Independent proxy advisory firm Glass Lewis has urged PENN Entertainment shareholders to vote for two board nominees in Johnny Hartnett and Carlos Ruisanchez ahead of the operator’s AGM next week.
Glass Lewis published a report outlining its reasons why shareholders should back Hartnett and Ruisanchez, who were nominated for the PENN board by activist investor group HG Vora.
HG Vora also put forward a third candidate, ex-PENN CFO William Clifford, who occupied the position with the operator between 2001 and 2013.
Following the three-person proposal, PENN opted to reduce the number of board seats up for election from three to two, a decision that was hastily met with a lawsuit from HG Vora against the ESPN Bet operator.
PENN has subsequently backed Hartnett and Ruisanchez, but is opposed to the idea of Clifford being added to the board, citing his “antiquated views of a rapidly changing industry” and the fact his skills are already represented within the current board lineup as the reason behind the rejection.
Glass Lewis, that provides corporate governance and voting recommendations to investors, released its report yesterday, 9 June. It outlined the advisory firm’s insights into the situation and concluded its support of PENN’s decision.
The report read: “Based on our review, we believe certain aspects of Clifford’s profile may overlap with existing or anticipated members of the board.
“The board’s assertion that his background is not sufficiently differentiated – and its unanimous decision not to support him despite backing two other dissident nominees – raises questions as to whether he would bring distinctive value at this time.”
Glass Lewis went on to quash any speculation that PENN acted unfairly in its review process of Clifford’s board credentials, adding: “We do not find sufficient evidence that the board acted in bad faith or with the primary purpose of entrenchment.
“The company did evaluate all three HG Vora nominees, including through interviews, and provided detailed rationale for its decisions.”
The report defended PENN’s intention to put just two board seats up for election at the AGM, scheduled to take place 17 June, and that barring any reversal of that decision, the firm concurred Clifford is ineligible for election.
“[PENN] made its board size and class size decision [for the 2025 Annual Meeting] in the context of an already full board with a retiring director,” Glass Lewis noted. “Moreover, the company’s rationale aligns with how the board has historically filled (or declined to fill) vacated seats. We do not find clear and compelling evidence that the board acted in bad faith.”
The report’s findings have been welcomed by PENN, which released a statement of its own in response.
The firm said: “We are pleased Glass Lewis recognises the board’s thorough review of all three of HG Vora’s nominees, our responsiveness to shareholder feedback regarding refreshment and the rigorous regulatory oversight of the gaming industry, in particular the restrictions imposed related to our engagement with HG Vora.
“Glass Lewis also acknowledges the strength and depth of the skills and experience our directors bring, in addition to our significant refreshment efforts.”
This development comes just three days after a separate report from Institutional Shareholder Services (ISS), another proxy advisory firm, conversely supported the arguments posed by HG Vora regarding Clifford’s appointment to the board.
ISS claimed that PENN’s board, in its current form, “lacks an adequate level of direct gaming industry experience”.
The report also talked up Clifford’s ability to raise counter arguments as something that could prove valuable to PENN’s board, as well as his prior experience at the operator.
“The more important point is that the board requires additional direct gaming industry experience, which Clifford can impart,” ISS argued. “He also has experience at the company itself, as a member of senior management and recently as a consultant.
PENN swiftly rebuffed that viewpoint, responding: “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.
“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.”
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Operator welcomes latest findings which support stance that ex-CFO William Clifford is ineligible for place on the board despite calls from activist investor group HG Vora
The post Advisory firm: There is a lack of evidence PENN “acted in bad faith” amid boardroom dispute first appeared on EGR Intel.