PENN Entertainment has confirmed the appointments of Johnny Hartnett and Carlos Ruisanchez to its board of directors, following the operator’s AGM today, 17 June.
Both candidates earned sufficient shareholder votes to become the board’s newest additions following a nomination process that has been marred by controversy amid PENN’s public spat with shareholder HG Vora.
The activist investor group originally nominated three candidates to occupy seats on the PENN board and, while Hartnett and Ruisanchez received unanimous backing from both the investor group and the operator, HG Vora’s third nominee, William Clifford, divided opinion.
PENN has outlined its reasons behind its opposition to its former CFO joining the board, claiming that Clifford’s “antiquated views” on the industry, exhibited during interviews with PENN’s nominating and corporate governance committee, as well as his skillset already being represented, played a key role in the company’s stance.
HG Vora previously accused PENN of breaching its fiduciary duties after the ESPN Bet operator reduced the number of board seats up for election from three to two when it became public that Clifford had been put forward as a nominee, rendering him ineligible for selection and prompting the New York-based investor group to file a lawsuit against PENN, although the case has subsequently been dropped.
The update from today’s AGM confirmed that Clifford will not be given a seat on PENN’s board, though the operator has not ruled out further dialogue with shareholders over the lineup of its board.
PENN released a statement announcing Hartnett and Ruisanchez’s board seats that read: “We are pleased to welcome Johnny and Carlos, both of whom bring highly relevant experience in digital and retail gaming to the board.
“Over the past several months, we have continued to engage with our shareholders, and we look forward to incorporating feedback from those conversations as we move ahead.
“It is clear from this engagement that PENN’s board, management team and shareholders are aligned in their focus on ensuring PENN is achieving its full potential. The board remains committed to the close oversight of our differentiated omnichannel strategy and to delivering sustainable long-term value.”
The operator continued, outlining the next steps in its growth ambition plans, noting: “We recognise there is more work to be done, and we are intently focused on driving profitability in our interactive segment and growth across the business as we continue strengthening the company’s balance sheet and liquidity position, deleveraging and accelerating capital return to shareholders.
“We look forward to further dialogue with our shareholders about our board’s composition and skillset evolution, as well as PENN’s executive compensation programme and strategic priorities, to ensure alignment with our shareholders.”
HG Vora also issued a statement on the outcome of the AGM, citing that more than half of the votes cast were done so via the group’s GOLD proxy card, rather than PENN’s white card that included just Hartnett and Ruisanchez, suggesting there may have been a majority support for Clifford to join the board.
The investment company stated PENN refused to recognise Clifford as a fully fledged candidate to the board, despite the support of “dozens of institutional investors”.
Parag Vora, HG Vora founder and portfolio manager, stated: “PENN’s shareholders have voted overwhelmingly for genuine change, including for the election of William Clifford to the board.
“There can be no mistake about the mandate from PENN’s shareholders that the status quo is simply unacceptable. We are grateful for the strong support the three independent nominees have each received from shareholders and are confident that Johnny and Carlos will work constructively with their fellow directors to drive shareholder value.”
PENN has been contacted by EGR for further comment in response.
In the days leading up to the AGM vote, two independent advisory firms published contrasting reports on whether PENN’s board would be strengthened by the addition of Clifford, who served as the firm’s CFO between 2001 and 2013.
Glass Lewis’ report encouraged shareholders to vote for Hartnett and Ruisanchez while supporting PENN’s viewpoint that questioned whether Clifford would “bring distinctive value” to the board.
Conversely, a separate report from Institutional Shareholder Services (ISS) backed HG Vora’s assessment, stating PENN’s board in its current form “lacks an adequate level of direct gaming industry experience” and noting Clifford’s ability to raise counter arguments as something that could prove valuable to the board.
In late May, HG Vora published a 116-page presentation, titled ‘Genuine Change is needed at PENN’, in which it blamed the board for failing shareholders and bemoaned how company stock had underperformed.
The operator swiftly responded, accusing HG Vora of making false clams, just weeks after PENN had argued its shareholder of making “value-destructive demands”.
EGR has contacted HG Vora for further comment.
The post PENN confirms two new board members after AGM vote despite HG Vora dispute first appeared on EGR Intel.
ESPN Bet operator has been accused of failing to properly acknowledge the nomination of former CFO William Clifford to its board, as war of words with investment company continues
The post PENN confirms two new board members after AGM vote despite HG Vora dispute first appeared on EGR Intel.