Special Committee Says PENN Board Acted “In Good Faith” in HG Vora Board-Seat Dispute

PENN Entertainment has received a significant boost in its legal fight with activist investor HG Vora after an independent Special Litigation Committee (SLC) investigation concluded that the board acted “in good faith” when it reduced the company’s director slate earlier this year.

The findings, filed on November 26 in the U.S. District Court for the Eastern District of Pennsylvania, address the central claim in HG Vora’s lawsuit: that PENN’s board breached its fiduciary duties by shrinking the number of Class II director seats from three to two.

That move limited HG Vora to securing two board positions at the June 17 shareholder meeting, where its nominees Johnny Hartnett and Carlos Ruisanchez were elected.

Special Committee Says Board Acted Properly

According to the filing, the SLC determined “that the Board acted on an informed basis, in good faith and for the best interests of PENN in the exercise of its business judgment in its decision to reduce the overall size of the Board from nine to eight.”

The committee also concluded that “it would not be in the best interests of PENN to pursue the HG Vora derivative claims or take other action,” after reviewing “the shareholder claims, allegations, factual materials and legal authority.”

The SLC consisted of two independent, non-director members, supported by outside counsel. Under Pennsylvania law, the committee was empowered to evaluate the derivative claims thrust into federal court earlier this year.

How the Dispute Escalated Through 2025

The SLC’s findings are the latest chapter in the nearly year-long dispute between the two parties. In February, HG Vora launched a proxy battle, accusing PENN of strategic missteps and demanding a board change.

In May, the activist investor intensified its campaign. On May 7, it filed a lawsuit, alleging that PENN’s board had manipulated the director slate to limit shareholder choice. Shortly after, it created a website and published a 116-page presentation arguing for strategic changes at PENN.

At the June 17 annual meeting, shareholders elected two of HG Vora’s nominees — Johnny Hartnett and Carlos Ruisanchez. Meanwhile, the fund’s third nominee was unable to stand for election due to PENN’s reduction in the number of seats.

After the shareholder vote, the litigation phase began. In July, a federal judge denied HG Vora’s request for an expedited trial. The ruling resulted in the appointment of the SLC, setting the stage for the findings filed this week.

What the SLC Report Means — and What Happens Next

The SLC’s findings strengthen PENN’s legal position in the lawsuit. Courts often side with special committees that demonstrate independence and a thorough review process.

The committee’s finding that the board acted “in good faith” gives PENN a strong defense against HG Vora’s allegations. If the court accepts the SLC’s report, PENN could move to dismiss or substantially narrow the derivative claims that form the core of HG Vora’s lawsuit.

HG Vora can challenge the committee’s methodology or independence, which could prolong the case. But for now, the SLC report is the most significant development since the annual meeting. It could bring PENN a step closer to resolving the nearly year-long proxy battle.