Penn Accused of Backtracking on Director Nominee Agreement by Vora
Posted on: April 28, 2025, 03:12h.
Last updated on: April 28, 2025, 03:12h.
Article Title: HG Vora's Proxy Fight with Penn Entertainment Intensifies: An Unwanted Invitation to a Contested Battle
Author: @etfgodfather | Finance | Gaming Business | Mergers and Acquisitions
The drama between hedge fund titan HG Vora Capital Management and regional casino operator Penn Entertainment (NASDAQ: PENN) hit new heights this week, with HG Vora accusing Penn of potentially skirting shareholder voting rights and reneging on an agreement regarding board nominations.
Last Friday, Penn admitted to only nominating two of HG Vora's preferred candidates - Johnny Hartnett and Carlos Ruisanchez - to its board of directors. A notable absence from the lineup was William Clifford, initially one of the three candidates HG Vora backed in January. Penn's seemingly arbitrary omission of Clifford—a former Penn executive and Pinnacle Entertainment alum—puzzled the money manager, prompting it to reinstate all three nominees for consideration.
In a fiery statement, HG Vora expressed its suspicion that Penn's move was disingenuous and an infringement of shareholder rights. The investor posited that Penn's intentions were twofold: a desperate bid to preserve board representation amidst the looming proxy fight and a disreputable public relations tactic.
Just ten days prior, the board had communicated a different intention—namely, to nominate three separate candidates. This switcheroo left HG Vora questioning the company's integrity and consistency.
HG Vora's alleged correspondence with Penn on April 15 referenced an original agreement by Penn to hold an election for three board seats at its upcoming annual meeting. The shareholder maintains it has taken the necessary steps to ensure its nominees are compliant with regulatory requirements across 20+ states[1][3].
HG Vora Stands Firm Against Penn's Board
Ever since HG Vora initiated a stake in Penn in December[5], the hedge fund has been vocal about its concerns regarding the company's board composition’s alleged violation of Pennsylvania corporate law[1]. According to HG Vora, these issues were only resolved post the expiration of the nomination window[2]. The fund expanded further, implying that Penn has been actively disenfranchising investors.
"HG Vora believes that the Board's self-serving action... deprived shareholders of their fundamental right to elect directors of their choosing[4]," according to the press release issued by the fund.
One of Penn's major shareholders, HG Vora has never shied away from voicing its intent to wage a proxy fight against the gaming company to install its slate of preferred directors[1]. True to its word, it has now filed paperwork for a proxy battle with the Securities and Exchange Commission (SEC)[4].
In a statement, HG Vora claimed that representatives from both parties had discussed the available board seats on April 25, 2025, with the fund reiterating the likelihood of its candidates' success in a shareholder vote[4]. That very same day, the Penn board announced they would reduce the number of seats up for election at the Annual Meeting[3].
The Clifford Conundrum Unfolds
When it agreed to endorse Hartnett and Ruisanchez, Penn clarified that it had not reached a definitive agreement with HG Vora but remained focused on maximizing shareholder value and avoiding a proxy fight[3]. However, Penn's unexpected move to slash the number of available board seats appears to have precipitated the proxy fight HG Vora had previously threatened[2].
On the flip side, introducing Clifford to the board—a candidate HG Vora believes would be invaluable in realizing shareholder value—could prove a strategic blunder[4].
"Clifford, would be a valuable addition to the Board of PENN," notes Vora. "Instead of wasting shareholder capital and corporate resources on entrenching the Board in the name of 'activism defense,' PENN should welcome Mr. Clifford to the Board and work with its financial advisors to consider all options to maximize shareholder value[4]."
[1] - Business Insider[2] - CNBC[3] - Reuters[4] - HG Vora Press Release[5] - Bloomberg
- In a public announcement made on NASDAQ, ETFGodfather, an influential figure in the finance and gaming business sectors, highlighted the ongoing feud between HG Vora Capital Management and Penn Entertainment.
- HG Vora accused Penn of disenfranchising shareholders and breaching an agreement regarding board nominations, citing the omission of William Clifford, a preferred candidate, from the board lineup.
- The financial investor declared that Penn's move was strategically designed to preserve board representation and employ a questionable public relations tactic amidst a looming proxy fight.
- HG Vora maintained that Penn had broken its original commitment to hold an election for three board seats at the annual meeting, suspecting the gaming company of violating shareholder rights and regulatory requirements.
- In response to Penn's actions, HG Vora proceeded to file paperwork for a proxy battle with the Securities and Exchange Commission (SEC), reiterating its plans to bring in its slate of preferred directors to maximize shareholder value and bring about positive changes in the gaming business.