Just days after PENN Entertainment appointed two of the three candidates investment firm and PENN shareholder HG Vora suggested to the gaming corporation, HG Vora is taking the company to court.
HG Vora filed the lawsuit in the Eastern Pennsylvania District Court, claiming that PENN is running afoul of the law by removing one of the the three board seats up for election without notifying shareholders in advance of the company’s annual meeting.
The action is the latest in a series of very vocal oppositions of PENN by HG Vora, which PENN allegedly says is trying to engage in a proxy battle to gain control of the company
The issues began in early 2024 when HG Vora notified the Securities and Exchange Commission (SEC) they asked the company for representation on the board given the company held 18.5% of the shares in the company. They later took a step the firm had never taken with a company they held shares in before by putting forth nominees for the board.
Many of the firm’s concerns about PENN appeared in the lawsuit, including a concern the company, which has a long history of land-based casino success, was too focused on developing the digital arm of the company.
HG Vora criticized acquisitions, CEO salary
“Under Snowden’s tenure, PENN has lagged a staggering 121% behind the S&P 500 and 94% behind its peers in the gaming industry. Notwithstanding that, the Board has continued to enable and encourage Snowden’s risky decision-making and mismanagement by lavishing him with an inflated compensation package that includes nearly $200 million in equity grants. Indeed, a 2023 report from a leading shareholder publication found that Snowden was the third most overpaid CEO of any S&P 500 company.”
A series of expensive and arguably lackluster media acquisitions mentioned in the suit highlight what HG Vora believed to be the mismanagement, including purchases of theScore and Barstool Media as well as the billion-dollar partnership with ESPN that currently supports ESPN BET.
The suit also drew attention to the lavish salary collected by PENN CEO Jay Snowden, citing several different independent reports that highlighted disparities in PENN executive salaries compared to performance.
The legal action is less about performance and more about PENN’s actions related to the board. Per the original structure, three of the nine seats were set to be available for election at the 2025 company meeting. Last month, PENN announced the intention to put up two of HG Vora’s proposed candidates, Johnny Hartnett and Carlos Ruisanchez, up for election, but that the third available seat would no longer be available after current director Ronald Naples announced plans to retire.
HG Vora says the elimination of the seat is a violation of the law and took exception to a press release issued by PENN connected to the news that did not acknowledge that the financial firm put forward the candidates.
Regulators got involved in the proxy battle
In the suit, HG Vora also claimed that PENN involved regulators to try and obstruct the group from having a say in potential board candidates. That includes a public hearing with the Massachusetts Gaming Commission in which PENN argued that HG Vora would need a license from the MGC in order to have an operational say in the company given the percentage of shares HG Vora controls.
In the wake of the hearing, HG Vora reorganized its investment in the company so it owned 4.8%, putting it under the 5% threshold that requires licensing in the state.
The candidates are independent of both PENN and HG Vora and both come with extensive gaming resumes. The third candidate, William Clifford, was rejected by PENN even though he served as CFO of Penn National Gaming from 2001-2013.
HG Vora is seeking the court to demand PENN to open the shareholder election to three seats and include all three names on the ballot for shareholders to choose from. The group is also seeking financial damages.
SBC Americas reached out to PENN for comment but had not received a response at time of publication.
