HG Vora Capital Management has stepped up its fight against PENN Entertainment’s current leaders. The investment firm has now submitted proxy documents to the Securities and Exchange Commission (SEC). It is asking shareholders to vote for its three suggested candidates for the company’s board. This vote will take place at PENN’s Annual Shareholder Meeting on June 17.
Hedge Fund Blames PENN’s Management for Poor Returns and Strategic Missteps
The hedge fund, which owns 4.8% of PENN, claims that the company’s bosses have failed to bring value to shareholders. HG Vora says that a bunch of bad choices, especially the company’s shift to online gaming and sports media, have caused a drop in returns for shareholders and made investors lose faith in the company.
HG Vora claims PENN’s shift from a thriving regional casino operator to a mixed media and betting firm has resulted in pricey buyouts and disappointing results. The company highlighted major deals, like PENN’s acquisition of Score Media and Barstool Sports, plus its $2 billion deal with Disney to use the ESPN Bet brand, as risky and carried out.
Even though management insists online operations will soon turn a profit, HG Vora remains skeptical. The firm has missed several self-set deadlines to make its digital side profitable pushing expectations to 2026. HG Vora believes that without new leadership, this timeline will not be met.
HG Vora Challenges PENN Board Moves, Cites Excessive CEO Pay and Lack of Accountability
In a letter to shareholders, HG Vora accused the board of taking steps to protect itself from meaningful oversight. It criticized a recent decision to cut the number of available board seats from three to two, just days after HG Vora put forward three nominees, calling the move a deliberate attempt to stop fair shareholder representation. The firm has started a lawsuit to challenge this change.
The proxy campaign also brings up issues about executive pay. HG Vora pointed out that CEO Jay Snowden has gotten over $120 million since 2021, a time when the company’s market value dropped by about $11 billion. This pay package, in HG Vora’s view, does not match company performance and shows a wider gap between leadership and shareholder interests.
HG Vora pushes for William Clifford, Johnny Hartnett, and Carlos Ruisanchez to join PENN’s board. These industry veterans would make the board more accountable and disciplined in its operations, according to HG Vora. UNITE HERE, a labor union representing workers at some PENN casinos, backs these candidates too.HG Vora asks shareholders to use the GOLD proxy card to vote. This shows support for changing PENN’s strategy.