Vora Blasts Penn After Company Cuts Number of Director Nominations
The ongoing dispute between HG Vora and Penn Entertainment (NASDAQ: PENN) took a new twist on Monday as the hedge fund claimed the regional casino operator may have breached investor voting rights by cutting the number of Vora-supported candidates for board nomination from three to two.
Last Friday, the gaming firm announced to investors that it will propose two of Vora’s preferred nominees — Johnny Hartnett and Carlos Ruisanchez — for its board of directors. William Clifford, who was among the trio Vora nominated in January, was not included in the group. Penn’s choice to not allow Clifford to stand for a vote is intriguing, especially when taking his history into account. He was formerly an executive at Penn and held senior positions at Pinnacle Entertainment, which Penn purchased seven years ago.
The money manager is aware of this and stated it will proceed with a plan to present all three candidates for nomination to the Penn board.
"Just ten days prior, the Board expressed an entirely different intention, to nominate three different candidates,” according to a statement issued by the investor. “Because it is unclear if the Company’s stated intention on Friday will persist, HG Vora will nominate its three candidates and solicit votes on their behalf.”
Vora stated that on April 15, it received written notification from Penn about holding an election for three board positions at the forthcoming annual meeting.
Vora Unafraid to Challenge Penn Director Slate
Following its stake acquisition in Penn in December, Vora claimed that the structure of the gaming company's board broke Pennsylvania corporate law. The money manager stated today that the issue was resolved only after the deadline for nominating new directors had elapsed. Vora mentioned that Penn is removing investors' rights.
“HG Vora believes the Board’s self-serving action, taken in the face of the prospect of losing three Board seats, had no legitimate corporate purpose and deprives shareholders of their fundamental right to elect directors of their choosing,” according to the press release.
The investor — among Penn’s largest — has repeatedly indicated its readiness to initiate a proxy fight against the gaming firm to present all three of its candidates to shareholders. Vora is fulfilling that promise, stating today that it has submitted proxy battle documents to the Securities and Exchange Commission (SEC).
“On the morning of April 25, 2025, representatives of PENN and HG Vora discussed how best to fill the three available Board seats,” the shareholder said in the statement. “HG Vora’s representative reiterated HG Vora’s belief that all three of its candidates would be successfully elected to the Board by PENN’s shareholders if the proxy contest went to a final vote. Later that same day, PENN’s Board announced the extraordinary action, in the midst of the proxy contest, of reducing the number of Board seats to be filled at the Annual Meeting.”
Penn Encounters Clifford Dilemma
In stating it would permit Hartnett and Ruisanchez to be nominated to the board, Penn emphasized that it had not finalized an agreement with Vora, but mentioned it "continues to concentrate on achieving the substantial value creation potential throughout the business" and aims to prevent a proxy battle.
It seems that the gaming company has welcomed the proxy battle it was cautioned about and could struggle to succeed in. When it comes to generating shareholder value, it is challenging to claim that bringing Clifford onto the board would obstruct that aim, and it could be even tougher to persuade other investors that he is an obstacle to that purpose.
“Clifford, would be a valuable addition to the Board of PENN,” notes Vora. “Rather than continuing to waste shareholder capital and corporate resources on entrenching the Board in the name of ‘activism defense,’ PENN should welcome Mr. Clifford to the Board and work with its financial advisors to consider all options to maximize shareholder value.”
