HG Vora Slams Penn Over Possible Unelected Board Pick

Activist hedge fund HG Vora is taking aim at Penn Entertainment again, this time criticizing what it calls a “self-serving” plan by the casino operator to potentially install another director after its annual shareholder meeting on June 17, without a shareholder vote.

The Controversial Letter

The controversy stems from a May 15 letter Penn sent to shareholders, in which the company said it “continues to consider opportunities to further refresh the Board, including with input from shareholders.” 

To HG Vora, that statement signals an intention to appoint a director of Penn’s choosing following the annual meeting, one who wouldn’t face a shareholder vote.

Last month, Penn agreed to add HG Vora’s two nominees, Johnny Hartnett and Carlos Ruisanchez, to its board. 

Meanwhile, three current directors, Barbara Shattuck Kohn and Saul Reibstein (not seeking re-election) and Ron Naples (retired), are stepping down.

“This Is Simply Unacceptable”

But HG Vora remains concerned that Penn is maneuvering behind the scenes. 

“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,” the firm said in a recent statement. 

The North American provider of integrated entertainment, sports content, and casino gaming experiences described the actions as “self-serving” with “no legitimate corporate purpose”, adding they were “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.”, the statement further said. 

Tensions escalated further when Penn rejected Vora’s third proposed board member, William Clifford, a veteran gaming executive with prior ties to Penn. 

In its shareholder letter, the board claimed Clifford’s experience wasn’t “additive or complementary” and said he lacked “the open-mindedness needed to create value for investors.”

Earlier this month, HG Vora filed a lawsuit in federal court, alleging that Penn reduced the number of board seats up for election from three to two solely to block all three of Vora’s nominees from gaining seats.

The hedge fund didn’t pursue an injunction that might delay the meeting. 

“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,” the firm said.

HG Vora also accused Penn of consistently underperforming its peers, arguing that “PENN’s Board has forfeited the right to select directors” while lacking input from shareholders.