Proxy Battle Heats Up: HG Vora’s Fight Against PENN’s Governance Tactics

The proxy contest between activist investor HG Vora Capital and gaming giant PENN Entertainment (PENN) has escalated, with Vora’s preliminary SEC filing revealing a high-stakes clash over corporate governance and shareholder rights. At the heart of the dispute is PENN’s abrupt decision to reduce its board size, a move Vora alleges is an unlawful ploy to block shareholder choice.

Background of the Dispute: A Last-Minute Power Play

In January 2025, HG Vora announced its intent to nominate three independent candidates for PENN’s 2025 annual meeting, targeting three Class II director seats. By April 15, PENN confirmed three seats would be contested—until April 25, when it unexpectedly cut the board size from nine to eight, eliminating one seat and reducing the number of contested seats to two.

Vora’s proxy statement calls this maneuver a “self-serving breach of fiduciary duty,” arguing it was timed to block shareholders from voting on a full slate of candidates. PENN’s prior missteps, including a 2024 violation of Pennsylvania election laws, add weight to Vora’s claim that the move lacks legitimate corporate purpose.

The Proxy Contest Dynamics: A Fight for Independence

Vora’s nominees—Johnny Hartnett (a gaming industry veteran), Carlos Ruisanchez (a former senior executive at Churchill Downs), and William Clifford (a former CEO of a publicly traded casino company)—are framed as critical to improving governance and strategy. The proxy materials emphasize their independence and expertise in an industry where PENN has struggled, particularly with its underperforming Interactive segment.

The proxy uses a “gold” universal proxy card, allowing shareholders to mix and match nominees. This contrasts with PENN’s “white” card, which restricts voting to its own candidates. Vora urges shareholders to use its card to ensure votes for all three nominees are counted if the board’s seat reduction is overturned.

Investors are watching closely: PENN’s stock has hovered around $30–$35 per share since early 2025, reflecting uncertainty. A successful Vora campaign could unlock value if its nominees push strategic reforms, such as cost-cutting or leadership changes.

Legal and Governance Concerns: A Pattern of Entrenchment?

Vora’s filing highlights PENN’s prior governance failures, including its 2024 violation of Pennsylvania’s law requiring shareholder votes on director elections. The firm argues that the board’s seat reduction—announced after Vora signaled its candidates could win—reflects a pattern of entrenchment.

The proxy statement also critiques PENN’s executive compensation structure, which it claims has misaligned incentives. For example, CEO Timothy Wilmott’s pay rose 15% in 2023 despite flat revenue growth, a point Vora says underscores the need for independent oversight.

Shareholder Voting Mechanics: The Stakes Are High

HG Vora and its affiliates own ~4.8% of PENN’s shares (7,250,000 shares), a significant but non-controlling stake. The proxy’s success hinges on convincing other shareholders to back its nominees. If the board’s seat reduction stands, votes for Clifford—the third nominee—will be discarded, leaving only Hartnett and Ruisanchez on the ballot.

Vora’s strategy is clear: frame the vote as a referendum on whether shareholders trust PENN’s leadership to address underperformance. The proxy stresses that even small changes, like adding independent voices, could shift the company’s trajectory.

Conclusion: A Crossroads for PENN’s Governance

The PENN-HG Vora proxy battle is a microcosm of broader corporate governance debates: Can shareholders force change in a company struggling to adapt, or will entrenched boards continue to prioritize stability over reform?

Vora’s 4.8% stake alone won’t win the vote, but it has positioned itself as a credible voice for change. If its nominees secure a majority of votes, it could catalyze shifts in strategy, such as scaling back underperforming digital initiatives or renegotiating executive pay.

Meanwhile, PENN’s stock—already down 20% from its 2023 highs—faces further downside if the market perceives the board’s seat reduction as a sign of weakness. Investors should watch not just the vote outcome, but the broader message: that shareholders demand accountability, even in a high-risk industry like gaming.

In the end, this isn’t just about board seats. It’s about whether PENN can prove it’s capable of turning its underwhelming performance around—or if outsiders need to shake things up. The answer could redefine the company’s future.