Penn shareholder HG Vora nominates three director candidates
HG Vora Capital Management, an investment firm based in New York, has put forth a formal proposal nominating three director candidates for positions on the board of Penn Entertainment. The firm raises significant concerns about the current management’s effectiveness in driving the organization’s growth potential.
In a statement released on January 29, HG Vora criticized Penn’s board, highlighting “reckless spending of nearly $4 billion” on mergers and acquisitions as well as media partnerships. The firm characterized Penn’s interactive strategy as an “abject failure,” claiming that it has consistently fallen short of expectations and failed to deliver on its promises.
HG Vora, which holds a 4.8% equity stake in Penn, has nominated three industry experts for board positions: William J. Clifford, Johnny Hartnett, and Carlos Ruisanchez.
Meet HG Vora’s Director Nominees
Johnny Hartnett has a wealth of experience in the gambling sector, having previously served as CEO of Superbet and held directorial roles at Flutter Entertainment’s Paddy Power Betfair and Sportsbet. His tenure at Flutter included pivotal contributions as Chief Development Officer during the acquisition of FanDuel, positioning him as a key player in expanding market reach.
William J. Clifford brings extensive financial acumen to the table, having served as CFO of Penn National Gaming for twelve years until 2013. His recent role as Senior Adviser for Gaming and Leisure Properties further cements his expertise in overseeing complex financial operations within the gaming industry.
Carlos Ruisanchez, co-founder of Sorelle Capital and Sorelle Hospitality, offers a unique perspective drawn from his tenure as CFO at Pinnacle Entertainment. Under his leadership, Pinnacle executed the significant 2013 acquisition of Ameristar. This experience culminated in Pinnacle’s sale to Penn for $2.8 billion in 2018, highlighting Ruisanchez’s strategic insight in high-stakes transactions.
The Upcoming Shareholder Meeting and Penn’s Financial Landscape
The election of these nominees will occur at Penn’s annual shareholders’ meeting, scheduled for 2025, with no immediate action required by shareholders at this time.
Parag Vora, founder and portfolio manager of HG Vora, expressed critical concerns, stating, “To date, there have been no repercussions for the board’s persistent poor judgment and disappointing shareholder returns.” He elaborated on the firm’s belief that Penn’s weak corporate governance disenfranchises shareholders and leads to incumbent board members retaining their seats, while the executive team enjoys disproportionately high compensation.
Penn’s reported financial results for Q3 2024 revealed a net loss of $36.7 million, a significant improvement compared to Q3 2023, which recorded a staggering loss of $724 million due to the divestiture of the Barstool brand back to founder Dave Portnoy for just $1. Despite this, Penn achieved revenues of $1.63 billion for Q3 2024, marginally higher than the $1.61 billion reported in the previous year.
Throughout the first nine months ending September 30, Penn generated $4.9 billion in revenue, a slight decrease from $4.96 billion year-over-year, alongside a net loss increase to $178.2 million from $131.9 million during the same period in the previous year.
Looking ahead, Penn Entertainment is poised to announce its full-year financial results on February 27.
In a notable strategic move, Penn has forged a $1.5 billion partnership with Disney-owned ESPN to launch ESPN Bet, which officially commenced operations in Washington D.C. in January and has extended market access to 20 states across the U.S.
Penn’s board has committed to evaluating HG Vora’s proposed nominees and will present its formal recommendations regarding director elections in its filings to the U.S. Securities and Exchange Commission ahead of the 2025 annual meeting. This engagement demonstrates the company’s intention to enhance shareholder value and address governance challenges.
