Penn Entertainment pushed back against some of the key arguments HG Vora made in a lengthy filing last week.
The two have been busy with proxy submissions leading up to the June 17 annual meeting. The current battle concerns the number of directors to be elected at the meeting, though HG Vora has been vocal about its disappointment in Penn’s online sports betting strategy and its ESPN Bet partnership since January.
Tuesday‘s filing from Penn hit back at claims concerning CEO Jay Snowden‘s compensation, usage of the company’s private jet and weaponizing regulators. It also reiterates the fact that both shareholders it is recommending for approval are directors nominated by HG Vora.
“We understand that claims of management enriching themselves with excessive compensation, personal use of corporate aircraft, or timely insider selling are attention-grabbing headlines; however, HG Vora’s claims are simply not based on the facts readily available in our public disclosure,” the Board of Directors said in a letter to shareholders that accompanied the filing.
Penn’s stock closed at $15.38 Tuesday, up 2% compared to Friday‘s close.
Penn: CEO pay toward bottom of peers
HG Vora claimed that Snowden has been paid “more than all but one of his peers” in its 116-page presentation filed last week. Page 74 included a graph that showed Snowden’s compensation at $25 million.
That is untrue, Penn said. The company explained that Snowden’s realizable pay represents only 45% of his reported compensation. That leaves him in the bottom 25% of Penn’s peer group, according to the data presented by Penn.
HG Vora also criticized insider share sales with a graph suggesting Snowden has sold more than $40 million in stock since he took over as Penn CEO in January 2020, a month before the Barstool relationship began.
The only shares Snowden has sold, according to Penn, have been to cover strike price and taxes on his options. Penn pointed out insiders have bought more than $5.7 million in shares on the open market since 2020, with $2.8 million bought by Snowden.
Jet allegations are uber-wrong
Penn also addressed the allegations of Snowden and CFO Felicia Hendrix using corporate aircraft as “their personal Uber service.”
HG Vora broke down flight information of the company’s two planes over five years. The top location is Reading, Pennsylvania, with 760 total flights to and from the airport down the road from Penn’s headquarters.
The next two top spots are Boston with 462 total flights and Teterboro, New Jersey, with 212 total flights. Those are the home airports for Snowden and Hendrix, respectively.
HG Vora made a mistake, Penn said, as it included flight hours when those planes were “leased by third parties.” Only 1.5% of total flight hours since 2020 were used for personal executive travel, Penn states.
Penn: no control over regulators
One of the main points by HG Vora concerning what the proxy battle is about is that Penn “sought to exploit regulatory oversight in an attempt to evade accountability” concerning the number of board seats available at the meeting.
That is not possible, Penn explained: “Despite HG Vora’s uninformed suggestions, gaming regulators exercise their authority to applicable statutes and regulations – not based on PENN’s suggestions.”
HG Vora suggested it could not “raise corporate governance matters” with Penn “due to restrictions recently imposed by a state gaming regulator.” It alleges Penn could have asked for regulatory intervention to allow that topic to be discussed as part of a settlement.
Penn noted that HG Vora wanted a board committee to “evaluate capital allocation and investment decisions,” proposing the committee “despite express prohibitions from regulators.”
Board experience broken down
Penn included information on all of its directors as well as a breakdown of how many directors hold skills Penn considers important for its board members.
Of 11 skills, including corporate governance, financial experience, industry experience and M&A, more than 50% of Penn directors have direct experience with 10 of them. The only one to fall below the majority was sales and marketing, with four of the eight directors holding that skill.
