Clifford's Political Campaign Under Fire: Penn Issues Counterattack, Questions Candidate's Qualifications
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Published on June 7, 2025, 1:43 AM.
Last modified on June 7, 2025, 1:43 AM.
Todd Shriber @etfgodfatherRead MoreGambling BusinessMergers and Acquisitions Penn National Gaming responds to HG Vora's report endorsement for board candidates*
- ISS encourages shareholders to support HG Vora's director slate
- Penn explains reasons behind William Clifford's candidacy rejection
Friday, Penn National Gaming (NASDAQ: PENN), the parent company of ESPN Bet, reacted to a report released the same day by Institutional Shareholder Services (ISS) that recommended shareholders vote in favor of HG Vora's proposed board candidate slate.
ISS, a leading proxy advisory firm, expressed support for Johnny Hartnett and Carlos Ruisanchez, two of HG Vora's proposed candidates. However, Penn expressed its reasons for rejecting William Clifford's candidacy, reiterating that his opinions seemed outdated for the rapidly evolving industry.
In its response to the ISS report, Penn pointed out that Clifford, who had served as the company's CFO, was hesitant to change and when he left in 2013, the subsequent changes led to "improved margins."
"Outdated Views" for a Rapidly Changing Industry
Since Jay Snowden took over as CEO of Penn in January 2020, the company has aimed to transform itself from a regional casino operator into a tech-driven gaming giant. Failures in this transition are central to HG Vora's arguments for board seats, and it appears Clifford shares the hedge fund's perspective.
According to Penn's statement, Clifford demonstrated "antiquated views of a rapidly changing industry, and the same resistance to exploring value-generating solutions, which we believe would hinder constructive decision-making."
Vora has criticized Penn for reducing the number of director seats at the June 17 Annual Meeting from three to two, claiming this move undermines shareholder democracy. In its Friday statement, the casino operator reiterated that it had explored various options with the money manager, but these attempts didn't pan out.
"PENN made multiple attempts to find an amicable solution with HG Vora, but each was rejected. Given HG Vora’s violations of its institutional waivers by multiple state gaming regulators, our ability to let HG Vora influence the governance of the company beyond the evaluation of the nominees was explicitly prohibited," according to the press release.
Speedy Board Refresh
Following the Annual Meeting, 75% of Penn's directors, including Hartnett and Ruisanchez, will have joined the board since 2019. While this refutes any argument that the board is static, it might not appease HG Vora and other disgruntled investors.
Among HG Vora's key arguments for change at Penn is that the board has supported CEO Jay Snowden's online sports betting ambitions, allowing him to pursue a series of deals that some investors believe were financially reckless. ESPN Bet, Penn's latest sports betting venture, has yet to gain significant market share in the US.
Potentially further bolstering HG Vora's case is that although Penn's board has seen a noticeable refresh since 2019, Snowden took over as CEO at the start of 2020 and immediately focused on expanding the company's online sports betting business. HG Vora contends that since Penn's shares peaked in 2021, the stock has plummeted while the board approved hefty compensation packages for Snowden.
Insights:
- Key Issues: HG Vora's disagreements with Penn involve boardroom change, nominee qualifications, seat reduction, sports betting strategy, and proxy support.
- HG Vora's Demands: HG Vora desires more aggressive board oversight to deliver shareholder value, believing the current leadership is not meeting the mark.[3][5][2]
- PENN's Responses: PENN accommodates some demands but resists full capitulation, defending its governance decisions and strategic direction.[3][5][2]
- The financial sector, including sports betting businesses, may face challenges in promoting change when directors maintain outdated views in a rapidly evolving industry, as was the case with William Clifford.
- The financial implications of a company's business strategy, such as the expansion into online sports betting, have been a contentious point in the ongoing discussion between Penn National Gaming and the hedge fund HG Vora, with some investors voicing concerns over financial risk.
