Penn shareholder HG Vora nominates three director candidates, citing “reckless spending”

HG Vora has charged Penn’s board of management with “reckless spending of nearly $4 billion” on M&A deals and media partnerships. The group called Penn’s interactive strategy an “abject failure” that has overpromised and not delivered in a statement released 29 January.

As a result, the firm, which holds a 4.8% shareholding in Penn, has nominated William J Clifford, Johnny Hartnett and Carlos Ruisanchez to Penn’s board of directors.

HG Vora’s three nominees

Hartnett is a former CEO of Superbet and has previously held director roles with Flutter’s Paddy Power Betfair business and Sportsbet. He also held other roles within the Flutter business, including as chief development officer during its acquisition of FanDuel.

Clifford is a former Penn National Gaming CFO, having held that position for 12 years up to 2013. Most recently, he has acted as a senior adviser for Gaming and Leisure Properties.

Carlos Ruisanchez is the co-founder of the hospitality group Sorelle Capital and Sorelle Hospitality. Ruisanchez was the CFO for Pinnacle Entertainment for five years up to 2018 and the founding of Sorelle. While at Pinnacle he was involved in its 2013 acquisition of Ameristar. Penn acquired Pinnacle in 2018 for $2.8 billion (£2.3 billion/€2.7 billion).

Penn annual meeting and financial losses

The nominees will be voted on at Penn’s 2025 annual meeting, which has not yet been scheduled. Shareholders do not need to take early action on the nominees.

The founder and portfolio manager of HG Vora, Parag Vora, said about Penn in a statement: “To date, there have been no repercussions for the board’s persistent bad judgement and disappointing shareholder returns.

“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.”

Penn’s most recently reported results for its Q3 2024 saw the group post a net loss of $36.7 million. However, year-on-year this was significantly lower than its Q3 2023 loss of $724 million that was attributed to Penn’s divestiture of the Barstool brand back to its founder Dave Portnoy for $1.

The group posted revenue for Q3 2024 of $1.63 billion, up from $1.61 billion year-on-year.

In the nine months ending 30 September, Penn reported revenue of $4.9 billion, down year-on-year from $4.96bn. The group posted a net loss for the nine-month period of $178.2m, an increase from the previous period’s loss of $131.9m.

Penn will report its full-year results on 27 February.

Penn entered into a $1.5 billion partnership with Disney-owned ESPN to create ESPN Bet in 2023. ESPN Bet went live in Washington DC in January, taking its current market access to 20 states in the US.

In a statement issued by Penn’s board of directors, it said it was “committed to creating long-term value for all shareholders” and that it would review HG Vora’s proposed director nominees, presenting its “formal recommendation” on the election of directors in its filings to the US Securities and Exchange Commission ahead of its 2025 annual meeting.