Lawsuit Filed by HG Vora Against Penn Entertainment Over Restrictions on Board Elections
HG Vora Capital Management is taking Penn Entertainment to court over its decision to slash the number of board seats available for election at the 2025 Annual Meeting, shifting from three seats down to two. This move, according to HG Vora, curtails shareholder power to introduce fresh, independent voices on the board.
The lawsuit doesn't stop at criticizing the reduced seat count. It also accuses Penn of violating federal securities laws by not complying with the universal proxy rules and disseminating misleading materials to the Securities and Exchange Commission (SEC). Specifically, HG Vora claims that Penn failed to treat all board nominees equally, as required by the SEC.
In response, HG Vora wants the court to halt Penn from limiting the election and allow its three nominated candidates - William J. Clifford, Johnny Hartnett, and Carlos Ruisanchez - to participate in the vote.
This legal action follows Penn's confirmation of only two board nominations, both with connections to HG Vora. The resulting standoff between the shareholder group and the company could set the stage for a proxy battle.
In its filing, HG Vora accused Penn's board of protecting its own leadership at the expense of shareholder influence. They argue that opening the board to more independent oversight would benefit shareholders and strengthen the company's governance practices.
If HG Vora prevails, Penn may need to reinstate the seat, produce corrected proxy materials, reschedule the Annual Meeting, and potentially pay damages.
- Despite the limitations set by Penn Entertainment, HG Vora Capital Management intends to restore shareholder power by seeking the court's intervention to allow the election of its three nominated shareholders, William J. Clifford, Johnny Hartnett, and Carlos Ruisanchez, in Pennsylvania.
- The finance sector in Pennsylvania could be impacted if Penn Entertainment is found to have violated federal securities laws, as HG Vora Capital Management alleges, by not treating all board nominees equally and disseminating misleading materials to the Securities and Exchange Commission (SEC).
- To avoid potential damages and strengthen its governance practices, Penn Entertainment may need to restore the seat cut from the 2025 Annual Meeting, produce corrected proxy materials, reschedule the meeting, and invite more independent voices onto the board, as suggested by HG Vora Capital Management.
