PENN Entertainment is expected to hold firm on its stance that its former CFO William Clifford will not be elected for a board seat, despite further pleas from shareholders.
Ahead of the company’s AGM later this month, Institutional Shareholder Services (ISS) submitted an independent report that supports the arguments raised by activist investor group HG Vora.
ISS is a proxy advisory firm, with HG Vora stating that the report has found a “clear case” for change in the PENN boardroom.
HG Vora has called for the appointment of all three of its nominees – Johnny Hartnett, Carlos Ruisanchez and Clifford – to the PENN board of directors.
HG Vora proposed the trio before PENN made the decision to reduce the number of board seats up for election from three to two, which prompted the New York-based investment company to file a lawsuit against the ESPN Bet operator.
PENN has publicly backed the appointments of both Hartnett and Ruisanchez, but is opposed to the prospect of Clifford, who previously served as the company’s CFO between 2001 and 2013, being added.
However, as part of its backing of HG Vora, the ISS report argued that under its current leadership, PENN’s performance has been “disappointing over all measurement periods”, failing to inspire the kind of returns expected from shareholders.
It also noted that the current board “lacks an adequate level of direct gaming industry experience”.
ISS wrote: “Hartnett and Ruisanchez seem to have fortuitously presented the board with a ready-made solution to a problem it was otherwise unprepared to address.
“The more important point is that the board requires additional direct gaming industry experience, which Clifford can impart. He also has experience at the company itself, as a member of senior management and recently as a consultant.
“[With respect to Clifford …], there is little evidence that the board has been able to hold management accountable, which suggests that a director who is not afraid to share a contrarian viewpoint may be a valuable addition. There does not appear to be an outcome that would make support unwarranted for Clifford at this meeting.”
Clifford previously made a bid for a seat on the PENN board back in 2020, but following interviews with senior figures within the PENN hierarchy, his skills “were not determined to be additive or complementary to the board”.
Just under six hours after HG Vora announced the findings from the ISS report, PENN issued its response, in which it claimed the independent proxy advisory firm provided an unrealistic view of Clifford’s candidacy.
“We remind shareholders that, during his time as PENN’s CFO, Mr Clifford advocated against key initiatives that were critical to succeeding in a competitive market,” the operator said.
“Following Mr Clifford’s departure in 2013 as PENN’s CFO, these changes were implemented under the publicly announced P30 programme and resulted in meaningful margin improvement.
“Further, during his interviews with PENN’s nominating and corporate governance committee, Mr Clifford demonstrated antiquated views of a rapidly changing industry, and the same posture of resistance to exploring value-generating solutions, which we believe would hinder constructive decision-making.”
The operator went on to shed light on its attempts to diffuse the situation with HG Vora, before noting it was forced to limit the level of influence the company could wield on its boardroom lineup.
“PENN attempted multiple resolutions with HG Vora, but all of our resolution attempts were rejected,” PENN noted.
“Given HG Vora’s violation of its institutional waivers by multiple state gaming regulators, our ability to allow HG Vora to influence the governance of the company beyond the evaluation of the nominees was expressly prohibited.”
The dispute between the two parties has been ongoing for weeks, with the back of last month seeing PENN accuse HG Vora of “false claims” after the investor released a 116-page presentation, titled Genuine Change is needed at PENN, which accused the board of failing shareholders and bemoaned how stock had underperformed.
The post PENN cites “antiquated views” as reason behind board candidate snub first appeared on EGR Intel.
ESPN Bet operator dismisses report from Institutional Shareholder Services that suggests the operator’s boardroom lacks “direct gaming industry experience” ahead of crucial AGM
The post PENN cites “antiquated views” as reason behind board candidate snub first appeared on EGR Intel.