ISS, Egan-Jones Back HG Vora’s Board Picks in PENN Proxy Fight, PENN Resists Clifford

Proxy Firms Take Sides

Institutional Shareholder Services (ISS) and Egan-Jones, leading proxy advisory firms, threw their weight behind HG Vora’s three nominees: William Clifford, Johnny Hartnett, and Carlos Ruisanchez, for PENN Entertainment’s board at the June 17 annual meeting.

Both firms urged shareholders to vote the GOLD proxy card, citing PENN’s “disappointing” performance. ISS slammed the board’s “misguided interactive strategy” and “ill-fated acquisitions,” like Barstool Sports, costing over $4.5 billion with scant returns. “There’s clearly a case for board change,” ISS stated, noting the board’s failure to hold management accountable.

HG Vora’s Case for Change

HG Vora, a New York activist investor and former top PENN shareholder, has targeted PENN’s board for weak governance and botched bets on online sports betting. Its nominees aim to inject gaming expertise. ISS praised Clifford’s 30-year industry track record, including CFO roles at Gaming and Leisure Properties, spun from PENN in 2013.

“Clifford could bring a contrarian perspective,” ISS said. Hartnett and Ruisanchez were lauded as a “ready-made solution” to PENN’s oversight gaps. Egan-Jones echoed ISS, citing PENN’s “worrisome” staggered board and 81% stock drop over four years.

PENN fired back, welcoming ISS’s nod for Hartnett and Ruisanchez, whom both sides nominated for two open board seats. “We’re open to accepting two of HG Vora’s nominees,” PENN said, noting 75% of its board joined since 2019. But PENN dug in against Clifford, arguing ISS misjudged his fit.

“Clifford advocated against key initiatives” as PENN’s CFO until 2013, the company claimed, and showed “antiquated views” in recent talks. PENN also flagged HG Vora’s regulatory violations, limiting its governance sway.

A Costly Digital Misstep

PENN’s online ventures, including buying Barstool for $551 million and theScore for $2 billion, plus a $2 billion ESPN Bet deal, fueled HG Vora’s ire.

Barstool was sold back to its founder for $1 in 2023, and analysts predict losses on theScore and ESPN Bet. ISS criticized PENN’s board for lacking gaming know-how, hampering oversight during the $4.5 billion spending spree, and doubling PENN’s $2.2 billion market cap.

Egan-Jones called for change after PENN’s “sour financials.” PENN’s 2024 interactive segment lost $202 million despite revenue growth.