HG Vora has written a damning open letter to the shareholders of PENN Entertainment, criticising the direction of the operator under its existing senior leadership team.
The investment firm is one of PENN Entertainment’s largest shareholders, currently holding 4.8% of the operator’s outstanding shares.
The firm has filed its definitive proxy statement with the Securities and Exchange Commission (SEC), in connection with its nomination of candidates for election to the PENN board of directors.
Earlier this month, HG Vora filed a lawsuit against PENN and its board after the investor’s third board candidate was denied the opportunity to stand for election.
The election is due to take place at the operator’s annual shareholder meeting on 17 June, 2025.
Along with the proxy statement, HG Vora’s letter to PENN shareholders claimed the decisions made by senior leaders have reduced the value of the company.
The letter read: “PENN’s stock has underperformed those of its publicly traded gaming peers over the last two, three, four, five, six, seven, eight, nine and 10 years, and during the tenure of the company’s CEO and most of the independent directors.
“In our view, this is the direct result of an unsuccessful strategic shift that has been plagued by value-destructive deal-making, reckless capital allocation and poor execution.
“We believe PENN trades at a discount to its intrinsic value because its management team and board of directors have lost credibility and investors fear further value-destructive decisions.”
The letter went on to claim that the board was unwilling to take responsibility for its failures despite “severe and objective underperformance”.
HG Vora also shared severe criticism for PENN’s decision to lower the number of directors up for election at the upcoming annual shareholders meeting.
“Perhaps the most brazen act of entrenchment was the board’s last-minute move to reduce the number of directors up for election at the 2025 Annual Meeting of Shareholders from three to two, after we had properly nominated three director candidates,” the letter continued.
“The board did so just 10 days after declaring to us there were three seats up for election. We believe this desperate manoeuvre not only deprives shareholders of their fundamental right to elect directors of their choosing but is also a violation of law and a breach of the board’s fiduciary duties.
“We believe shareholders should not tolerate such a manipulation of the electoral process, nor should they continue to accept PENN’s dismal performance. Shareholders deserve a board that welcomes their input, is dedicated to serving their interests, is committed to holding management accountable and is open to all avenues for maximising value.”
The letter also called out PENN president and CEO Jay Snowden and board chair David Handler for their roles in shaping the company’s direction.
HG Vora cited the $4.3bn worth of shareholder capital spent by the operator since 2020, which it claimed had led to “several value-destructive acquisitions and partnerships”.
The investment firm said: “Under the leadership of its president and CEO, Jay Snowden, and board chair, David Handler, PENN has been pursuing a misguided transformation from a best-in-class regional casino operator to a sports, media and technology conglomerate.
“Unfortunately, this transformation has been characterised by massively overpaying for acquisitions and poor execution.
“Under the oversight of the board and Mr Handler – who purports to be an expert in gaming and technology M&A – PENN has executed a string of transactions that, in our view, stand among the worst in the industry’s history.
“PENN paid more than $2bn for Score Media and Gaming, a small Canadian company that was generating less than $25m in annual revenue, and more than $500m for Barstool Sports, whose controversial brand and outspoken founder reportedly threatened PENN’s relationships with its gaming regulators, putting the entire PENN franchise at risk.
“PENN has also committed to paying Disney more than $2bn for the right to the ESPN Bet trademark for 10 years, a sum that Disney’s CEO noted was substantially more than other suitors were willing to pay. Despite this prolific spending, we believe that PENN’s online sports betting strategy has failed.”
The firm also questioned the “tone-deaf” remuneration given to Snowden, given the perceived failures of the company that it highlighted.
“Even as the company’s fundamental performance has deteriorated, management’s attempt to build a digital business has floundered, and most shareholders have seen the value of their investment decline substantially, PENN’s executives – especially Mr Snowden – have been lavishly rewarded by the board,” HG Vora continued.
“While PENN’s market value has declined by approximately $11bn since the beginning of 2021, Mr Snowden has been paid more than $120m. Despite PENN’s abysmal track record during his tenure, Mr Snowden is now the second highest-paid CEO among his peers after the company rewarded him with a greater than 70% increase to his target compensation in 2024.
“This increase in target compensation is particularly tone-deaf, in our view, given the fact that PENN’s stock price declined for the third consecutive year in 2023, underperforming the company’s publicly traded gaming peers by nearly 30 percentage points.”
The letter concluded by highlighting the importance of the upcoming board of directors election with regard to steering PENN in the right direction.
HG Vora urged shareholders to strongly consider the three candidates it intends to put forward – William Clifford, Johnny Hartnett and Carlos Ruisanchez – “who are independent of both the company [PENN] and HG Vora”.
“This election is about more than improving the board’s composition; it is about catalysing meaningful change at PENN. It is imperative that shareholders send a clear and unambiguous message that continued ineffective leadership, lack of accountability and entrenching actions will no longer be tolerated,” the letter stated.
“We strongly urge shareholders to vote the gold proxy card for the election of each of the three HG Vora-nominated candidates.
“By voting HG Vora’s gold proxy card – and not the company’s proxy card – you can convey that the status quo is no longer acceptable, and that it is time for genuine change. Join us in voting for accountability, fresh thinking and a better future for PENN.”
EGR has contacted PENN for comment.
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Activist investor criticises CEO Jay Snowden’s “tone-deaf” compensation, “failed” sports betting strategy and M&A deals, which stand among the “worst in the industry’s history”
The post HG Vora rips into PENN’s strategy and leadership in scathing open letter first appeared on EGR Intel.