Proxy Battle Heats Up: HG Vora’s Fight for PENN Entertainment Board Seats

The proxy fight between activist investor HG Vora Capital Management and PENN Entertainment, Inc. (NASDAQ: PENN) has escalated into a high-stakes showdown over corporate governance, executive accountability, and shareholder value. At the heart of the dispute is HG Vora’s push to secure three board seats to address what it calls “poor judgment, failed transactions, and value-destructive actions” by PENN’s leadership. With the annual shareholder meeting looming on June 17, 2025, investors are faced with a critical decision: back the status quo or vote for a governance overhaul.

The Catalyst: A Seat Reduction and a Legal Firestorm

The conflict began in April 2025 when PENN’s board abruptly reduced the number of director seats up for election at its annual meeting from three to two—a move HG Vora decried as a “breach of fiduciary duties and violation of law.” PENN’s decision came hours after discussions with HG Vora about nominating three candidates, including William Clifford, a former CFO of Penn National Gaming. By shrinking the slate, PENN effectively blocked Clifford’s candidacy, a move HG Vora calls a “desperate attempt to avoid accountability.”

The proxy fight is not without precedent. In 2024, PENN violated Pennsylvania state gaming laws by initially listing too few directors up for election, a mistake it only corrected after the shareholder nomination deadline had passed. This history of regulatory missteps fuels HG Vora’s argument that PENN’s governance is fundamentally flawed.

The Nominees and the Numbers

HG Vora has nominated three candidates:
1. Johnny Hartnett: A seasoned gaming executive with experience in operations and capital allocation.
2. Carlos Ruisanchez: A finance expert with a background in mergers and acquisitions.
3. William Clifford: A former CFO of Penn National Gaming, highlighted by HG Vora as critical to addressing PENN’s “value-destructive” financial decisions.

PENN, however, has only “intended” to nominate Hartnett and Ruisanchez, excluding Clifford. HG Vora rejects this compromise, arguing that Clifford’s expertise in corporate finance is essential to turn around PENN’s struggling stock price.

Why This Matters for Shareholders

PENN’s stock has underperformed for four consecutive years, dropping 19% year-to-date through April 2025. HG Vora attributes this to mismanagement, including $4 billion spent on online betting ventures like ESPN Bet, which have yet to deliver returns. Meanwhile, CEO Jay Snowden’s 2024 compensation soared to $26.7 million—a 72% increase from 2023—despite the stock’s poor performance.

The proxy fight is also about regulatory compliance. PENN’s leadership faces scrutiny over its adherence to gaming laws, particularly after state regulators revoked HG Vora’s institutional investor waivers in 2024 due to its active governance role. HG Vora reduced its voting stake to 4.8% in January 2025 to comply with regulations, but this hasn’t deterred its push for change.

PENN’s Counterarguments: Legal Barriers or Excuses?

PENN claims it cannot accommodate HG Vora’s demands without violating state gaming regulations. For instance, agreeing to public commitments on capital allocation or governance changes could breach rules governing corporate governance and advisor involvement. PENN also insists it offered to immediately appoint Hartnett and Ruisanchez on April 24, 2025, but HG Vora refused, demanding all three nominees or broader strategic concessions.

Critics argue PENN’s legal arguments are a smokescreen. The company’s 2024 regulatory violation—corrected only after the nomination deadline—suggests a pattern of governance failures. Additionally, PENN’s refusal to engage on Clifford’s nomination, despite his relevant experience, raises questions about its willingness to address structural issues.

The Universal Proxy Card: A Game-Changer?

HG Vora is using a “gold universal proxy card” to allow shareholders to mix votes between its nominees and PENN’s slate. This tactic could amplify support for the activist’s candidates, as shareholders are no longer forced to choose entirely one slate or the other. PENN, however, has historically opposed universal proxies, calling them “unnecessary” and “costly.”

What’s at Stake for Investors?

The June 17 shareholder meeting will determine PENN’s future:
- Scenario 1 (HG Vora Wins): A board with three new members could push for strategic changes, such as cutting excessive executive pay, halting underperforming investments, and prioritizing shareholder returns. This could catalyze a rebound in PENN’s stock, currently trading at multi-year lows.
- Scenario 2 (PENN Retains Control): The status quo would likely persist, risking further declines in shareholder value. PENN’s management has already rejected HG Vora’s calls for a 50% share buyback and a board committee on capital allocation—a stance that may deter long-term investors.

Conclusion: Vote for Change or Risk Irrelevance

The data is unequivocal: PENN’s stock has underperformed, its governance history is marred by regulatory violations, and its leadership has failed to align compensation with shareholder returns. HG Vora’s nominees bring expertise in finance, operations, and strategic oversight—critical skills for turning PENN around.

While PENN’s legal arguments merit consideration, its actions (e.g., reducing seats mid-contest) and history (e.g., 2024 regulatory breach) suggest a pattern of entrenchment. Investors who value accountability and strategic clarity should heed HG Vora’s call for a governance overhaul. The June vote isn’t just about board seats—it’s about whether PENN will evolve or remain stuck in a cycle of underperformance.

As the proxy fight nears its climax, shareholders must decide: support a path to recovery or risk being left behind in a gaming sector that demands agility and transparency.