor bought out the remaining stake in the more lucrative UFC, which diluted Endeavor’s shareholders.
Zuffa LLC via Getty Images

Adding to the upheaval, the employees who made a lot of fuss came away on better terms, sources said – pointing to an agent who allegedly bragged about getting a one-time bonus of over $ 200,000 after s’ complain to management about his new share purchase conditions.

“Everything here is tailor-made,” a source said, adding that it’s the culture of the company to reward people for “making noise”.

“Whoever screams the loudest and whoever is most worried about leaving that day or that month is likely to get something,” the source said.

The company behind talent agency WME, which represents top clients like Christian Bale, Gal Gadot and Matt Damon, continued their IPO plans this year after an unsuccessful attempt in 2019. The launch in April has took place despite the fact that the company remained weakened. by the pandemic, which has dampened Hollywood production and live events.

Ari Emanuel and Mark Shapiro
Ari Emanuel (left) with Endeavor chairman Mark Shapiro, who told employee shareholders their shares were “under water”.
Getty Images for NBCUniversal

Emanuel and his partners, Patrick Whitesell and Shapiro, made a success of the IPO by making a deal at the same time to buy 100% of the mixed martial arts company UFC, of ​​which Endeavor already owned half, and whose business has grown. exploded during the pandemic. Endeavor sold 21 million shares to investors at $ 24 each on April 29, raising $ 511 million.

Since its inception, Endeavor’s stock has since hovered mostly around $ 25, hitting a high of $ 31.95 in May and a low of $ 23.17 in June. On Friday, it closed at $ 24.99.

According to a source familiar with the situation, Emanuel owns around 30 million Endeavor shares – a cache worth $ 735 million at current market prices. The only obstacles to the sale of Emanuel include a blocking period for the IPO that expires at the end of this year, as well as the acquisition of 4.1 million stock options that it received in the year before the IPO, according to sources and regulatory documents.

miss-universe-2021
Endeavor, which holds the Miss Universe pageant, issued new shares to employee shareholders with harder-to-attain strike prices and longer vesting periods.
PA

Those 4.1 million options alone, which are expected to vest in three installments by the end of 2023, will see Emanuel reap a $ 100 million windfall if Endeavor’s stock maintains its value until the end of 2023. -the. Meanwhile, around 80 percent of his total holdings have no such restrictions, allowing him to cash out whenever he wants.

“Ari basically recovered by issuing a ton of UFC shares over the past 12 months when no one else was getting a lot of shares and then those units were converted into a huge amount of UFC shares. ‘Endeavor,’ a source said. “No one else’s slice of the pie got bigger.”

While some 150 Endeavor executives who joined the company before 2014 appear to be receiving bonuses in line with what they were promised in dollars, some complained that they were half of what they should have received given of business growth. Meanwhile, another 150 executives hired after 2014 saw their bonuses cut to a quarter of what they were promised,

“The stock has to increase a lot before I get what was agreed to when I signed,” said an insider.

Employees complained that Emmanuel (far left) and Whitesell (center left) were responsible for some dilution of Endeavor’s shares over the years.
Getty

It is unusual for a company to do an IPO with underwater stocks. But when it does, especially in a complex merger, it results in “delicate” calculations that can confuse and confuse people, said compensation expert James Reda.

“What the company really needs to care about is making sure that everyone is treated the same” … and that the “people at the top” don’t “bend the rules” to gain profit, did he declare.

Questions surfaced in 2017 when Emanuel and Whitesell sold roughly $ 165 million in Endeavor stock – and were then rewarded with $ 100 million each in replacement stock at the company’s expense, diluting the other shareholders, according to the filings.

While Endeavor announced a restructuring in March 2020 that resulted in more than 1,000 layoffs during the pandemic, Emanuel said he would not be taking a salary that year. Nonetheless, he received a bonus of $ 1.2 million for the first three months of the year and managed to claw back his full bonus of $ 5.8 million for what Endeavor’s S-1 record has. called “his leadership and contributions during the COVID-19 disruption.”

Whitesell got a bonus of $ 2 million, while Shapiro took a bonus of $ 1.6 million, CFO Jason Lublin got a bonus of $ 1.4 million, and legal director Seth Krauss earned $ 2.4 million.

In contrast, sources said most of Endeavor’s approximately 5,700 employees without stock options – who resisted layoffs, time off and pay cuts, many of whom worked overtime before the IPO company – received $ 500 Visa gift cards after launch.


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