Investor Allegations Countered by Penn Entertainment Prior to Board Gathering
In the heat of a significant proxy fight, PENN Entertainment has refuted a series of allegations leveled by HG Vora Capital Management, one of its prominent investors. The gaming company issued a rebuttal this week to challenge claims made by the activist hedge fund in a recent comprehensive presentation.
PENN Endorses Two HG Vora Nominees but Rejects a Third on Regulatory Grounds
The dispute primarily revolves around PENN Entertainment's annual shareholder meeting scheduled for June 17, where shareholders will elect two board members. PENN has endorsed two of HG Vora's candidates, Johnny Hartnett and Carlos Ruisanchez, but has declined the hedge fund's third nomination due to regulatory concerns. PENN contends that HG Vora's proposals, which the company argues violated state gaming regulations, hindered the possibility of a broader agreement.
HG Vora's presentation alleges that PENN mishandled its digital transition and squandered over $11 billion in shareholder value since 2021. It also targets CEO Jay Snowden's remuneration package and his use of company aircraft, suggesting a disparity between executive perks and the company's dwindling stock performance.
PENN Responds, Claiming Twisted Facts
PENN fired back, asserting these claims distort the truth. The company highlighted that Snowden's actual compensation is less than half of the reported amount and ranks at the bottom of industry peers in terms of executive pay. Additionally, 1.5% of corporate flight time was utilized for personal trips, a figure that PENN claims HG Vora inflated by including hours when the jets were rented to others.
Hedge Fund Accuses PENN's Digital Push, While Company Emphasizes Future Growth
The hedge fund also questions PENN's leaders for prioritizing online sports betting at the expense of the strong land-based casino business. However, PENN stands by its digital strategy, pointing to partnerships with ESPN and theScore as key to building a long-term, scalable customer ecosystem. The company believes these moves, along with its Penn Play loyalty program and robust retail presence, set it up well for future growth.
Rules and regulations have fueled disputes in this conflict. PENN accuses HG Vora of attempting to circumvent licensing rules in its quest for more board influence, a claim the hedge fund denies. The company emphasizes the importance of maintaining regulatory compliance to safeguard its 30-year standing in the gaming industry.
Despite the disagreement, PENN expresses its eagerness to engage with shareholders and drive the business forward. As the vote draws near, the outcome could shape the future direction of one of North America's leading gaming companies.
Sources: [1], [2], [3], [4], [5]
- In defense of the allegations, PENN Entertainment has stated that its digital transition strategy, which prioritizes sports betting, is crucial for building a scalable customer ecosystem, despite HG Vora Capital Management's criticism.
- Along with endorsing two HG Vora nominees for its board of directors, PENN Entertainment has rejected a third due to regulatory concerns, asserting that HG Vora's proposals violated state gaming regulations.
- As part of its rebuttal, PENN Entertainment has highlighted that its CEO Jay Snowden's actual compensation is less than half of the reported amount and ranks at the bottom of industry peers in terms of executive pay, countering HG Vora Capital Management's claims about executive perks.
