Vora Says Penn Plan to Refresh Board Lacks Accountability
Posted on: May 19, 2025, 02:19h.
Last updated on: May 19, 2025, 03:03h.
- Hedge fund calls plan to possibly add a director after annual meeting “an assault” on investor rights
- Claims Penn is manipulating board electoral process
HG Vora, the activist investor that’s waging a proxy fight against Penn Entertainment (NASDAQ: PENN), called the possibility of the gaming company adding another director to its board after its annual meeting next month “self-serving” and an “assault on shareholder rights.”
At issue are comments made by the board in a May 15 letter to shareholders in which it said the gaming company “continues to consider opportunities to further refresh the Board, including with input from shareholders.” Vora believes the implication is that the regional casino operator will add a director of its choosing following its June 17 annual meeting, meaning that the new director won’t have been voted on by investors. Last month, Penn approved the nominations of Vora candidates Johnny Hartnett and Carlos Ruisanchez to its board.
The gaming company pointed out that three current directors are leaving. Barbara Shattuck Kohn and Saul Reibstein won’t stand for reelection this year, and Ron Naples told the board he’s retiring with immediate effect. The hedge fund has since excoriated Penn for reducing the number of seats up for election while pushing the company to add William Clifford — a gaming executive with previous ties to Penn — to the group of nominees.
The board had been silent on its reluctance to let Clifford stand for election until last week’s shareholder letter in which the directors said the candidate’s experience and skills weren’t “additive or complementary,” and that he lacked the open-mindedness needed to create value for investors.
Vora Concerned Penn Will Backdoor Another Director
Vora, which officially declared a proxy war against Penn last week, is concerned the gaming company is going to add an unelected director sympathetic to CEO Jay Snowden after the annual meeting, meaning that person won’t be put before investors for a vote.
PENN’s statement suggests that it is going to expand the Board by adding back the seat that it removed last month and unilaterally name a director of its choosing for a three-year term — all after the 2025 Annual Meeting,” said the money manager in a statement. “These self-serving actions have no legitimate corporate purpose and are being done to deprive shareholders of the right to vote or oppose the nomination of a third director. This is simply unacceptable and should not be tolerated.”
Earlier this month, the investor filed a lawsuit against Penn in United States District Court for the Eastern District of Pennsylvania, claiming that the reason Penn reduced the number of seats up for election to two from three was because the company shareholders would approve all three Vora candidates.
“HG Vora did not seek a preliminary injunction so the Board would not have the excuse to delay the Annual Meeting and avoid seating the other two HG Vora-nominated director candidates — Johnny Hartnett and Carlos Ruisanchez,” adds the hedge fund.
Penn Using Corporate Machine to Get its Way, Says Vora
Vora, which has pointed out that at no point over the past decade have Penn shares outperformed comparable stocks, said that given that history, the board has no rights to appoint directors without the consent of investors.
Importantly, because of PENN’s history of using the corporate machinery to thwart the will of shareholders, and its track record of value destruction, HG Vora believes shareholders should not tolerate such a manipulation of the electoral process and that PENN’s Board has forfeited the right to select directors without shareholder input,” according to the statement.
As for the money manager’s proposed directors slate, also known as the “Gold Card,” Wall Street has lauded the three candidates, expressing confidence in their gaming industry experience as a potential catalyst for Penn.
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