On February 22, 2026, PENN Entertainment (NYSE: PENN) finally signaled a cessation of hostilities, or at least a near-term truce, with activist heavyweight HG Vora Capital Management. In a sweeping cooperation agreement, PENN will expand its board to 11 members, adding three independent directors: Heather Ace, Jeffrey Fox, and Fabio Schiavolin.
Crucially for PENN, this deal kills the high-profile federal litigation HG Vora filed following the 2025 proxy contest. In exchange for the seats and a “Class II” seat-count guarantee through 2028, HG Vora has dropped its claims with prejudice and entered a strict standstill.
Investors should see this as a court-ordered surrender that keeps the pressure on PENN’s management.
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| Boardroom Alpha |
From the Ballot Box to the Courtroom
To understand this deal, you have to look back at the June 2025 Annual Meeting. In a closely watched activist battle, HG Vora successfully ran a “short slate” and seated two directors (Johnny Hartnett and Carlos Ruisanchez) against the board’s wishes.
In a controversial defensive move, PENN’s board attempted to “gate” HG Vora’s influence by shrinking the board size from nine to eight just before the vote—a maneuver that triggered a scathing federal lawsuit from the activist. For the last eight months, PENN has been fighting a losing battle in discovery (and in the market as its stock price continues to sag). By handing over three more seats today, PENN is essentially “paying the ransom” to stop a second proxy fight in 2026 and to bury the legal discovery that threatened to expose internal board tensions.
The “Tech Audit” Begins
While the legal peace is the headline, the composition of the new directors tells the real story. The appointment of Jeff Fox—a veteran of tech-heavy turnarounds—is a direct shot across the bow of PENN’s ESPN Bet strategy.
The market’s primary grievance has been the lack of transparency and ROI on PENN’s massive digital migration. By seating Fox and the other new directors, HG Vora now has the “inside track” to audit the interactive segment’s spend. This agreement essentially places PENN in a box. The management team still runs the company, but every dollar spent on customer acquisition for ESPN Bet will now face a grueling internal review from a faction that didn’t hire them.
Investor Take Away
The “Restricted Period” buys CEO Jay Snowden and the board a three-year runway, but it is a narrow one. The standstill remains in effect until 45 days before the 2028 nomination deadline—unless a third party makes a play for the company.
Despite the voting agreement, the “ISS/Glass Lewis” escape hatch will keep the pressure on PENN. If the proxy advisors turn on the board’s operational performance, HG Vora is allowed to vote against the incumbent directors.
PENN has avoided a 2026 proxy fight, but they have invited the “enemy” inside the tent. If the stock continues to lag peers, expect these new directors to be the ones quietly leaking that a sale of the Interactive Division or a whole-company merger is the only way out.