PENN Entertainment elects directors Johnny Hartnett and Carlos Ruisanchez to its board

PENN Entertainment announced shareholders elected Johnny Hartnett and Carlos Ruisanchez to its Board of Directors at the company’s annual meeting on Tuesday, while tensions escalated with activist investor HG Vora over a third board nominee.

The elections follow backing from proxy advisory firm Glass Lewis, which said Hartnett and Ruisanchez would “likely enhance board oversight of PENN’s capital allocation and digital strategy.” Both nominees were supported by PENN but also appeared on HG Vora’s proxy card.

However, PENN rejected HG Vora’s third nominee, William Clifford, despite HG Vora claiming he received a majority of shareholder votes. PENN had reduced the size of its board to eight members, effectively eliminating the possibility of a third seat.

“We are pleased to welcome Johnny and Carlos, both of whom bring highly relevant experience in digital and retail gaming to the Board,” the PENN board said in a statement. “The Board remains committed to the close oversight of our differentiated omni-channel strategy and to delivering sustainable long-term value.”

HG Vora, PENN’s third-largest shareholder, said Clifford’s exclusion was contrary to shareholder will. “PENN’s shareholders have voted overwhelmingly for genuine change, including for the election of William Clifford to the board,” said founder Parag Vora. “There can be no mistake about the mandate from PENN’s shareholders that the status quo is simply unacceptable.”

The investor noted that 55% of all votes were cast using its gold proxy card, which included all three of its nominees. PENN, for its part, had informed shareholders in May that votes for Hartnett and Ruisanchez would be counted regardless of whether they were submitted via its own white proxy card or HG Vora’s.

Proxy firm Glass Lewis supported PENN’s stance, stating: “We do not find sufficient evidence that the board acted in bad faith or with the primary purpose of entrenchment.” It also noted that Clifford’s background “may overlap with existing or anticipated members of the board," with the board asserting that his background is not sufficiently differentiated.

Concurrently, the boardroom dispute has spilled over into court. HG Vora has filed suit in the Eastern District of Pennsylvania, alleging that PENN unlawfully removed a board seat without shareholder notification. The firm is seeking expedited proceedings, while PENN has moved to stay the case.

The showdown highlights mounting tensions over PENN’s strategic direction and leadership, particularly regarding its digital investments, including ESPN Bet and theScore Bet. While PENN maintains confidence in its digital growth, HG Vora has accused the company of making “value-destructive” decisions.

Final voting results will be disclosed in a Form 8-K filing with the U.S. Securities and Exchange Commission in the coming days.