PENN Entertainment plans to nominate two new directors who were recommended by a critical minority shareholder.
The gaming company has announced that it intends to put up Johnny Hartnett and Carlos Ruisanchez for election to its board of directors following discussions with HG Vora Capital Management.
The New York-based investment firm proposed the nominations of Hartnett and Ruisanchez, as well as former PENN CFO William J. Clifford, to board seats at PENN several months ago amid its strong criticism of PENN’s operations and leadership.
Pointing to a sharp decline in PENN stocks in recent years, HG Vora has argued in favor of changes in PENN’s organizational structure and claimed that the company had engaged in “reckless spending of nearly $4 billion” on partnerships. HG Vora also asserted that PENN’s online gaming business has been an “abject failure.”
The company was previously PENN’s largest single shareholder but trimmed back its stake to 4.8% earlier this year to comply with regulatory requirements ahead of a planned proxy battle with the company.
Despite discussions between the two sides, PENN said in a statement that it was “unable to reach an agreement with HG Vora.” It thanked the investor firm for its input and stressed that “we are eager to begin working with our new directors to drive profitable growth for the benefit of all PENN shareholders.”
PENN recognizes room for Interactive improvement
HG Vora isn’t the only shareholder firm that has been fiercely critical of PENN. Last June, the Donerail Group called for PENN to consider a sale and claimed that the company’s leadership has lost credibility as a result of the downturn in share value.
PENN added in its statement that its board believes there is “significant opportunity for value creation at PENN, particularly within our Interactive segment.”
As PENN looks to continue to improve at translating its retail casino footprint into online sports betting and iGaming success, Harnett and Ruisanchez could bring new insight to the board. Both new nominees have extensive experience in gaming.
Hartnett brings expertise in online sports betting and online casino, having led Superbet Group as CEO for four years from 2019 to 2023, during which time the company experienced strong market growth and expansion. Before that, he spent a decade as head of sport at Irish gambling giant Paddy Power and also worked for five-and-a-half years in a separate spell with Paddy Power Betfair, rising to managing director international.
Ruisanchez is CEO of Sorelle Capital and president of Sorelle Hospitality and previously served as president and CFO of gaming entertainment company Pinnacle before its sale in 2018.
“We look forward to benefiting from Johnny’s and Carlos’ fresh perspectives as we enter into a critical phase for the business,” added PENN. “Johnny and Carlos bring critical expertise and experience in the gaming industry, across both digital and retail, that are aligned with the board’s priorities and are tailored to the opportunities in front of us.”
As part of the board reshuffle, Ron Naples has retired effective immediately and Barbara Shattuck Kohn and Saul Reibstein will not stand for reelection at the 2025 annual meeting of shareholders. The board now comprises eight directors, seven independent.
HG Vora calls out PENN in public again
In a statement posted on Monday afternoon, three hours after PENN’s board announcement, HG Vora criticized PENN for reducing the number of seats up for election from three to two.
“HG Vora believes the Board’s self-serving action, taken in the face of the prospect of losing three board seats, had no legitimate corporate purpose and deprives shareholders of their fundamental right to elect directors of their choosing,” read part of the statement. HG Vora added that it recommended three new directors in January “to restore accountability and proper oversight at PENN after years of poor judgment, failed transactions and value destructive actions.”
HG Vora confirmed it is filing a preliminary proxy statement with the U.S. Securities and Exchange Commission in connection with the company’s annual meeting.
