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An investor in casino operator Penn Entertainment is seeking to secure three independent board seats in a move to wrestle away control of the company, which it says has performed disappointingly without any consequences.
Penn runs 43 casinos and racetracks in 20 states and operates online sports betting and online casino gambling operations, according to The Wall Street Journal.
The investor, New York-based HG Vora, has never before launched a proxy battle. It cited “Years of Poor Judgment, Failed Transactions, and Value Destructive Actions” as the rationale behind its move to do so now in a statement released Wednesday.
"To date, there have been no repercussions for the Board's persistent bad judgment and disappointing shareholder returns," Parag Vora, founder and portfolio manager of HG Vora, said in the statement.
The statement highlighted "a misguided Interactive strategy that has resulted in the reckless spending of nearly $4 billion" as evidence of the board's bad calls.
"We believe this is in part due to PENN's weak corporate governance, which disenfranchises shareholders and entrenches board members while rewarding its CEO with excessive compensation,” Vora said.
Penn released a statement Thursday acknowledging the nominations of the potential new board members but giving no further comment.
New York-based Vora telegraphed its intention to nominate board directors in late 2023 when it had an 18.5% economic interest, including swaps, in Penn, the WSJ reported at the time. It has since reduced its stake in the company to 5% to be able to undertake its proxy fight.
The three board members HG Vora has nominated are Carlos Ruisanchez, former chief financial officer of Pinnacle Entertainment, which Penn bought in 2018; former Penn Chief Financial Officer William J. Clifford and Johnny Hartnett, former CEO of the European gambling-and-tech business Superbet Group.
Penn’s stock price dropped to $20.50 Thursday from its record $130.47 in March 2021. That is a drop of more than 80% over the last four years.
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