Penn Entertainment says it rejected HG Vora Capital Management’s nomination of William Clifford for the board because, among other concerns, he advocated against modernising many of the company’s key processes while he was CFO.
The online and land-based gaming operator said its conclusion on Clifford is the same as five years ago, when it said he “did not possess the experience, skills or other characteristics necessary to make a positive contribution” to the board or company.
Clifford volunteered for a Penn board seat in 2020 but was rejected and, during his interview process, Penn said he “failed to demonstrate the base level of open-mindedness required of all directors in order to explore value-generating solutions.”
HG Vora, one of Penn’s largest shareholders with a 4.8 per cent stake, has commenced litigation against Penn for reducing the number of board seats available at its AGM from three to two – and for casting doubt on Clifford’s nomination by only accepting HG Vora’s nominations of Johnny Hartnett and Carlos Ruisanchez.
In a letter to shareholders, Penn insisted it “thoroughly interviewed” all three candidates and determined that the former two would bring “relevant expertise and experience in the gaming industry – across both digital and retail – and would be additive inside the boardroom.”
But it said Clifford, while he was chief financial officer at Penn National Gaming, advocated against the creation of a customer database and related loyalty program, the development of hotels and other amenities at properties and the adoption of standardised and centralised software, systems and shared services.
It noted that most of these aspects of the company’s operations were brought in under the leadership of Jay Snowden, formerly chief operating officer and now CEO and president of Penn.
Penn said the initiatives were “essential to driving meaningful margin improvement and are critical to success in today’s competitive market.”
HG Vora had strongly criticised Snowden’s leadership and M&A strategy in its own letter to shareholders.
Penn added: “Mr. Clifford lacks digital gaming and online sports betting experience – areas essential to the future of Penn’s business and the industry – and his general experience is redundant with the significant real estate and financial expertise already represented on our board.
“We offered HG Vora several reasonable proposals to reach a mutually agreeable resolution, and as noted above, ultimately determined that Mr. Hartnett and Mr. Ruisanchez would be value-additive to the Board.
“However, HG Vora quickly rejected every one of our proposals and never offered up a counter-proposal other than the appointment of all three of its nominees or a settlement involving the appointment of two of its nominees in addition to impermissible commitments around governance and strategic changes.”
