Penn caves, partially
Penn appoints two of three new directors put forward by activist
Penn Entertainment announces two new board appointments.
Johnny Hartnett and Carlos Ruisanchez selected following discussions with HG Vora.
But the company suggests HG Vora might still be aiming at an AGM vote for a third board seat.
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Partial victory
Two out of three ain’t bad: Penn Entertainment has announced it intends to nominate Johnny Hartnett and Carlos Ruisanchez to its board after discussions with activist investor HG Vora.
At the same time, Ron Naples has retired from the board with immediate effect.
Meanwhile, Barbara Shattuck Kohn and Saul Reibstein have notified the company that they will not stand for reelection at the 2025 Annual Meeting of Shareholders.
The Board now comprises eight directors, seven of whom are independent.
I think you forgot something: Recall, In January HG Vora put forward three nominations for the board as part of its attempt to influence strategy at the company. They included Harnett, Ruisanchez and William Clifford, who was previously CFO at Gaming & Leisure Properties.
Hartnet is currently non-executive director at Superbet and previously was CEO.
Ruisanchez is co-founder of Sorelle Capital and previously CFO at Pinnacle Entertainment.
This ain’t over: However, the Penn statement would suggest that HG Vora, which owns ~5% of the firm, is still willing to put its third candidate to a vote in the upcoming AGM in June.
The accompanying statement said “while we were unable to reach an agreement with HG Vora, we thank them for their input and look forward to continued engagement with all of our shareholders.”
Casting aspersions: The activist investor has been a significant shareholder in Penn since the tail end of 2023. It has been publicly critical of the management team and its strategy, particularly with regard to its online missteps.
These include the Barstool Sportsbook misadventure and now the faltering progress with ESPN Bet.
New position: In the statement accompanying the news, Penn said it looked forward to "benefitting" from Hartnett and Ruisanchez’s “fresh perspectives as we enter into a critical phase for the business.”
It added that the board "continues to believe there is significant opportunity for value creation,” particularly within the interactive business.
It noted that both Hartnett and Ruisanchez bring “critical expertise and experience” across both digital and retail.
Counting down: Penn will report its Q1 earnings on May 8 when it will be under pressure to show signs of progress with ESPN Bet.
Following comments during the Q4 earnings call that hinted at the potential exit strategy, analysts suggested the company might be willing to “walk away” when the three-year break clause comes into operation in 2026.
Abject lesson: Parag Vora, founder at the eponymous firm, said previously that Penn’s online strategy had “abject failure due to a pattern of overpaying, overpromising and not delivering.”
He said the board had, to date, suffered “no repercussions” for its “persistent bad judgment 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.”
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Share price
Booster shot: The Penn share price was up 6% today, helped by a late flurry. It is down 18.5% YTD.
Upcoming earnings
Apr 28: BetMGM
Apr 29: Betsson, Caesars Entertainment, NorthStar Gaming, Entain
Apr 30: Kambi, MGM Resorts, Rush Street, Robinhood
May 1: VICI Properties, Northstar Gaming