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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.  )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
PENN NATIONAL GAMING, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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825 Berkshire Boulevard, Suite 200
Wyomissing, Pennsylvania 19610
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 10, 2020
NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of Shareholders (the “Annual Meeting”) of Penn National Gaming, Inc. (the “Company”), a Pennsylvania corporation, will be held on Wednesday, June 10, 2020, at 10:00 a.m. Eastern time. This year, due to the ongoing public health impact of the coronavirus (COVID-19) pandemic, the Annual Meeting will be online and a completely virtual meeting of shareholders. You may attend, vote and submit questions during the Annual Meeting via the live audio webcast on the Internet at www.virtualshareholdermeeting.com/PENN2020. You will not be able to attend the Annual Meeting in person nor will there be any physical location.
Only shareholders of record at the close of business on April 6, 2020 are entitled to notice of, and to vote at, the Annual Meeting and any postponement or adjournment thereof. We are committed to ensuring our shareholders have the same rights and opportunities to participate in the Annual Meeting as if it had been held in a physical location. As further described in the proxy materials for the Annual Meeting, you are entitled to attend the Annual Meeting via the live audio webcast on the Internet at www.virtualshareholdermeeting.com/PENN2020. While we encourage you to vote in advance of the Annual Meeting, you may also vote and submit questions relating to meeting matters during the Annual Meeting (subject to time restrictions). You may vote by telephone, Internet or mail prior to the Annual Meeting.
To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/PENN2020, you must enter the 16-digit control number found next to the box with the arrow included on your Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on June 10, 2020 (the “Notice”) or proxy card (if you receive a printed copy of the proxy materials).
The Annual Meeting will be held for the following purposes:
1.
To elect two Class III directors to serve until the 2023 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified;
2.
To ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the 2020 fiscal year;
3.
To hold an advisory vote to approve the compensation paid to the Company’s named executive officers; and
4.
To consider and transact such other business as may properly come before the Annual Meeting.
On April 27, 2020, we began mailing to certain shareholders the Notice containing instructions on how to access this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”) and how to vote via the Internet. The Notice of Annual Meeting, Proxy Statement and Annual Report are available at www.proxyvote.com.
By order of the Board of Directors,
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Carl Sottosanti
Executive Vice President, General Counsel and Secretary
Wyomissing, Pennsylvania
April 27, 2020
Your vote is very important. You may vote at the virtual meeting or by proxy. Whether or not you plan to virtually attend the Annual Meeting, we encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. You may vote by proxy by telephone or Internet (instructions are on your proxy card, voter instruction form or the Notice, as applicable) or, if you received your materials by mail, by completing, signing and mailing the enclosed proxy card in the enclosed envelope.

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FORWARD-LOOKING STATEMENTS
This Proxy Statement includes forward-looking statements. These statements are not historical facts, but instead represent beliefs of Penn National Gaming, Inc. (the “Company”) regarding future events, many of which, by their nature are inherently uncertain and outside the Company’s control. These statements can be identified by the use of forward-looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends,” “plans,” “seeks,” “may,” “will,” “should,” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Forward-looking statements include, but are not limited to statements regarding: the reopening of the U.S. economy, the coronavirus (“COVID-19”) pandemic and potential new treatments and vaccines, the length of time the Company’s gaming properties will be required to remain closed and the impact of these continued closures on the Company and its stakeholders, the demand for gaming once the properties reopen, the impact of COVID-19 on general economic conditions, capital markets, unemployment, consumer spending and the Company’s liquidity, financial condition, operations, supply chain and personnel, the potential benefits and expected timing of the Morgantown and Perryville transactions with Gaming and Leisure Properties, Inc. (“GLPI”), the decisions made by the Company in response to COVID-19, the launch of the Barstool-branded online sports gaming app and its future revenue and profit contributions, the Company’s cash burn, the demand for gaming once the gaming facilities reopen, property level operating margins, the anticipated opening of retail sportsbooks at our properties, the expected benefits of the investment in Barstool Sports, Inc., and growth opportunities and potential synergies related to the acquisition of Pinnacle Entertainment, Inc. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include, but are not limited to: (a) COVID-19 and its effect on capital markets, general economic conditions, unemployment, consumer spending and the Company’s liquidity, financial condition, operations and personnel; (b) industry, market, economic, political, regulatory and health conditions; (c) disruptions in operations from data protection breaches, cyberattacks, extreme weather conditions, medical epidemics or pandemics, such as the COVID-19, and other natural or manmade disasters or catastrophic events; (d) the reopening of the Company’s gaming properties are subject to various conditions, including numerous regulatory approvals and may be delayed, including for reasons beyond our control; (e) the consummation of the proposed Morgantown and Perryville transactions with GLPI are subject to various conditions, including approvals, and accordingly may be delayed or may not occur at all, including for reasons beyond our control; (f) potential adverse reactions or changes to business or regulatory relationships resulting from the announcement or completion of the transactions with GLPI; (g) the outcome of any legal proceedings that may be instituted against the Company or its directors, officers or employees; (h) the impact of new or changes in current laws, regulations, rules or other industry standards; and (i) other risks, including those as may be detailed from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). For more information on the potential factors that could affect the Company’s financial results and business, review the Company’s filings with the SEC, including, but not limited to, its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. The Company does not intend to update publicly any forward-looking statements except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Proxy Statement may not occur.
 
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LETTER FROM THE PRESIDENT AND CEO TO OUR SHAREHOLDERS
April 27, 2020
Dear Fellow Shareholder:
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Penn National Gaming, Inc. (the “Company” or “Penn National”) experienced a tremendous start to 2020, as our core business delivered record results in January and February, buoyed by the introduction of retail sports betting at several properties, and our stock price soared to record highs following the announcement of our strategic investment in Barstool Sports. Regrettably, that momentum has been temporarily curtailed by the unprecedented impact of the ongoing coronavirus pandemic, which required the temporary closure of all 41 of our properties. Our hearts go out to all of those affected by this public health crisis, and we are extremely thankful for the tireless efforts of our first responders and health care workers who are bravely serving on the front lines of this war.
During times like these, we are deeply aware of our ongoing commitment to being a good corporate citizen and valued member of our communities. In addition to donating more than 45 tons of food to local foodbanks and homeless shelters since our temporary closures, our properties have provided hundreds of hotel rooms and thousands of masks, gloves and other personal protective equipment to first responders around the country. I am very proud of the way our Company and team members have continued to think about and contribute to the greater good.
Our guiding principles in responding to this crisis have been to (i) protect our team members, who are the true lifeblood of the Company, (ii) preserve liquidity, and (iii) remain focused on our long-term strategic objectives. While some of the following mitigation steps we have taken are painful on a personal and professional level, I am confident these moves will help to ensure a brighter future for our Company’s team members, customers, shareholders and other key stakeholders.
We believe our team members are critically important to our long-term success, as reflected by our ranking as the
casino industry’s #1 Employer of Choice by Bristol Associates in its most recent survey. Unfortunately, given the uncertainty about the duration of the pandemic, and with no meaningful revenue for the foreseeable future, we were forced to make the extremely difficult decision to implement unpaid furloughs impacting approximately 26,000 team members companywide beginning on April 1, 2020. In addition to the furloughs, we have implemented meaningful compensation reductions for the Company’s remaining executives, and our Board of Directors voluntarily agreed to waive the cash component of their compensation.
We deeply regret the hardship the furloughs will place on our team members and their loved ones. To ease some of the burden, we extended team member medical benefits through June 30, 2020 and established a special COVID-19 Emergency Relief Fund under the Penn National Gaming Foundation to provide assistance to team members and local relief organizations in our communities. The Company has already raised over $1.7 million in seed money for the cause, including more than $425,000 in personal contributions from our senior management team, our Company’s Board of Directors, and property general managers. For more information about the COVID-19 Emergency Relief Fund or to donate, please visit: https://www.pngaming.com/community.
In addition to these mitigation measures, on March 27, 2020 we announced an agreement with our principal landlord, Gaming & Leisure Properties, Inc. (“GLPI”), involving the sale of the Tropicana Las Vegas real estate assets and a new ground lease for our planned Category 4 casino in Morgantown, Pennsylvania, in exchange for significant rent credits and an option to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland by the end of 2021 (which would expand our industry-leading footprint to 20 states). We also reached an agreement with our lenders on April 14, 2020 to amend our credit agreement to provide covenant relief until first quarter of 2021. These transactions highlight our team’s ability to creatively address short-term liquidity needs in a manner that is supportive of our long-term objectives.
Fortunately, according to public health officials, we are starting to see a light at the end of this tunnel. The social distancing orders we have been living under have helped
 
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to “flatten the curve” around the country and the number of positive tests have slowly begun to stabilize. Meanwhile,there have been some promising early results in clinical trials on potential new treatments and vaccines. This has all given rise to a growing chorus of the business community, as well as local, state and federal officials, to gradually reopen our country for business.
In preparation for reopening, our corporate and property management teams have been actively engaged in discussions with our regulators, local and state governments and health authorities to get ready for the resumption of operations. The temporary closures of our properties have provided us with a unique opportunity to reimagine our casinos, and we have already identified ways to improve our operating model while enhancing the guest experience. We believe our geographic diversification across 19 states — with no more than 15% of our revenues being derived from any single state — makes us well- positioned to benefit from an expected state-by-state phased-in approach to reopening.
Our unparalleled distribution network will also help power the launch of our Barstool-branded mobile sports betting product in the third quarter of this year, as our product development team has remained fully engaged and focused on delivering a best in class product on time and on budget. We expect our digital businesses to deliver meaningful revenue and profit contributions in 2021 and beyond. We also believe our continued evolution into the best-in-class omni-channel provider of retail and online gaming and sports betting entertainment will be a catalyst for our core land-based business, while also providing a
platform for significant long-term shareholder value. In short, our long-term strategic position remains unchanged and intact.
Notwithstanding the severe impact COVID-19 has had on our business in 2020, we can look back proudly on our many accomplishments in 2019, including record revenues of $5.3 billion, the addition of Greektown Casino and Margaritaville Casino to our portfolio and the successful integration of Pinnacle Entertainment, which added 12 new gaming properties and three new states to our portfolio.
I firmly believe our future remains bright at Penn National. Pride, creativity, hard work, perseverance, family focus and grit has defined us over the years at Penn National, and that is exactly what will get our Company through this current challenge as well.
I would like to thank all of our team members for their patience and understanding during these very trying times, as well as our valued shareholders for your ongoing support and confidence.
Sincerely,
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Jay A. Snowden
President, Chief Executive Officer and Director
 
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2020 PROXY STATEMENT SUMMARY
This summary contains highlights about our Company and the upcoming 2020 Annual Meeting of Shareholders. This summary does not contain all of the information that you may wish to consider in advance of the meeting, and we encourage you to read the entire proxy statement before voting.
2020 Annual Meeting of Shareholders
Date and Time: Wednesday, June 10, 2020 at 10:00 a.m. Eastern time
Location:
Live audio webcast on the Internet at www.virtualshareholdermeeting.com/PENN2020*
Record Date: April 6, 2020
*This year’s Annual Meeting will be conducted via audio webcast online and a completely virtual meeting of shareholders due to the ongoing public health impact of the COVID-19 pandemic. This decision was made in light of the protocols that federal, state, and local governments have imposed or may impose in the near future and taking into account the health and safety of our shareholders, directors and members of management. You may attend, ask questions relating to meeting matters and vote during the Annual Meeting via the live audio webcast on the Internet at the link above. You will not be able to attend the Annual Meeting in person. There will be no physical location for shareholders to attend.
Voting Matters and Board Recommendations
Proposal
Matter
Board
Recommendation
1
Election of Class III Directors (Jane Scaccetti and Jay A. Snowden)
FOR each Nominee
2
Ratification of Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm for 2020
FOR
3
Advisory Vote to Approve Executive Compensation
FOR
Overview of Penn National Gaming

Nation’s Leading Regional Gaming Operator — The Company is the leading, most geographically diversified, owner and manager of gaming and racing properties in the United States with 41 properties in 19 states and significantly advanced its interactive operations and strategy in 2019. The Company has consistently generated attractive returns for its shareholders.

Disciplined Operating Focus — In 2019, the Company continued to deploy disciplined operating strategies by managing existing properties with a focus on maximizing profitability and free cash flow, while delivering outstanding gaming and entertainment experiences for customers and supporting the local communities in which it operates.
 
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2019 and 2020 Financial and Operating Achievements
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Record Financial Performance
In 2019, we exceeded financial guidance and had record revenues of $5.3 billion, which was an increase of 48% from 2018. In addition, we had a net income of $43.1 million in 2019, principally driven by $173.1 million of impairment losses, as compared to net income of $93.5 million in 2018. In addition, we had Adjusted EBITDAR* of $1.6 billion, which was an increase of 54% from 2018.
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Industry Leading Margins
We have implemented strategic initiatives leveraging the Company’s scale following the Pinnacle acquisition. Along with our prior initiatives, these programs, which include both revenue enhancement and cost saving components, are expected to improve the Company’s property level operating margins. In 2019, we improved our margin and achieved an industry leading margin.
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Growth by Acquisitions and Development
After the recent acquisitions of Margaritaville Resorts Casino in Bossier City, Louisiana and Greektown Casino-Hotel in Detroit, Michigan, we began constructing two new “satellite” casinos in Pennsylvania — Hollywood Casino Morgantown and Hollywood Casino York. We have suspended construction on the Pennsylvania developments due to COVID-19.
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Employer of Choice in the Casino Industry
In 2019, we placed first as the Employer of Choice in the Casino Industry for 2019, pursuant to the survey conducted by the independent advisory groups, Bristol Associates and Spectrum Gaming Group.
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Pinnacle Integration
On October 15, 2018, the Company acquired Pinnacle Entertainment, Inc., in a transaction that significantly expanded the Company’s position as the nation’s leading regional gaming operator. In connection with the integration, we were able to substantially exceed our projections and deliver $87 million in cost synergies by the end of 2019.
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Omni-Channel Growth
Penn Interactive — In 2019, we launched our online casino games in Pennsylvania through our HollywoodCasino.com gaming platform. We opened a number of our internally-branded retail sports books in Indiana, Iowa, Michigan, Mississippi, Pennsylvania, and West Virginia. In 2020, we anticipate opening retail sportsbooks at our properties in Colorado and Illinois. In addition, we entered into long-term market access agreements with leading sports betting operators (Draft Kings, PointsBet, theScore and The Stars Group), which we expect to fund our own online sports betting and iCasino business.
Barstool Sports — In February 2020, we acquired approximately 36% of the common stock of Barstool Sports, Inc., a leading digital sports, entertainment and media platform. In connection with the Barstool Sports investment, we became Barstool Sports’ exclusive gaming partner for up to 40 years and have the right to utilize the Barstool Sports brand for all of our online and retail sports betting and iCasino products. We expect to launch our online sports gaming app called Barstool Sports in the third quarter of 2020 and anticipate that this transaction will facilitate the Company’s omni-channel growth.
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Tropicana, Morgantown and Perryville Transactions
On March 27, 2020, we announced an agreement with our principal landlord, Gaming & Leisure Properties, Inc. (“GLPI”) involving the sale of the Tropicana Las Vegas real estate assets and a new ground lease for our planned Category 4 casino in Morgantown, Pennsylvania, in exchange for $337.5 million in rent credits and the ability to participate in additional upside from the eventual sale of Tropicana Las Vegas by GLPI. In addition, the deal includes an option for us to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland in 2021. On April 16, 2020, we closed on the sale of the Tropicana Las Vegas real estate assets to GLPI. We expect to close the Morgantown transaction in the second quarter of 2020.
*
This is a non-GAAP financial measure. See Reconciliations and Non-GAAP Financial Measures in this Proxy Statement.
 
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825 Berkshire Boulevard, Suite 200
Wyomissing, Pennsylvania 19610

PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 10, 2020
This Proxy Statement is being furnished to the shareholders of Penn National Gaming, Inc. (the “Company,” “Penn National” or “PENN”) in connection with the solicitation of proxies for the Company’s 2020 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on June 10, 2020 at 10:00 a.m. Eastern time, or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. The Annual Meeting will be held via live audio webcast on the Internet at www.virtualshareholdermeeting.com/PENN2020. This solicitation is being made by the Company. This Proxy Statement, the accompanying Proxy Card, and the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”) are first being made available to our shareholders on or about April 27, 2020.
GOVERNANCE OF THE COMPANY
Corporate Governance Highlights
Independence
Board Leadership
Gender Diversity
Board Tenure
Overboarding
Directors’ Skills and
Experience
5 of 7 independent directors
Fully independent Compensation, Audit, Nominating and Corporate Governance Committees
Separate Chairman and CEO (for over six years)
Independent Chairman
Lead Independent Director
2 of 7 board members are female (both in board leadership positions)
Company named a “2020 Women on Boards Winning Company”
3 directors have tenure of less than 6 years No overboarded directors Collective experience in gaming, hospitality, capital markets, accounting, tax, technology, risk management and governmental affairs

We have one class of common stock and no supermajority voting requirements.

We conduct regular self-assessments of the Board and its committees.

The Board has adopted a Code of Conduct for directors, officers and employees and the Company conducts company-wide sexual harassment training.

We have significant stock ownership requirements for our directors and named executive officers.

We hold an annual advisory vote on executive compensation.

We conduct comprehensive succession and talent development planning.

We have an active cyber security committee.

We conduct extensive shareholder engagement throughout the year.

The Board has significant involvement in our long-term growth and capital deployment strategy.

Reflecting the highly regulated industry in which our Company operates, we have a Compliance Committee with broad authority, comprised of Board members and non-director compliance professionals.

The Nominating and Corporate Governance Committee regularly reviews and assesses our Company’s corporate governance structure and practices in light of industry trends and best practices.
 
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Board of Directors
Commitment to Shareholder Value
We have continued to pursue innovative transactions to create value for our shareholders and to undertake new avenues of growth over the last several years:

On November 1, 2013, we created the gaming industry’s first real estate investment trust, Gaming and Leisure Properties, Inc. (“GLPI”), through a tax free spin-off (the “Spin-Off”). The Company was an industry pioneer in this regard, as several of its peers have since completed similar transactions.

On October 15, 2018, we acquired Pinnacle Entertainment, Inc., in a stock/cash transaction that significantly expanded the Company’s position as the nation’s leading regional gaming operator.

In 2019, we pursued online opportunities through Penn Interactive, including the launch of Hollywoodcasino.com, an online real money gaming operations, in Pennsylvania.

We completed a significant investment in the first quarter of 2020 in Barstool Sports, Inc., a leading digital sports, entertainment and media platform.
The Board was highly instrumental in providing leadership to the Company during the negotiations leading to consummation of these complex transactions.
Board Overview
The Company operates in a highly specialized and rigorously regulated industry. This environment demands a high level of integrity and accountability in all key aspects of its operations, its management team and its Board of Directors. The Board believes that its structure and composition have been important elements of the Company’s development activity, growth and success in the gaming industry over the years. The Board is comprised of individuals who bring unique talents and perspectives to their service on the Board and, as a group, strike a balance between those who have a proven record of effectively working together to responsibly oversee management’s operation of the Company and those who bring fresh perspectives and unique insights to the Board. In fact, over the last six years, the Company has added three talented new directors and looks forward to the long-term benefits of the diversity of their experiences and views. In addition, no member of the Board serves on the board of more than one other public company, which helps to ensure that each member is fully engaged in his or her duties to the Company.
To maximize shareholder value, the Board strives to maintain a governance environment where (i) entrepreneurship and prudent risk taking are encouraged, with a focus on both long- and short-term value creation, (ii) shareholder perspectives are understood and long-term relationships with shareholders are fostered through frequent, candid and comprehensive engagement with and disclosure to the Company’s shareholders and the investment community, (iii) integrity and accountability are integrated into the Company’s management philosophy and operations and (iv) the Company is able to attract, develop and retain industry-leading executive talent to manage the Company’s increasingly complex operations.
The Board regularly evaluates the governance environment to enable the Company to respond appropriately to changes, practices and market conditions, as well as suggestions from shareholders and other stakeholders, all in a manner that we believe will continue the Company’s long-term record of increasing shareholder value.
Composition, Skills and Independence
The Company’s Board of Directors currently consists of seven members. The Board believes it is appropriately sized to effectively carry out its responsibilities. The Board is small enough to facilitate individual engagement and involvement, to allow directors to communicate frequently with management and each other, and to permit meetings to be conducted on short notice. This is especially critical to support the Company’s efforts to grow strategically (such as through the Pinnacle and Barstool transactions) and to create new value for shareholders through complex and innovative transactions. At the same time, the Board believes that it is large enough and has the appropriate composition and skills to encourage diverse viewpoints and better collaborative decision making.
The collective membership of the Board has a strong background in gaming, hospitality, capital markets, accounting, tax, technology, risk management and governmental affairs, as well as long-term experience with the Company’s operations in an increasingly competitive industry. These backgrounds and experiences prove especially valuable in light of the complexities inherent in our industry and the fact that we have properties across 19 different states in the United States. Consequently, the Board believes that its composition is optimized to support and oversee the Company’s business and strategy.
The Board has determined that all of the directors who currently serve or have served on the Board during the last fiscal year, other than Messrs. Reibstein, Snowden,
 
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Wilmott and Carlino, are independent under the current Listing Rules of the NASDAQ Stock Market (the “NASDAQ Rules”). Mr. Reibstein does not currently meet these independence requirements due to his former roles as the Company’s Executive Vice President, Chief Financial Officer and Treasurer until December 31, 2016 and as an executive advisor from January 1, 2017 through December 31, 2017. Mr. Carlino did not meet these independence requirements, in part, due to his role as Chief Executive Officer of GLPI. Notably, the Board’s Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee are comprised exclusively of independent directors. The independent Board directors typically meet several times per year in executive session.
Board Leadership
David Handler, who is an independent director, has served as our Chairman of the Board since June 12, 2019. Mr. Handler joined our Board in 1994 and is a partner at Centerview Partners, an independent financial advisory and private equity firm. The Board believes that Mr. Handler is best suited to serve as Chairman of the Board because of his considerable investment banking and capital markets experience, which includes a focus on mergers and acquisitions and other significant transactions (including many in the technology space), which compliments his long-term exposure to the gaming industry. Mr. Handler’s background has been an invaluable asset to the Company over the years, particularly in connection with evaluating potential acquisitions and financing opportunities.
The roles of our Chairman of the Board and Chief Executive Officer have been split for over six years. Our Chief Executive Officer is responsible for the general management and operation of the business, providing guidance and oversight to senior management and formulating the strategic direction of the Company. The Chairman of the Board is responsible for the content, quality and timeliness of information provided to our Board and consults with our Board and Chief Executive Officer regarding oversight of our business affairs. The Board believes that the decision to separate the roles of Chairman of the Board and Chief Executive Officer has been beneficial, both with regards to corporate governance and operational execution.
In addition, the Board has appointed Barbara Shattuck Kohn as its lead independent director to, among other things, facilitate communication between management and the independent directors. The responsibilities of the lead independent director include:

Consulting with the Chairman of the Board regarding the information, agendas and schedules
of Board and Board committee meetings, including the ability to add items to the agendas for any meeting.

Scheduling, setting the agenda for and serving as chair of meetings of independent directors.

Serving as principal liaison between the independent directors and the Chairman of the Board and between the independent directors and senior management.

Presiding at all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent directors.

In the event of the death, incapacity, resignation or removal of the Chairman of the Board, serving as the acting Chairperson of the Board until a new Chairperson is selected.
Chairman Emeritus
In light of the restrictions of Section 8 of the Clayton Antitrust Act, Peter M. Carlino, the founder of our Company, resigned from the Board of Directors and as Chairman of the Board, effective June 12, 2019. The Board of Directors unanimously appointed Mr. Carlino as Chairman Emeritus and in that capacity, Mr. Carlino attends meetings of the Board of Directors, but does not have any voting rights. The Board believes that Mr. Carlino is well suited to serve as Chairman Emeritus in light of his proven record of generating value for the Company’s shareholders. This impressive record is the result of his vision for the Company and his talent for successfully identifying and capitalizing on opportunities in the gaming and racing industry. Moreover, the Board believes that Mr. Carlino’s substantial beneficial ownership of the Company’s equity strongly aligns his interests with the interests of all shareholders.
Board Resources
In fulfilling its objectives, many of the direct oversight functions of the Board are performed by the Board’s committees with support from both senior internal resources as well as independent outside advisors. For example, the Audit Committee receives frequent reports directly from the Company’s Vice President, Internal Audit, Chief Financial Officer, Chief Accounting Officer, General Counsel, Executive Vice President of Operations, and Chief Compliance Officer. The Audit Committee also has express authority to direct the Company’s internal audit staff. Additionally, the Company’s independent registered public accounting firm provides support through its annual audit and quarterly reviews of the Company’s financial statements. The Compliance Committee is structured in the same manner relative to
 
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the Chief Compliance Officer and the Company’s compliance staff and also has regular access to the Company’s senior management team.
Both the Audit Committee and the Compliance Committee have had substantial internal staff and outside resources to assist them in carrying out their responsibilities. At December 31, 2019, the Company maintained a 62 person internal audit staff overseen by the Company’s Vice President, Internal Audit, who reports to the Audit Committee, and a 42 person compliance staff overseen by the Company’s Chief Compliance Officer, who provides frequent reports to the Compliance Committee. Additionally, the Company has retained two non-director members to serve on its Compliance Committee: Steve DuCharme, a former Chairman of the Nevada State Gaming Control Board with over 30 years of experience in law enforcement and gaming regulation, serves as the Chairman of the Compliance Committee, and Thomas N. Auriemma, the Company’s former Vice President, Chief Compliance Officer and former Director of the Division of Gaming Enforcement in New Jersey, with over 30 years of experience as a gaming regulator in the State of New Jersey.
Risk Oversight
The Board does not view risk in isolation and recognizes that a prudent level of risk taking is an essential element of the Company’s strategy. As such, the Board and its Committees take an active role in the oversight of risks that have the potential to significantly impact the Company (including, among other things, competition, including new forms of competition, gaming legislation, regulatory matters, legal issues, cyber security, capital allocation, macroeconomic issues, capital markets, succession, executive compensation, and financial statements) and the management team is charged with managing those risks. The management team also monitors risk on an enterprise level to help the Board and the Company better understand, mitigate and manage the various risks the Company faces across the enterprise that could potentially impair its ability to execute the corporate strategy and achieving its goals. In addition, members of senior management attend all meetings of the Board and its Committees, and the Board and senior management work closely together to ensure that awareness of salient risks are integrated into the Company’s operations and key decisions. The Company also has a well-established cyber security committee comprised of senior management from different departments within the Company, which provides frequent reports to the Audit Committee and the Board on cyber security threats. A discussion of the compensation risk assessment process undertaken by the Compensation Committee is described on page 28 of this Proxy Statement.
Key Policies and Procedures
The Board has adopted and regularly reviews the Company’s Code of Business Conduct (the “Code of Conduct”), which applies to all directors and employees of the Company, including its principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct is designed to, among other things, promote ethical behavior, deter wrongdoing, address potential conflicts of interest, and encourage full and accurate reporting in the Company’s filings with the SEC and compliance with applicable laws. The Code of Conduct also provides for a 24 hour hotline that any employee, patron, vendor or other third party can use to report, anonymously if they so choose, any suspected fraud, financial impropriety or other alleged wrongdoing. These reports are promptly investigated and receive the highest level of management attention, with particular focus from the Company’s Chief Compliance Officer, Vice President, Internal Audit, General Counsel and Senior Vice President of Human Resources, as appropriate. Subsequently, senior management provides investigation summaries to the Compliance Committee and the Audit Committee. A copy of the current Code of Conduct is available on the Company’s website at www.pngaming.com/about-us.
The Board also has adopted Corporate Governance Guidelines (the “Corporate Governance Guidelines”) that are intended to provide a structure within which our Board and management can effectively pursue the Company’s objectives for the benefit of its shareholders and other constituencies. The Corporate Governance Guidelines include policies and procedures relating to, among other items, the role, structure and composition of the Board; Board procedures and leadership; risk oversight; use of outside consultants; and conflicts of interest. The Board and the Nominating and Corporate Governance Committee regularly consider the efficacy of these policies. A copy of the current Corporate Governance Guidelines is available on the Company’s website at www.pngaming.com/about-us.
In addition, the Company has adopted various other policies and procedures addressing the Company’s operations and corporate governance:

stock ownership guidelines;

an executive compensation clawback policy;

an equity based award administration policy (to ensure the consistency and efficiency of the Company’s equity award process);

a corporate signature authority policy (to provide accountability with respect to significant commitments);
 
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a sexual harassment and discrimination policy (developed by a diverse internal committee and accompanied by company-wide training); and

a compliance plan.
The Board regularly reviews the Company’s corporate governance policies and practices to evaluate their effectiveness in identifying, assessing and managing risks and to achieve compliance with the requirements of Pennsylvania law (the state in which the Company is incorporated), the NASDAQ Rules, the SEC rules and regulations and state gaming regulations, all in the context of pursuing best practices and increasing shareholder value.
Stock Ownership Guidelines for Directors
The Board of Directors has established stock ownership guidelines for non-employee directors of the Company to incentivize directors to maximize shareholder value. Each non-employee director is expected to own and hold shares of common stock, including restricted stock and phantom stock units, equal in value to at least five times the annual cash retainer (exclusive of separate committee retainers) for non-employee directors in the applicable year. New non-employee directors have a period of three years from the date of initial election to achieve this ownership guideline. As of December 31, 2019, all of the non-employee directors were in compliance with these guidelines.
Succession Planning for Senior Management
Our Board, in coordination with our Compensation Committee, carefully oversees Chief Executive Officer (“CEO”) and senior management succession planning. Our CEO and our Senior Vice President of Human Resources provide the Board with recommendations on, and evaluations of, potential successors to the CEO and other members of senior management. Our Board reviews potential internal candidates with our CEO and our Senior Vice President of Human Resources, including the qualifications, experience and development priorities for these individuals. Directors engage with potential CEO and senior management successors at Board and committee meetings and in less formal settings to allow
them to personally assess candidates. This extensive planning resulted in an orderly and successful CEO transition at the end of 2019, when Timothy Wilmott, our then CEO, retired, and Jay Snowden, our then President and Chief Operating Officer and long-time senior executive at the Company succeeded Mr. Wilmott as CEO on January 1, 2020. Further, our Board periodically reviews the overall composition of our senior management’s qualifications, tenure and experience. The Company’s talent management program, which seeks to develop, hire and retain talent below the senior management level, is led by our Executive Vice President of Operations and our Senior Vice President of Human Resources and is complementary to the Board’s succession planning.
2019 Board and Committee Meetings
Each member of the Board contributes a substantial amount of time and effort to service as a Board and committee member. During 2019:

the Board held nine formal meetings,

the Audit Committee held seven formal meetings,

the Compensation Committee held eight formal meetings,

the Nominating and Corporate Governance Committee held four formal meetings, and

the Compliance Committee held three formal meetings.
Further, Board members are encouraged to, and regularly do, engage in informal discussions with each other and members of management, and they are provided daily industry media coverage and property results as well as frequent management reports and updates. The independent directors meet periodically in executive session.
During the year ended December 31, 2019, each of the Company’s directors attended at least 75% of the meetings of the Board and committees of the Board of which he or she was a member. The Company encourages directors to attend shareholder meetings. Each of the Company’s directors, other than Ronald J. Naples, attended the 2019 Annual Meeting of Shareholders.
 
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Committees of the Board
The Board maintains four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance Committee. The specific duties and operation of each committee are described in more detail below. The Board has determined that each director serving on the Audit Committee, the Compensation Committee or the Nominating and Corporate Governance Committee is independent under the NASDAQ Rules and the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”). The Compliance Committee also includes subject matters experts who are not directors. Each of the Audit Committee, Compensation Committee and Nominating and Governance Committee operates under a written charter adopted by the Board of Directors that is reviewed annually and is available at www.pngaming.com/about-us.
Committee Membership
Audit Committee Members
Compensation Committee
Members
Nominating and
Corporate Governance
Committee Members
Compliance Committee
Members
Jane Scaccetti, Chair
Barbara Shattuck Kohn, Chair
Barbara Shattuck Kohn, Chair
Steve DuCharme, Chair (non-director)
John M. Jacquemin John M. Jacquemin John M. Jacquemin Thomas A. Auriemma (non-director)
Barbara Shattuck Kohn Ronald J. Naples Ronald J. Naples Ronald J. Naples
Saul V. Reibstein
Audit Committee
In addition to being independent as noted above, the Board has determined that each member of the Audit Committee also meets the financial literacy requirements under the NASDAQ Rules and is an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. In addition, Ms. Scaccetti has practiced as a certified public accountant since 1977, which makes her particularly well-qualified to serve as Chair of the Audit Committee.
The principal functions of the Audit Committee are to:

serve as an independent and objective party to monitor the integrity of the Company’s financial reporting process and internal control system;

engage the independent registered public accounting, firm, review and appraise the audit efforts of the Company’s independent registered public accounting firm and internal auditors and monitor the registered public accounting firm’s independence; and

maintain free and open communication with and among the independent registered public accounting firm, the internal auditors, the Company’s finance department, senior management and the Board of Directors.
The Audit Committee is also responsible for reviewing and pre-approving all conflicts of interest and related person transactions involving the Board or the Company’s executive officers. In discharging its oversight role, the Audit Committee is empowered to investigate any matter
brought to its attention and any other matters that the Audit Committee believes should be investigated. The Audit Committee may at any time engage, at the expense of the Company, independent counsel or other advisors, as it deems necessary to carry out its duties.
Compensation Committee
In addition to being independent as noted above, each member of the Compensation Committee is also a non-employee director, as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an outside director, as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended.
The Committee’s authority and responsibilities include:

evaluating the annual performance of the CEO and recommending to the Board for approval all CEO compensation and employment agreements and separation agreements;

evaluating and approving for the other executive officers (other than the CEO) salary, annual short-term incentive opportunities, long-term equity based incentives and other benefits;

reviewing and approving employment agreements and separation agreements for the other executive officers (other than the CEO);

monitoring trends and best practices with regard to executive compensation;

reviewing and approving awards under the long-term incentive compensation plan and annual
 
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short-term incentive compensation plan for the other executive officers (other than the CEO), and reviewing and recommending that the Board approve of awards under the long-term incentive compensation plan and annual short-term incentive compensation plan for the CEO, including the performance criteria, goals and objectives provided for in such plan;

reviewing executive compensation programs annually to determine whether they are properly coordinated and are achieving their intended purposes;

periodically reviewing the policies for administration of the Company’s executive compensation programs;

assessing the Company’s management and leadership succession planning;

approving incentive awards that the CEO may grant to employees other than executive officers;

formulating and administering the Company’s stock ownership guidelines;

recommending director compensation to the Board; and

administering and interpreting the Company’s long-term incentive compensation plans.
The CEO provides the Compensation Committee performance assessments and compensation recommendations for each executive officer of the Company (other than himself). The Compensation Committee considers the CEO’s recommendations with the assistance of the compensation consultant and sets the compensation of those executive officers based on its deliberations. The Compensation Committee holds executive sessions without management to facilitate candid discussion regarding executive performance and compensation, including establishing the CEO’s compensation.
The Compensation Committee retains the services of compensation consultants and legal advisors to provide such advice and assistance as it deems appropriate in its sole discretion. The Compensation Committee has the sole responsibility to oversee the work of any of its advisors. The Compensation Committee can terminate the services of such compensation consultants and advisors and approves their fees and retention terms, which are funded by the Company. The Compensation Committee engaged an independent third party executive compensation consultant for 2019, Exequity LLP (“Exequity”), who has served as the Compensation Committee’s consultant for the previous seven years. Exequity provides advice and assistance to the
Compensation Committee in carrying out its duties and responsibilities with respect to the Company’s executive compensation programs and non-employee director compensation. Prior to engaging Exequity, and at least annually during the engagement, the Compensation Committee evaluates the independence of Exequity. This review includes receiving information regarding other services, if any, provided by Exequity to the Company, the Board of Directors or other committees of the Board of Directors, and periodically reviewing the fees incurred as a result of such other activities. In 2019, the Compensation Committee determined that Exequity was independent and that the retention of Exequity by the Compensation Committee did not give rise to any conflicts of interest.
Nominating and Corporate Governance Committee
The Governance Committee is responsible for:

reviewing and making recommendations on the eligibility criteria for individual Board and committee membership, including the range of skills and expertise, diversity, and independence that should be represented on the Board and its committees;

reviewing and recommending the appropriate structure, composition and size of the Board and its committees;

identifying and recommending, for the Board’s selection, nominees for election to the Board;

considering the Board’s leadership structure, including the separation of the Chairman of the Board and CEO roles and the election of a lead independent director;

annually reviewing the Company’s Corporate Governance Guidelines and overseeing other corporate governance practices, including reviewing and recommending to the Board for approval any new or revised guidelines, documents or policies; and

overseeing regular evaluations of the Board and its committees and making recommendations to the Board as may be appropriate in light of the results of such evaluation.
Compliance Committee
The members of the Compliance Committee are individuals who, by virtue of their familiarity with law enforcement, regulated businesses, the business activities of the Company, are sensitive to the concerns of state gaming regulators and are capable of ensuring compliance
 
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or determining the existence or likelihood of a violation of a law, rule, regulation, policy or procedure applicable to the Company.
The Compliance Committee was established to foster, through robust self-regulatory policies and procedures,
compliance with applicable laws relating to the Company’s gaming businesses and to prevent, to the fullest extent possible, any involvement by the Company in any activities that could pose a threat to the reputation and integrity of the Company’s operations.
Director Selection Process
The Governance Committee considers candidates for Board membership suggested by, among others, its members, other Board members and management. The Governance Committee will also consider recommendations of nominees for directors by shareholders (for information relating to the nominations of directors by our shareholders, please see “Director Nominations by Shareholders” on page 52). In addition, the Governance Committee has authority to engage a search firm to assist in the identification of director candidates, to approve the search firm fees (which are paid by the Company) and other retention terms, and to obtain advice and assistance from internal and external legal, accounting or other advisors. In selecting nominees for director, the Governance Committee considers a number of factors, including, but not limited to:

a candidate’s ability to effectively represent the interests of the shareholders;

whether a candidate has demonstrated business and industry experience that is relevant to the Company, including recent experience at the senior management level (preferably as chief executive officer or a similar position);

a candidate’s ability to meet the suitability standards set forth in the Company’s bylaws, as well as the rigorous suitability, investigation and filing requirements of the relevant regulatory agencies in each of the numerous jurisdictions where the Company operates;

a candidate’s background and diversity of experience, skill set, independence from management and freedom from potential conflicts of interest with the Company;

a candidate’s financial literacy, including whether the candidate can meet the audit committee membership standards set forth in the NASDAQ Rules and SEC rules;

whether a candidate is recognized for his or her reputation, integrity, judgment, skill, leadership ability, honesty and moral values;

a candidate’s ability to work constructively with the Company’s management and other directors; and

a candidate’s capacity, taking into consideration the number of other boards on which the candidate serves, to dedicate sufficient time and energy to his or her board and committee duties.
During the process of considering a potential nominee, the Governance Committee and its Company delegates generally request extensive additional information about, and conduct interviews with, the potential nominee. The information expected to be provided includes detailed financial and personal history customarily required by the Company’s gaming and racing regulators. In addition, the Governance Committee will also request that the candidate submit to an investigation overseen by the Chief Compliance Officer to evaluate whether the candidate is suitable to serve on the Board of a publicly traded, multi-jurisdictional, highly regulated gaming and racing company.
Jay A. Snowden was elected to the Board of Directors on August 1, 2019 in conjunction with the announcement of his appointment as the Company’s Chief Executive Officer effective January 1, 2020.
 
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Compensation of Directors
The Company pays fees to each director who is not an employee of the Company. During the year ended December 31, 2019, each non-employee director received an annual cash fee of $50,000, plus an additional $10,000 for service on each of the Audit Committee, the Compensation Committee and the Compliance Committee, as applicable. Each non-employee director had the opportunity to elect to receive his or her annual retainer in the form of shares of restricted stock with forfeiture restrictions lapsing on the first anniversary of the date of grant.
In 2019, each non-employee director (other than the Chairman of the Board) received a grant of phantom stock units or restricted stock at his or her election with a value of $250,000 and the Chairman of the Board received a grant of phantom stock units or restricted stock at his election with a value of $375,000. Each award of phantom stock units or shares of restricted stock vests in three equal annual installments from the date of grant.
2019 Director Compensation Table
The following table sets forth information with respect to all compensation awarded to the Company’s non-employee directors for 2019.
Name
Fees
Earned or
Paid in
Cash ($)(2)
Stock
Awards
($)(3)
Total
($)(4)
Peter M. Carlino(1) 50,000 374,996 424,996
David A. Handler(1) 60,000 328,120 388,120
John M. Jacquemin 70,000 249,991 319,991
Barbara Shattuck Kohn 70,000 249,991 319,991
Ronald J. Naples 70,000 249,991 319,991
Saul V. Reibstein 60,000 249,991 309,991
Jane Scaccetti 60,000 249,991 309,991
(1)
On June 12, 2019, Mr. Carlino stepped down as Chairman of the Board and director and became Chairman Emeritus and Mr. Handler became Chairman of the Board.
(2)
In 2019, each non-employee director was permitted to elect to receive his or her retainer in shares of restricted stock, which vest on the first anniversary of the date of grant. In 2019, Messrs. Handler and Reibstein and Ms. Scaccetti elected to receive 3,085 shares of restricted stock in lieu of cash.
(3)
The amounts listed are calculated based on the closing price on the day prior to grant date computed in accordance with FASB ASC Topic 718. In 2019, Mr. Carlino received a grant of phantom stock units with a value of $375,000 for his service as Chairman of the Board. In addition, in 2019, Mr. Handler received a grant of restricted stock with a value of $328,125, of which $250,000 was granted for service as a director of the Company and an additional $78,125 was granted for his service as Chairman of the Board, which was a pro-rated amount.
(4)
As of December 31, 2019, the following stock awards were outstanding: (i) for Mr. Carlino, 49,010 phantom stock units; (ii) for Mr. Handler, 19,820 phantom stock units and 19,870 shares of restricted stock; (iii) for Mr. Jacquemin, 19,820 phantom stock units and 12,853 shares of restricted stock; (iv) for Ms. Kohn, 19,820 phantom stock units and 12,853 shares of restricted stock; (v) for Mr. Naples, 32,673 phantom stock units; (vi) for Mr. Reibstein, 7,151 phantom stock units and 15,938 shares of restricted stock; and (vii) for Ms. Scaccetti, 19,820 phantom stock units and 15,938 shares of restricted stock. As of December 31, 2019, Mr. Reibstein also had 178,179 stock options outstanding related to his previous service as Chief Financial Officer of the Company.
 
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ENVIRONMENTAL, HUMAN CAPITAL MANAGEMENT
AND SOCIAL RESPONSIBILITY
Environmental Responsibility
We are committed to creating a positive impact on the environment and encourage participation in sustainability initiatives at each of our properties, as evidenced by three of our most recent greenfield developments being certified as LEED® Gold or LEED® Silver by the U.S. Green Building Council. We are proactively developing energy efficient and environmentally-conscious projects at our properties to help reduce our carbon footprint and promote environmental sustainability.
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More than 80 percent of our properties have completed an energy-efficient lighting retrofit program and our two current development projects in Pennsylvania are being constructed for energy efficiency. With a longer lifespan than incandescent bulbs and a more efficient use of electricity, LED bulbs allow our properties to collectively reduce their annual energy consumption by millions of kilowatt hours annually. Likewise, by conducting regular audits of energy consumption at the property-level, we develop custom initiatives — such as HVAC energy management projects and thermostat control systems — to ensure the most efficient use of electricity. At Plainridge Park Casino in Massachusetts — a certified LEED® Gold facility — solar panels significantly offset electricity usage from traditional sources.
In 2020, our 23 hotel properties will feature larger, pump-topped dispensers for shampoo, conditioner, and body wash. These new containers can reduce more than 70 percent of the plastic and product waste generated annually by single-use amenity bottles. In an effort to conserve water, most of our hotel locations encourage guests to participate in linen and towel reuse programs. Behind the scenes, low-flow fittings and efficient use of laundry facilities help further curb water waste.
We currently have robust recycling programs in place at most of our properties nationwide (with plans to continue to expand this program), diverting recyclable materials produced by the casino and hotel operations away from landfills. Composting facilities, currently implemented at five locations, allow even more waste to be redirected. Additional waste reduction efforts at select properties — such as the use of plant-based and paper straws, the replacement of paper towels with electric hand dryers, and the elimination of Styrofoam — help further reduce waste directly at the source. These types of broad sustainability programs are designed to eliminate over 25,000 pounds of waste annually at each property.
Diversity and Social Inclusion
Building a diverse workforce is critical to helping us attract and retain the talent needed to advance our business and create outstanding guest experiences at our properties across the country. We welcome and value customers and employees of all backgrounds and are committed to creating both a work force reflective of the local markets and a supplier base that promotes an environment of diversity, equity, inclusion and empowerment. We are proud that 49% of our team members identify as female and 47% identify as minority across the entire enterprise. We also fully support our LGBTQ+ team members and guests. In 2019, we developed standards at each of our properties to ensure accessibility of facilities and training and communication to team members regarding LGBTQ+ rights. In addition, we support local community organizations, such as The LGBTQ Center in Las Vegas, which fights to “protect the well-being, positive image, and human rights of the lesbian, gay, bisexual, transgender, and queer community, its allies, and low to moderate income residents in Southern Nevada.”
 
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We are committed to supporting the well-being and professional development of all of our team members, including tuition reimbursement and other certification programs, with a particular focus on minority and female leadership development. For example, Women Leading at Penn (“WLP”) continued to grow in its second year of operations. The goal of WLP is to network, inspire, and encourage women to pursue leadership roles and to have female executives champion growth and development the property and corporate levels. Through our “Lean In Circles,” we are helping women gaming professionals connect with each other to share advice and best practices and provide the tools and support to ultimately increase the number of women in leadership, specifically at the manager level and above. As a result, women held 34% of the leadership positions at the Company in 2019.
We are very proud of the fact that two members of our Board of Directors — Barbara Shattuck Kohn and Jane Scaccetti — were named to Women Inc.’s list of “2019 Most Influential Corporate Directors.” The Women Inc.’s list features a comprehensive directory of influential female directors, executives, influencers and achievers who are currently serving on the boards of S&P 500/Large-Cap publicly-held companies and making impacts through their leadership.
Finally, we recently launched a targeted employment program for residents of Puerto Rico who were affected by the devastation caused by Hurricane Maria. Our talent acquisition team traveled to Puerto Rico in 2019 to recruit new employees for our properties nationwide and additional recruitment visits are planned for 2020.
Diversity Procurement
We have focused on purchasing from diverse sources for many years. In 2019, following our acquisition of Pinnacle Entertainment, we formally established a committee to implement a corporate-wide Supplier Diversity Initiative to coordinate efforts across all properties regardless of jurisdictional requirements, with the goal of developing new opportunities for diversity business. This initial effort resulted in increasing our diversity spend to over $88 million with businesses owned by minorities, women, disabled individuals and veterans. In 2020, we will be enhancing our efforts through a new membership in the Minority Supplier Diversity Council.
Employee Wellness
We believe a healthy lifestyle contributes to a long and happy life. Part of our commitment to our team members is to promote a culture of wellness that encourages and supports healthy decisions. We want our team members to enjoy their work environment, which includes looking forward to the meals and snacks they consume while they are at work. Our company dining program is a key component of our commitment to our global wellness initiative. The global goals of this
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initiative include:
Providing a high-quality and healthy dining option that positively contributes to the team member experience;
Reducing the cost of food and providing standardized portions with healthier ingredients;
Creating and implementing “MicroMarkets” that are designed to offer a substantial variety of fresh and healthy foods; and
Offering healthy dining education to all team members to assist them in making informed choices about what they consume and purchase.
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Employer of Choice in the Casino Industry
In 2019, we placed first as the Employer of Choice in the Casino Industry for 2019, under the anonymous survey conducted by the independent advisory groups, Bristol Associates and Spectrum Gaming Group. This award demonstrates our substantial commitment to our team members and our investment in employee engagement.
 
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Supporting our Veterans
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In 2019, we joined the U.S. Chamber of Commerce Foundation’s Hiring Our Heroes initiative that connects veterans, service members, and military spouses with meaningful employment opportunities. We are committed to identifying and hiring full-time team members through this program to further unite the military community with our company in order to create economic opportunity and a stronger, more diversified workforce.
Our properties spotlight our team members who served in the military through back-of-house “Honor Wall” displays and special recognitions and events around Veterans Day and throughout the year in our internal newsletter.
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Operation Lead from the Front,” a program launched by the IM ABLE Foundation with seed money from us, was designed to match military veterans with children with disabilities in their communities to help the veterans rediscover meaning, purpose, and connection through a new mission of mentoring and helping them stay active through adaptive workouts. The program capitalizes on leadership traits of the veterans and forms a meaningful and reciprocally motivating relationship.
We are also a lead funder of a local scholarship program for veterans wishing to pursue vocational careers at Reading Area Community College in Pennsylvania. In addition, the Penn National Gaming Foundation is supporting the development of a new homeless shelter for hundreds of veterans and their families in Berks County, Pennsylvania.
Veteran Alan Coderre (USMC) and adaptive athlete Robert DiBona
Response to COVID-19 Pandemic
As the world continues to grapple with this unprecedented public health crisis, our hearts go out to all of our first responders, healthcare workers, team members, customers and all those affected by the COVID-19 pandemic.
We are proud of the fact that when the orders came down to temporarily suspend operations at our 41 facilities in 19 states, our team members managed the process in a safe and orderly fashion, ensuring the health and well-being of our guests. We are equally proud of the fact that since closing our doors, our properties have donated more than 45 tons of food to local food banks and homeless shelters in our communities, ensuring our perishable food items can help those in need. In addition, we have donated thousands of unused masks and surgical gloves to first responders and health care providers, as well as provided hotel rooms to our heroes on the front lines of this battle, and several of our properties have been used as staging areas for food distribution to those in need.
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While the Company continued to pay all of its employees through the end of March 2020, given the uncertainty about the duration of the pandemic, and with no revenues for an undefined period of time, we were left with no choice but to require unpaid furloughs for approximately 26,000 members of our workforce, including a vast majority of our corporate team members, beginning on April 1, 2020. This decision was incredibly difficult to make and, to try to help ease some of the burden, we are maintaining medical benefits through June 30, 2020 for those team members who are currently enrolled in our health plans. The remaining, mission critical staff took immediate, meaningful pay cuts, and our Board of Directors elected to forgo their cash compensation until further notice.
 
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Penn National has been actively involved at all levels of government aggressively advocating for various programs that will support our team members during the furlough. Our Company continues to work closely with the American Gaming Association, state gaming associations, and our respective federal and state legislative delegations in each of the communities in which we operate to advocate for key measures that will
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provide much needed relief to our workforce and our industry.
In addition, the Penn National Gaming Foundation established a COVID-19 Emergency Relief Fund to assist our team members and local relief organizations affected by the COVID-19 pandemic. Already, more than $1.7 million has been raised through personal donations from our Chief Executive Officer, senior management team, Board of Directors and property general managers, in addition to contributions from our Foundation and property employee assistance funds.
Since the time we were required to temporarily close, we have been busy deep cleaning all of our facilities. In preparation for the eventual reopening of our properties, our remaining Corporate and property management teams have been actively engaged in discussions with our regulators and local and state governments and health authorities to develop comprehensive reopening protocols, which are entirely focused on keeping our guests and team members safe.
Community Involvement
The Penn National Gaming Foundation, a 501(c)(3) not-for-profit organization (“Foundation”), was launched in 2005 in the wake of Hurricane Katrina to assist the nearly 2,000 of our team members in Mississippi and Louisiana who were impacted by one of the most devastating storms in our nation’s history. Today, the Foundation focuses its efforts on supporting charities within our corporate region, which includes the Las Vegas Service Center, as well as supplementing the significant contributions our properties separately make in their communities. The Foundation has also supported relief efforts for multiple other natural disasters through the years, such as Hurricanes Gustav and Harvey, as well as helping with the medical expenses of one of our team members who was a victim in the Route 91 Harvest Music Festival shooting in Las Vegas.
When not addressing a public health crisis or responding to a natural disaster, the Foundation generally focuses on the following key areas of need: Community Development, Human Services, Cultural Affairs & Diversity and Health and Medical-related programs.
Last year, we contributed approximately $3.5 million to worthwhile causes and millions of dollars more in local development incentives, in addition to donating thousands of volunteer hours by team members in our respective communities. Some of the organizations that benefit from our support include the following:
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We, our properties, and our team members nationwide are actively involved in the American Cancer Society’s Relay for Life. In our first three years of participating, we have raised more than $1 million companywide for important cancer research. Each year, our Corporate office has provided a $50,000 match to what our properties can raise through this effort, as well as contributing $50,000 annually to the ACS’ “CEOs Against Cancer,” of which Jay Snowden is a member of the Board of Directors.
 
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At Metanoia Gala, from left: Michelle and State Senator Ronnie Johns, Donna and Governor John Bel Edwards, Reverend Jeff Bayh, Mary Kadair, and Eric Schippers, Sr. Vice President, Penn National Gaming.
We and our L’Auberge Casino Hotel Baton Rouge are leading sponsors and active volunteers for Metanoia Manor, a one-of-a-kind refuge for adolescent victims of human trafficking in Louisiana. Metanoia’s shelter can currently house sixteen children, each with a private room and bath. Staffed by professionals that include physicians, nurses, social workers, educators, and others, Metanoia seeks to rehabilitate the children until they are ready to return safely into society.
We have contributed more than $150,000 to the cause over the last three years. In addition, we have hosted two law enforcement summits at our Lake Charles, Louisiana facility for officials from Texas and Louisiana to share best practices and discuss potential new legislation to help fight human trafficking. The group has now grown to include officials from Arkansas and Mississippi.
Collectively, Penn National’s properties across the country gave $18.3 million in 2019 to numerous local charitable organizations, philanthropic programs and economic development initiatives.
 
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PROPOSAL NO. 1
ELECTION OF CLASS III DIRECTORS
Information about Nominees and Other Directors
The Board of Directors currently consists of seven members: David A. Handler (Chairman), John M. Jacquemin, Barbara Shattuck Kohn, Ronald J. Naples, Saul V. Reibstein, Jane Scaccetti and Jay A. Snowden. The directors are organized into three classes, with each class elected to serve a three year term. Two Class III directors will be elected at the Annual Meeting to hold office, subject to the provisions of the Company’s bylaws, until the annual meeting of shareholders of the Company to be held in 2023 and until their respective successors are duly elected and qualified.
Class III Nominees
The following table sets forth the name, independence status, number of other public company boards, principal occupation and term of service of each person who has been nominated to be a director of the Company. Each nominee has consented to be named as a nominee and, to the knowledge of the Company, is willing to serve as a director, if elected. Should either of the nominees not remain a nominee at the end of the meeting (a situation which is not anticipated), solicited proxies may be voted by the holders of the proxies for a substitute nominee (unless a proxy contains instructions to the contrary).
Name of Nominee
Independent
Other
Public
Company
Boards
Principal Occupation
Term
(if
elected)
Jane Scaccetti
Yes
1
CEO of Drucker & Scaccetti, P.C.
2023
Jay A. Snowden
No
None
President and Chief Executive Officer of Penn National Gaming, Inc.
2023
Nominee Qualifications
Jane Scaccetti
Class III Director
Age: 66
Director Since: 2015
Business Experience:   Ms. Scaccetti is the Chief Executive Officer of Drucker & Scaccetti, P.C., a public accounting and business advisory firm, of which she has been a principal since 1990. In addition, Ms. Scaccetti is a member of the Board of Directors of Myers Industries, Inc., a New York Stock Exchange listed company, and is a member of its Audit and Governance Committees. Ms. Scaccetti also serves as a director of Mathematica Policy Research, Inc., trustee of Temple University, and a trustee of Salus University. In addition, Ms. Scaccetti served as a director and audit committee chair of The Pep Boys — Manny, Moe & Jack from 2002 until 2016; and of Nutrition Management Services Company from 1992 until 2010. Ms. Scaccetti was named to Women Inc.’s list of “2019 Most Influential Corporate Directors.”
Other Public Company Boards:   Myers Industries, Inc.
Ms. Scaccetti brings financial expertise as a practicing CPA since 1977, as well as her management expertise as chief executive officer of a public accounting and business advisory firm and as a director of other publicly traded companies. Her experience brings unique perspective to the Board and the Board is enhanced by Ms. Scaccetti’s financial sophistication and expertise.
 
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Jay A. Snowden
Class III Director
Age: 44
Director Since: 2019
Business Experience:   In August 2019, the Board elected Mr. Snowden as a Board member. Effective January 1, 2020, Mr. Snowden became the Company’s Chief Executive Officer. Mr. Snowden joined the Company in October 2011 as Senior Vice President-Regional Operations. In January 2014, Mr. Snowden became the Company’s Chief Operating Officer and in March 2017, Mr. Snowden became President and Chief Operating Officer. Prior to joining the Company, Mr. Snowden was the Senior Vice President and General Manager of Caesars and Harrah’s in Atlantic City, and prior to that, held various leadership positions with them in St. Louis, San Diego and Las Vegas.
Other Public Company Boards:   None
Mr. Snowden brings well-established gaming and hospitality experience to our Board of Directors based on his extensive experience working in the gaming industry.Given his achievements in leading the operations of the Company as President and Chief Operating Officer and now as President and Chief Executive Officer, he also has unique perspectives and experience related to the gaming operations of the Company and the broader gaming industry.
In addition to the qualifications of each nominee for director described above, Jane Scaccetti and Jay A. Snowden are standing for re-election based upon the judgment, financial acumen and skill they have demonstrated as Board members, as well as their demonstrated commitment to serve on the Board.
The Board of Directors unanimously recommends that the shareholders vote “FOR” each of the nominees.
Continuing Directors
The following table sets forth the name, independence status, number of other public company boards, principal occupation and term of service of each person who will continue as a director after the Annual Meeting.
Name
Independent
Other
Public
Company
Boards
Principal Occupation
Term
Expires
Class I Directors:
David A. Handler
Yes
None
Partner, Centerview Partners
2021
John M. Jacquemin
Yes
None
President, Mooring Financial Corporation
2021
Class II Directors:
Barbara Shattuck Kohn
Yes
1
Former Principal of Hammond Hanlon Camp LLC
2022
Ronald J. Naples
Yes
1
Director of P.H. Glatfelter Company, Glenmede Trust Company and the Philadelphia Contributionship
2022
Saul V. Reibstein
No
1
Former Executive Vice President, Chief Financial Officer and Treasurer of Penn National Gaming, Inc.
2022
 
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Continuing Directors’ Qualifications
David A. Handler
Class I Director
Age: 55
Director Since: 1994
Business Experience:   Mr. Handler has served as the Company’s Chairman of the Board since June 2019 and as a director since 1994. In August 2008, Mr. Handler joined Centerview Partners as a Partner. Centerview Partners is an independent financial advisory and private equity firm. From April 2006 to August 2008, he was a Managing Director at UBS Investment Bank.
Other Public Company Boards:   None.
Mr. Handler has considerable investment banking and capital markets experience, which includes a focus on mergers and acquisitions and other significant transactions (including many in the technology space), which compliments his long-term exposure to the gaming industry. Mr. Handler’s background has been an invaluable asset to the Company over the years, particularly in connection with evaluating potential acquisitions and financing opportunities.
John M. Jacquemin
Class I Director
Age: 72
Director Since: 1995
Business Experience:   Mr. Jacquemin is President of Mooring Financial Corporation, a group of financial services companies founded by Mr. Jacquemin in 1982 that specializes in the purchase and administration of commercial loan portfolios.
Other Public Company Boards:   None.
Mr. Jacquemin has significant experience with private equity funds specializing in restructurings, workouts and the valuation of distressed debt. The nature of these investments requires a sophisticated understanding of financial statements to enable the identification of growth opportunities in troubled companies, as well as valuation expertise. This experience brings unique perspective to the Board and is enhanced by Mr. Jacquemin’s financial sophistication and financial statement expertise and long-term exposure to the gaming industry.
Barbara Shattuck Kohn
Class II Director
Age: 69
Director Since: 2004
Business Experience:   Ms. Kohn serves as a director of Fluent, Inc. Ms. Kohn was a Principal at Hammond Hanlon Camp LLC, a strategic advisory and investment banking firm from 2012 to 2018. Ms. Kohn also serves as a director of Emblem Health, one of the nation’s largest nonprofit health plans. She has previously served as a director of Computer Task Group and a division of Sunlife Financial Corporation. Prior to joining Hammond Hanlon Camp LLC in 2012, Ms. Kohn was a Managing Director of Morgan Keegan — Raymond James. Morgan Keegan & Company, Inc. was acquired by Raymond James Financial from Regions Financial Corp. and was the successor to Shattuck Hammond Partners, an investment banking firm Ms. Kohn co-founded in 1993. Prior to 1993, she spent 11 years at Cain Brothers, Shattuck & Company, Inc., an investment banking firm she also co-founded. From 1976 to 1982, she was a Vice President of Goldman, Sachs & Co. Ms. Kohn began her career as a municipal bond analyst at Standard & Poor’s Corporation. Ms. Kohn was named to Women Inc.’s list of “2019 Most Influential Corporate Directors.”
Other Public Company Boards:   Fluent, Inc.
Ms. Kohn has substantial experience in investment banking, capital markets and project finance. Further, she possesses the experience, financial sophistication and financial statement expertise necessary to evaluate potential acquisition and financing opportunities for the Company, and she was instrumental in evaluating both the preferred equity investment in the Company by Fortress Investment Group, LLC in 2008 and the Spin-Off in 2013. This financial background is ideally suited for Ms. Kohn’s service on the Audit and Compensation Committees, and her reputation, integrity, judgment and proven leadership ability meets both the Board’s high standards and the rigorous requirements of the various regulatory agencies with jurisdiction over the Company.
 
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Ronald J. Naples
Class II Director
Age: 73
Director Since: 2013
Business Experience:   Mr. Naples serves as a director of P.H. Glatfelter Company, Glenmede Trust Company and the Philadelphia Contributionship. Mr. Naples served as Chairman of the Pennsylvania Stimulus Oversight Commission and Chief Accountability Officer for the Commonwealth of Pennsylvania, having been appointed to that position by the Governor of Pennsylvania, from April 2009 until February 2011. From 1997 until May 2009, Mr. Naples was the Chairman of Quaker Chemical Corporation, a public specialty chemical company serving the metalworking and manufacturing industries worldwide, and served as Quaker’s Chief Executive Officer from 1995 to 2008. Previously, Mr. Naples was Chairman and Chief Executive Officer of Hunt Manufacturing Company, a public company, from 1981 to 1995. He also served as Chairman of the Federal Reserve Bank of Philadelphia.
Other Public Company Boards:   P.H. Glatfelter Company
Mr. Naples has significant business experience as a chief executive officer and director of large, publicly traded corporations. Mr. Naples has significant government and regulatory experience as Chairman of the Pennsylvania Stimulus Oversight Commission and Chief Accountability Officer for the Commonwealth of Pennsylvania and as Chairman of the Federal Reserve Bank of Philadelphia. Mr. Naples’ impressive educational background and distinguished military career as well as his reputation, integrity, judgment and proven leadership ability that meets both the Board’s high standards and the rigorous requirements of the various regulatory agencies with jurisdiction over the Company. In addition, Mr. Naples’ military, leadership and regulated company experience is invaluable in the context of his service on the Compliance Committee.
Saul V. Reibstein
Class II Director
Age: 71
Director Since: 2018 (and previously a director from 2011 to 2014)
Business Experience:   Mr. Reibstein served on the Company’s Board of Directors and was Chairman of the Audit Committee from June 2011 until his appointment as Senior Vice President and Chief Financial Officer in November 2013. Mr. Reibstein retired as the Company’s Executive Vice President, Chief Financial Officer and Treasurer on December 31, 2016 and was employed by the Company as an executive advisor from January 1, 2017 through December 31, 2017. From 2004 until joining the Company as an executive, Mr. Reibstein served as a member of the senior management team of CBIZ, Inc., a New York Stock Exchange-listed professional services company, where, as Executive Managing Director, he was responsible for the management of the CBIZ New York City Financial Services office operations and the overall international activities of the Financial Services Group. Mr. Reibstein has over 40 years of public accounting experience, including 11 years serving as a partner in BDO Seidman, a national accounting services firm, where he was the partner in charge of the Philadelphia office from June 1997 to December 2001 and Regional Business Line Leader from December 2001 until September 2004. In addition, since July 2010, Mr. Reibstein has served as a member of the Board of Directors of Vishay Precision Group, Inc., a publicly traded company, where he is Chairman of the Audit Committee and a member of both of its Compensation and Nominating and Corporate Governance Committees. Mr. Reibstein is a licensed CPA in Pennsylvania and received a Bachelor of Business Administration from Temple University.
Other Public Company Boards:   Vishay Precision Group, Inc.
Mr. Reibstein brings to our Board extensive familiarity with the Company and the gaming industry, having previously served as the Company’s Executive Vice President, Chief Financial Officer and Treasurer, as well as accounting, finance, risk management and strategic management expertise for both public and private companies, including gaming companies.
 
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PROPOSAL NO. 2
RATIFICATION OF SELECTION OF DELOITTE & TOUCHE LLP AS
THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2020
The Audit Committee has selected Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020, and the shareholders are being asked to ratify this selection. Deloitte has served as the Company’s independent registered public accounting firm since 2017. All audit and non-audit services provided by
Deloitte are approved by the Audit Committee. Deloitte has advised the Company that it has no direct or material indirect interest in the Company or its affiliates. Representatives of Deloitte are expected to virtually attend the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Professional Fees
A description of aggregate fees for professional services performed by Deloitte, which served as our independent public accounting firm for fiscal 2019 and 2018, is as follows:
Fiscal 2019
Fiscal 2018
Audit Fees(1) $ 6,302,934 $ 6,440,714
Audit-Related Fees(2) $ 160,000 $ 531,919
Tax Fees
Other Fees(3) $ 6,895 $ 10,000
Total Fees $ 6,469,829 $ 6,982,633
(1)
Audit fees include fees associated with the annual audit, reviews of the Company’s quarterly reports on Form 10-Q, annual audits required by law for certain jurisdictions, comfort letters, consents and other audit and attestation services related to statutory or regulatory filings. Audit fees also include the audit of the Company’s internal controls over financial reporting, as required by Section 404 of the Sarbanes Oxley Act of 2002. In addition, audit fees in 2019 included $600,000 for regulatory audits for Greektown and Penn Interactive and audit procedures related to Margaritaville. Further, audit fees in 2018 included approximately $1.4 million in fees associated with the Pinnacle acquisition with respect to audit procedures of the financial statements of Pinnacle for the period from January 1, 2018 to October 14, 2018 and audit procedures for business combination accounting.
(2)
Audit related fees in 2019 included purchase price accounting and lease assessments for the Greektown and Margaritaville transactions. Audit related fees in 2018 included $451,300 for due diligence costs.
(3)
Other fees include fees with respect to state regulatory filings.
Audit Committee Pre-Approval Policy
The Audit Committee’s Audit and Non-Audit Services Pre-Approval Policy provides for the pre-approval of audit and non-audit services performed by the Company’s independent registered public accounting firm. Under the policy, the Audit Committee may pre-approve specific services, including fee levels, by the independent registered public accounting firm in a designated category (audit, audit-related, tax services and all other services). The
Audit Committee may delegate, in writing, this authority to one or more of its members, provided that the member or members to whom such authority is delegated must report their decisions to the Audit Committee at its next scheduled meeting. In 2019, all of the services provided by Deloitte were approved by the Audit Committee prior to commencement of services.
The Board of Directors unanimously recommends that shareholders vote “FOR” the ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.
 
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AUDIT COMMITTEE REPORT
Management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Audit Committee is responsible for appointing, compensating, overseeing and, where appropriate, discharging and replacing the Company’s independent registered public accounting firm (the “independent accounting firm”). In addition, the Audit Committee is involved in the selection of the lead audit engagement partner whenever a rotational change is required by applicable law or listing standards or for any other reason. The independent accounting firm is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with generally accepted accounting principles. In addition, the independent accounting firm will express its own opinion on the effectiveness of the Company’s internal controls over financial reporting. The Audit Committee is responsible for monitoring and overseeing these processes.
The function of the Audit Committee is not intended to duplicate or attest as to the activities of management and the independent accounting firm, nor can the Audit Committee certify that the independent accounting firm is “independent” under applicable rules. The Audit Committee serves a board level oversight role, in which it provides advice, counsel and direction to management and the independent accounting firm on the basis of the information it receives, discussions with management and the independent accounting firm and the experience of the Audit Committee’s members in business, financial and accounting matters.
In this context, the Audit Committee met and held numerous discussions with management and the
independent accounting firm during 2019. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent accounting firm. The Audit Committee discussed with the independent accounting firm matters required to be discussed by the applicable standards of the Public Company Accounting Oversight Board.
The independent accounting firm also provided to the Audit Committee the written disclosures and the letter required by Rule 3526 of the Public Company Accounting Oversight Board, Communications with Audit Committees Concerning Independence, and the Audit Committee discussed with the independent accounting firm the firm’s independence.
Based upon the Audit Committee’s discussion with management and the independent accounting firm and the Audit Committee’s review of the representations of management and the report of the independent accounting firm on the Consolidated Financial Statements, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on February 27, 2020.
Audit Committee of the
Board of Directors
Jane Scaccetti, Chair
John M. Jacquemin
Barbara Shattuck Kohn
 
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PROPOSAL NO. 3
ADVISORY VOTE TO APPROVE COMPENSATION PAID TO
THE COMPANY’S NAMED EXECUTIVE OFFICERS
We are pleased to provide our shareholders with the opportunity to approve, on an advisory basis, determinations made by the Compensation Committee and the Board of Directors regarding the compensation of our named executive officers for 2019, pursuant to Section 14 of the Exchange Act, as described in the Compensation Discussion and Analysis section, and the subsequent tabular and narrative disclosure beginning on page 24 of this Proxy Statement (the “CD&A”). We currently conduct this advisory vote on an annual basis. We are requesting your nonbinding vote on the following resolution:
“RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure included in the Company’s proxy statement for the 2020 Annual Meeting of Shareholders.”
We believe shareholders should approve of the Company’s 2019 compensation program because it is appropriate in the context of industry standards and is heavily weighted towards performance-based compensation that aligns executive compensation with shareholder interests. As more specifically described in the CD&A, the Committee believes the compensation paid to Mr. Wilmott, the Company’s Chief Executive Officer in 2019, is reasonable and appropriate in light of the Company’s scale, objectives, achievements and performance.
We urge you to carefully review the CD&A so that you have a complete understanding of how important our compensation program is to the continued success of the Company. You will find in the CD&A a detailed discussion of the Company’s pay-for-performance compensation philosophy, the elements of our compensation program and the specific payments made to named executive officers with respect to 2019. The Company’s compensation program is fundamental to the approach we employ to attract, motivate and, most importantly, retain our named executive officers. To that end, we believe we have designed a compensation program that is strongly grounded on pay-for-performance principles, and which features a significant amount of “at risk” compensation, as described in more detail in the CD&A. This strategy continues to pay dividends. The Company’s recent performance, inclusive of 2019, has been strong, based in large part on the focused and strategic leadership of the Company’s management team.
We believe that the Company’s 2019 achievements, as illustrated on page 25, coupled with the Company’s record of providing long-term value creation amply supports the compensation paid to the named executive officers. As an advisory vote, the results of this vote will not be binding on the Board or the Company. However, we urge you to endorse our pay-for-performance compensation program, particularly in light of the Company’s strong performance and significant achievements over both the short-term and long-term.
The next advisory vote to approve the compensation of our named executive officers will take place at the 2021 Annual Meeting of Shareholders.
The Board of Directors unanimously recommends that shareholders cast their advisory vote “FOR” approval of the compensation of the named executive officers for 2019.
 
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COMPENSATION DISCUSSION AND ANALYSIS
For purposes of the following CD&A, unless context otherwise requires, the terms “Committee,” “we” or “our” refer to the Compensation Committee of the Board, a Committee made up of entirely independent directors.
Executive Compensation Highlights
Our compensation program:

Includes a mix of fixed and variable pay (with objective measures) designed to create sustainable long-term value for our shareholders;

Defers a significant portion of variable pay as equity based awards, encouraging both shareholder alignment and executive retention;

Includes both long-term and short-term components;

Focuses on “at risk” compensation, with 82% of our CEO’s total compensation at risk in 2019;

Benchmarks compensation at the median of an appropriate industry peer group; and

Implements performance based vesting for a meaningful portion of equity awards for the Company’s named executive officers.
Key Features of our Executive Compensation Program
What We Do
What We Don’t Do
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Align Pay with Performance — Our program design and outcomes focus on “at risk” compensation to better align compensation earned with the Company’s performance
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No Single Trigger Change in Control — We do not provide for single trigger vesting or unusual severance multiples upon a change in control in our equity plan and employment agreements
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Performance Awards — Our program includes equity awards with performance based vesting paid at the end of the three year period with 67% of long-term incentive pay to named executive officers tied to performance metrics
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No Tax Gross Ups — Our employment agreements do not contain tax indemnification provisions
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Multiple and Objective Performance Metrics — Incentive compensation is tied to both short and long-term measures to ensure balanced incentives
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No Discounting or Repricing of Options — We prohibit discounting or repricing options and restrict margin lending
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Share Ownership Guidelines — All directors and named executive officers exceed the Company’s significant stock ownership requirements
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No Supplemental Retirement Plans — We do not have any defined benefit pension programs or other supplemental executive retirement plans
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Clawback Policy — Our policy provides for the recovery of compensation in certain circumstances
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No Excessive Perquisites — Our executive officers have very limited perquisites
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Equity Awards Policy — Our policy ensures consistency in application of the Company’s equity award process
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No Hedging or Pledging — Hedging and pledging of the Company’s stock is prohibited
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Minimum Vesting — Our current long-term equity plan includes a minimum vesting period of one year for all awards
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No Liberal Share Counting — We prohibit “liberal share counting” under the Company’s equity plans
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Fungible Share Ratio — Our long-term equity plan incorporates a fungible share ratio feature
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No Excess Dilution — We limit dilution by carefully monitoring burn rate and overhang
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Independent Consultant — We utilize an independent compensation consultant
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No Minimum Payouts — Our long-term equity plan does not include a minimum payout
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Appropriate Peer Group — We benchmark our compensation against appropriate industry peers with whom we compete for talent
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No Arbitrary Awards — There is very little discretion in the granting of awards
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Share Repurchase Program — We use share repurchase programs (when appropriate) to capitalize on prudent stock repurchase opportunities that help offset the potential dilution from shares granted pursuant to incentive awards
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No Block Equity Grants — We do not make block equity grants
 
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Executive Summary
2019 AND 2020 FINANCIAL AND OPERATING ACHIEVEMENTS
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Record Financial Performance
In 2019, we exceeded financial guidance and had record revenues of $5.3 billion, which was an increase of 48% from 2018. In addition, we had a net income of $43.1 million in 2019, principally driven by $173.1 million of impairment losses, as compared to net income of $93.5 million in 2018. In addition, we had Adjusted EBITDAR* of $1.6 billion, which was an increase of 54% from 2018.
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Industry Leading Margins
We have implemented strategic initiatives leveraging the Company’s scale following the Pinnacle acquisition. Along with our prior initiatives, these programs, which include both revenue enhancement and cost saving components, are expected to improve the Company’s property level operating margins. In 2019, we improved our margin and achieved an industry leading margin.
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Growth by Acquisitions and Development
After the recent acquisitions of Margaritaville Resorts Casino in Bossier City, Louisiana and Greektown Casino-Hotel in Detroit, Michigan, we began constructing two new “satellite” casinos in Pennsylvania — Hollywood Casino Morgantown and Hollywood Casino York. We have suspended construction on the Pennsylvania developments due to COVID-19.
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Employer of Choice in the Casino Industry
In 2019, we placed first as the Employer of Choice in the Casino Industry for 2019, pursuant to the survey conducted by the independent advisory groups, Bristol Associates and Spectrum Gaming Group.
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Pinnacle Integration
On October 15, 2018, the Company acquired Pinnacle Entertainment, Inc., in a transaction that significantly expanded the Company’s position as the nation’s leading regional gaming operator. In connection with the integration, we were able to substantially exceed our projections and deliver $87 million in cost synergies by the end of 2019.
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Omni-Channel Growth
Penn Interactive — In 2019, we launched our online casino games in Pennsylvania through our HollywoodCasino.com gaming platform. We opened a number of our internally-branded retail sports books in Indiana, Iowa, Michigan, Mississippi, Pennsylvania, and West Virginia. In 2020, we anticipate opening retail sportsbooks at our properties in Colorado and Illinois. In addition, we entered into long-term market access agreements with leading sports betting operators (Draft Kings, PointsBet, theScore and The Stars Group), which we expect to fund our own online sports betting and iCasino business.
Barstool Sports — In February 2020, we acquired approximately 36% of the common stock of Barstool Sports, Inc., a leading digital sports, entertainment and media platform. In connection with the Barstool Sports investment, we became Barstool Sports’ exclusive gaming partner for up to 40 years and have the right to utilize the Barstool Sports brand for all of our online and retail sports betting and iCasino products. We expect to launch our online sports gaming app called Barstool Sports in the third quarter of 2020 and anticipate that this transaction will facilitate the Company’s omni-channel growth.
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Tropicana, Morgantown and Perryville Transactions
On March 27, 2020, we entered into a binding term sheet with our principal landlord, Gaming & Leisure Properties, Inc. (“GLPI”) involving the sale of the Tropicana Las Vegas real estate assets and a new ground lease for our planned Category 4 casino in Morgantown, Pennsylvania, in exchange for $337.5 million in rent credits and the ability to participate in additional upside from the eventual sale of Tropicana Las Vegas by GLPI. In addition, the deal includes an option for us to acquire the operations of GLPI’s Hollywood Casino in Perryville, Maryland in 2021. On April 16, 2020, we closed on the sale of the Tropicana Las Vegas real estate assets to GLPI. We expect to close the Morgantown transaction in the second quartes of 2020.
*
This is a non-GAAP financial measure. See Reconciliations and Non-GAAP Financial Measures in this Proxy Statement.
 
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RECORD FINANCIAL RESULTS
The Company achieved record financial results for 2019 in revenues and Adjusted EBITDAR.*
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*
This is a non-GAAP financial measure. See Reconciliations and Non-GAAP Financial Measures in this Proxy Statement.
The Company’s total target compensation in 2019 for its top four executive officers was approximately 5% below the market median for the top four executives at peer companies (based on a comparison of the Company’s top four executives’ 2019 total target pay to the 2018 peer company total target pay levels, as disclosed in the peer companies’ 2019 proxy statements).**
[MISSING IMAGE: tm202024d1-bc_payceo4c.jpg]
**
Excludes CEO pay for Red Rock Resorts, Inc. due to lack of participation in a long-term incentive program.
Key Compensation Practices
The Committee, in consultation with Exequity, management and the full Board, routinely considers compensation practices suggested by the Company’s shareholders as a result of the Company’s shareholder outreach efforts, as well as those identified as “best practices” by various market constituents. With all such suggestions, we strive to incorporate into our compensation program the practices we believe will most effectively support the Company’s continuing efforts to create shareholder value. Over the last several years we
have incorporated many of these practices into our compensation program, which are discussed on page  28 of this Proxy Statement.
We will continue to evaluate and consider input from our shareholders and emerging “best practices” to ensure that our compensation programs contain the features necessary to properly align the interests of our executives with the interests of our shareholders.
 
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Shareholder Outreach and Say on Pay Vote
We received 98% support for our say on pay vote in 2019. We believe this overwhelming level of support demonstrates that our shareholders recognize our commitment to incorporating “best practices” into our compensation program, as well as our continuing sensitivity to shareholder views on compensation. During 2019, the Company continued its long standing practice of detailed, frequent communication and discussion with shareholders, including outreach to most of our top 40 shareholders regarding executive compensation and corporate governance issues as well as typical investor relations matters.
The Company continues to hold quarterly conference calls in which management limits its prepared remarks in favor of creating an open forum to allow shareholders and analysts an opportunity to ask about matters of most interest to them. The Company also continues to provide financial and other disclosure beyond that which is required by the SEC on matters such as management’s views on Company performance, industry trends and pending legislation. Further, members of the Company’s senior management team maintain an active schedule of
participation at institutional investor conferences, shareholder meetings and management staffed tours of our properties. We also regularly host investor and analyst meetings at our corporate offices and arrange for investors and analysts to visit our properties (before and after they open) and meet with local management. At the Global Gaming Expo (G2E), the gaming industry’s annual trade show in Las Vegas, our executives participated in a significant number of investor events and conducted a large number of group meetings with analysts and investors. These outreach efforts provide investors and prospective investors with constructive forums to discuss a wide variety of important subjects with management, including executive compensation, and provide useful feedback for management.
We believe our discussions with investors have been especially important with regard to our compensation program. For instance, based in part on our dialogue with shareholders, the Company has implemented performance share programs for the Company’s top executives, which contain performance based vesting for a meaningful portion of equity awards.
Executive Compensation Benchmarking Peer Group
We review the Company’s peer group each year to determine whether any changes are warranted from the prior year’s peer group. The companies that make up the Company’s peer group are its business competitors as well as its primary source of, and primary competition for, executive talent. Many of the Company’s executives have been recruited from these other gaming enterprises. In addition, since gaming is an increasingly specialized and regulated industry, it takes a high degree of experience and prior knowledge to provide effective oversight and guidance to multiple gaming properties in a variety of jurisdictions (all of which is even more important as the Company evolves into more interactive businesses). Further, the Company’s executive officers are required to submit to extensive investigations conducted by the state police, or an equivalent investigatory agency, of their personal and family financial records, their character and their competency in order to be found “suitable” to serve in their respective capacities in each of the jurisdictions in which the Company operates. Accordingly, the pool for executives capable of and willing to serve in an executive capacity in a publicly traded, multi-jurisdictional gaming and racing company tends to be limited, and in many cases
consists mostly of individuals who are already working within the gaming industry and within our peer group. For these reasons, along with the continued growth of our Company, we have determined that the appropriate peer group for the Company consists of the most prominent companies in the commercial gaming industry. We believe that this peer group is appropriate for determining relative industry performance as well as for recruitment and retention purposes.
For compensation comparison purposes for 2019, we used the following peer group:

Boyd Gaming Corporation,

Caesars Entertainment Corporation,

Eldorado Resorts, Inc.,

Las Vegas Sands Corp.,

MGM Resorts International,

Red Rock Resorts, Inc., and

Wynn Resorts, Ltd.
 
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Overview of Compensation Program
Objectives of Compensation Program
The overall objective of the Company’s executive compensation program is to compensate members of management in a manner that most effectively incentivizes them to maximize shareholder value without taking undue financial risks. At the same time, the executive compensation program is intended to enable the Company to attract and retain the executive talent needed to grow and advance the strategic interests of an increasingly larger and more complex entity. For context, as of December 31, 2019, the Company operated 41 properties in 19 states, employed over 28,000 full and part-time employees and 2019 revenues were $5.3 billion. In an environment where (i) the number of traditional gaming venues has grown exponentially in the U.S. and abroad over the last decade (increasing both the number of business competitors and competitors for talent, (ii) alternatives such as gaming REITs (of which there are now three) and spin-offs, as well as the continued involvement of private equity investment, are continuing to proliferate and (iii) internet gaming, sports wagering, social gaming, fantasy sports, and e-sports are rapidly gaining in popularity, the competition for executive talent in our industry has grown sharply. These factors are specifically contemplated in the Company’s compensation objectives, which are to:

Align executive pay opportunities with shareholder value creation;

Create a pay-for-performance compensation program that will appropriately reward management for operational and strategic development success; and

Attract and retain the best possible management team for the Company to increase shareholder value and maintain the Company’s well-established reputation in the capital markets.
Compensation Philosophy
To support the Company’s compensation program objectives, we have adopted and annually review and confirm a compensation philosophy that serves as the guide for all executive compensation decisions. Our compensation philosophy is as follows:
The Company intends to maintain an executive compensation program designed to attract and retain the executive talent needed to grow and further the strategic interests of the business. To this end, the Company offers a compensation and benefits program that is competitive with that of its peers and rewards the skills and expertise of its executive team. The
Company’s program is designed to motivate and reward executives to achieve and exceed targeted results and improve shareholder value. Compensation received by the executives will be commensurate with the performance of the Company, prevailing market rates in the industry, and their own individual contributions by linking compensation to the achievement of objectively measured goals.
Risk Assessment
In establishing and reviewing our executive compensation program, we consider, among other things, whether the program properly motivates executives to focus on the creation of shareholder value without encouraging unnecessary or excessive risk-taking. As a result, the Committee carefully reviews the principal components of executive compensation. Base salaries are reviewed and set annually. Annual short-term incentive pay is focused on achievement of certain specific, readily quantifiable and meaningful financial goals and is determined using absolute and objective performance criteria. The other major component of our executive officers’ compensation is long-term incentives through a mix (which may vary from year to year and by level) of stock options, performance-based restricted stock awards and phantom stock units that we believe are important to help further align executives’ interests with those of our shareholders. Such grants are subject to long-term vesting schedules, and senior executives are subject to minimum stock ownership requirements, to help ensure that executives always have significant value tied to long-term stock price performance. In addition, we have share ownership guidelines requiring that our senior executives own a certain multiple of their base salary (ranging from two to five times) of Penn equity within five years of assuming their current position. Once achieved, ownership of the required amount must be maintained for as long as the individual is subject to the guidelines. We believe that the annual short term incentive pay is balanced by our long-term incentive compensation, which are granted annually, always leaving our executives subject to risk of stock price movement. In addition, both our short term incentive pay and long-term incentive pay are subject to maximum payout ceilings. These cash and incentive awards, especially when combined with the compensation clawback policy described on page  36 of this Proxy Statement, appropriately balance payment for performance and alignment of executive compensation with shareholders without encouraging imprudent or excessive risk taking. Based on the Committee’s review of the above factors, the Committee determined that the Company’s compensation programs do not create risks
 
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that are reasonably likely to have a material adverse effect on the Company.
2019 Named Executive Officers
For 2019, our named executive officers were:
Executive
2019 Title
Timothy J. Wilmott* Chief Executive Officer
Jay A. Snowden* President and Chief Operating Officer
William J. Fair** Executive Vice President and Chief Financial Officer
Carl Sottosanti Executive Vice President, General Counsel and Secretary
*
Mr. Wilmott retired and resigned as Chief Executive Officer on December 31, 2019 and Mr. Snowden became Chief Executive Officer effective January 1, 2020. For a summary of the agreement relating to Mr. Wilmott’s retirement as Chief Executive Officer, see “Wilmott Separation and Transition Agreement” in this Proxy Statement.
**
Mr. Fair resigned as Executive Vice President and Chief Financial Officer on March 3, 2020. David Williams became Executive Vice President and Chief Financial Officer on March 3, 2020. For a summary of the agreement relating to Mr. Fair’s departure as Executive Vice President and Chief Financial Officer, see “Fair Executive Agreement” in this Proxy Statement.
Elements of Compensation
We have designed a compensation program that is substantially weighted towards performance-based compensation, and which uses performance metrics designed to ensure that management is appropriately incentivized across a number of different business environments, while also appropriately considering each of the principal objectives of the Company’s business strategy. To that end, our compensation program is strongly grounded in pay-for-performance principles. As illustrated in the following chart (based on the annual grants made to our executive officers) in 2019 the Company’s target performance based compensation (or “at risk” compensation), which includes performance-based equity awards, stock options and cash bonuses tied to Adjusted EBITDA, after Lease Payments, for the Company’s named executive officers comprises 82% of total target compensation. Of this amount, 49% of the value at award date of long-term incentive awards awarded to such officers in 2019 were performance awards that are subject to performance-based vesting only upon the achievement of annual financial performance goals and a three year restriction period.
Target 2019
Named Executive Officers Compensation
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The principal elements of the compensation program are described below. Please see “Analysis of 2019 Compensation” starting on page  33 for a discussion of the specific actions taken and payouts with respect to executive compensation for fiscal year 2019. For a detailed description of the Committee’s role and responsibilities, as well as the retention and use of Exequity, please see “Compensation Committee” beginning on page  8 of this Proxy Statement.
Base Salary.   The base salary of our executive officers as a group is benchmarked against the 50th percentile (median) of base salaries of comparable executives within the Company’s peer group. We benchmark against the median in order to set salaries that are competitive in the gaming industry and that will attract and retain qualified executives. Base salaries are then adjusted for certain qualitative factors, including specific position duties and responsibilities, tenure with the Company, individual contribution and position value to the Company and the overall positioning of an executive’s pay package.
Annual Short-Term Incentive. The annual target short-term incentive compensation of our executive officers as a group is benchmarked against the 50th percentile (median) of annual short-term incentive compensation of comparable executives within the Company’s gaming peer group. The Company’s annual short-term incentive plan is designed to motivate the executive officers and other members of management to achieve the Company’s carefully crafted short-term operational objectives. To ensure that such executives are appropriately incentivized to maximize earnings for the Company, our annual short-term incentive plan in 2019 provided for the payment of cash incentive compensation based upon the Company’s achievement of Adjusted EBITDA, after lease payments (“Adjusted EBITDA, after Lease Payments”) goals for the year. The Committee believes that an annual incentive program that relies on Adjusted EBITDA, after Lease Payments focuses our executives on the achievement of annual objectives that will most tangibly contribute to both short and long-term shareholder gains.
Adjusted EBITDA, after Lease Payments refers to Adjusted EBITDAR less Lease Payments, which is
 
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defined as lease payments made to our REIT landlords under our triple net leases. Adjusted EBITDA is defined as earnings before interest expense, net; income taxes; depreciation and amortization; stock-based compensation; debt extinguishment and financing charges; impairment losses; insurance recoveries and deductible charges; changes in the estimated fair value of our contingent purchase price obligations; gain or loss on disposal of assets; the difference between budget and actual expense for cash-settled stock-based awards; pre-opening and acquisition costs; and other income or expenses. Adjusted EBITDA is inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment and is inclusive of rent expense associated with triple net operating leases. Adjusted EBITDAR is defined as Adjusted EBITDA (as defined above) plus rent expense associated with our triple net operating leases. A reconciliation of Net Income to Adjusted EBITDA, after Lease Payments is included as Appendix A.
We measure our annual short-term incentive plan based on Adjusted EBITDA, after Lease Payments because it is an objective and quantifiable measurement for the Company’s financial performance, as well as for comparing the Company’s performance to others within the industry, as EBITDA is the most commonly used performance metric in the gaming industry. The Compensation Committee believes that Adjusted EBITDA, after Lease Payment is a useful performance measure because it illustrates the performance of the Company’s ongoing business operations after deducting the lease payments made only to our REIT landlords, pursuant to our triple net leases.
From time to time, we make adjustments to Adjusted EBITDA, after Lease Payments to determine the annual short-term incentive compensation in accordance with the terms of the 2018 Long Term Incentive Compensation Plan (the “2018 Plan”). These adjustments are made in connection with unanticipated, one time and non-recurring events.
The target bonus is payable when the Company meets or exceeds its Adjusted EBITDA, after Lease Payments goal for a given year, subject to any adjustments permitted under the 2018 Plan to account for certain extraordinary or unforeseen events (“Target EBITDA”). The Company must achieve at least a “threshold” amount of Adjusted EBITDA, after Lease Payments (currently set at 85% of Target EBITDA) in order for executives to receive any portion of the annual short-term incentive bonus. In order for the Company’s executives to receive the maximum amount of annual short-term incentive bonus the Company must achieve a “stretch” amount of Adjusted EBITDA, after Lease Payments (currently set at 115% of
Target EBITDA). In order to help manage potential payouts, annual short-term incentive opportunities are capped at the maximum bonus levels for each executive, regardless of the extent to which performance exceeds targeted levels. In addition, the amount of bonus for each executive is subject to reduction in the event that such executive does not achieve certain pre-approved and measurable individual goals for the year. We have typically elected to pay this award in cash, although we have discretion to pay this award in cash, equity or any combination of cash and equity. We set the ranges of bonuses payable to each executive as a percentage of annual base salary, consistent with the incentive programs and practices used by the Company’s peer group. For 2019, the target bonus opportunities for the named executive officers were as follows:
Executive
Target Bonus Opportunity
as Percentage of Salary
Chief Executive Officer 150%
President and Chief Operating
Officer
100%
EVP, Chief Financial Officer 100%
EVP, General Counsel and Secretary 100%
For 2019, the Committee established the following Adjusted EBITDA, after Lease Payments goals for the annual incentive compensation metric:
Metric
($ in millions)
Threshold
(85%)
Target
(100%)
Maximum
(115%)
Adjusted EBITDA, after Lease Payments $ 596.4 $ 701.7 $ 807.0
We have elected to use Adjusted EBITDA, after Lease Payments as the performance metric for the annual short term incentive compensation plan again in 2020.
Equity Compensation.   We believe that the award of equity compensation is a critical component of the Company’s executive compensation program because equity compensation directly and tangibly ties executive compensation to management’s ability to increase shareholder value. Our experience has shown us that equity compensation fosters an atmosphere where employees “think like owners” and are motivated to increase the long-term value of the Company by aligning their interests with those of the Company’s shareholders. Accordingly, we believe that equity compensation is an excellent tool to reflect the Company’s emphasis on “pay for performance” so that an appropriate portion of each executive’s compensation package will align with the creation of shareholder value. We also believe that this culture of employee ownership has been a significant
 
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contributing factor to the Company’s success and will continue to play a vital role in future success. More specifically, in an industry that is growing in scope and complexity, we believe that equity compensation is a critical tool in attracting and retaining executives with the type of entrepreneurial spirit that we believe is integral to the Company’s success, as well as for incentivizing them to explore creative approaches to unlock shareholder value, such as the Spin-Off, our new business lines (particularly interactive gaming and retail sportsbooks), and the Pinnacle and Barstool Sports transactions.
Consistent with the Board’s desire to maximize shareholder value, we have taken steps to protect shareholder interests and promote shareholder value in both the design and the administration of the equity compensation program. Under the terms of the 2018 Plan, awards to employees are administered by the Committee. The vesting schedules for awards are designed to encourage employees to focus on the long-term success of the Company by requiring employees to remain with the Company for a number of years (in all cases three or four years, with a minimum vesting period of one year under our 2018 Plan) before all of their awards are vested and may be settled. The 2018 Plan does not provide for automatic vesting of equity following a change in control. In addition, the 2018 Plan does not permit the exercise price of outstanding stock options or stock appreciation rights to be reduced, nor does it permit the grant of discounted stock options or stock appreciation rights. Finally, the 2018 Plan includes a “fungible share ratio” concept that requires the Company to count each share awarded as restricted stock, or pursuant to any other full value award, as an award of 2.30 shares for purposes of counting the shares available for issuance under the 2018 Plan, provided that awards settled only in cash are not counted against the shares available under the 2018 Plan.
Under the Performance Share Program, the Committee establishes performance-based awards for each eligible participant. The awards are denominated at target as restricted stock and/or phantom stock units equal to a determined percentage of the participant’s base salary in effect at the date of grant. Each award has a three-year award period consisting of three one-year performance periods and a minimum three-year service period. In 2019, 67% of long-term incentive compensation of our named executive officers was based on performance. One or more performance goals for each performance period are established for each one-year performance period. Consequently, the number of performance awards credited to the participant’s account for each one-year performance period will increase or decrease from the target award depending on the extent to which the applicable performance goal is actually achieved. For example, if at least 85% of the applicable performance goal is not achieved, no performance awards will be
credited for the performance period, and if at least 115% of the applicable performance goal is achieved, an amount equal to 150% of the target performance shares will be credited for that performance period. Following the end of each performance period, the Committee will determine the level of performance goals achieved and credit, to each participant’s account, the number of performance awards for such period. All credited performance awards that were granted in 2019 will remain subject to forfeiture during the full three-year service period, subject to lapse of such forfeiture restrictions earlier in the event of involuntary termination of service, retirement, death or disability, or a qualifying termination following a change in control of the Company.
In 2019, the Committee considered various performance metrics for the Performance Share Program and ultimately selected, in equal weight, (i) an Adjusted EBITDA-based goal and (ii) a synergies goal relating to the Pinnacle acquisition for the first performance period of the 2019 performance awards:

Adjusted EBITDA Metric.   The Committee selected Adjusted EBITDA after Lease Payments because (i) many of the Company’s peer gaming companies operate in different markets than the Company, and relative stock performance between the Company and its peers may be skewed by differences in local, regional or international market conditions, as well as external factors such as M&A activity, and (ii) Adjusted EBITDA, after Lease Payments is the key metric to incentivize management to enhance shareholder value (particularly in a year with extensive acquisition activity such as 2019). Further, because the Company’s Adjusted EBITDA after Lease Payments targets may vary significantly from year-to-year due to mergers and acquisitions, new development projects, macro-economic events, regulatory events and changes in the competitive landscape, the Committee determined that a one-year performance period was appropriate. Nevertheless, because grants under the program do not fully vest until the third anniversary of the grant date, and performance awards are earned in the form of restricted stock and phantom stock units, the Committee determined that the Performance Share Program incentivizes the long-term growth of shareholder value and encourages executive retention.

Synergies Metric.   The Committee determined that synergies achieved was an appropriate second performance metric from the Pinnacle transaction to align Company performance with the previously announced goal of $100 million in expected synergies within the two year period following the Company’s acquisition of Pinnacle.
 
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For 2019, the Committee established the following goals for the first performance period of the 2019 performance awards:
Metric
($ in millions)
Threshold
(85%)
Target
(100%)
Maximum
(115%)
Adjusted EBITDA, after Lease Payments $ 596.4 $ 701.7 $ 807.0
Synergies $ 42.5 $ 50.0 $ 57.5
Deferred Compensation.   The Company does not maintain any defined benefit pension programs for its executives. Instead, consistent with the Company’s peer group, the Company maintains an elective nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for executives. In 2019, the Company provided a matching contribution on an executive’s deferrals to the plan of up to 5% of the executive’s base salary and annual bonus. All amounts credited to an executive’s account are invested, as directed by the executive, in commonly available mutual funds, and the Company does not guarantee any minimum returns. The plan is unfunded and benefits are paid from the Company’s general assets; however, the Company contributes the funds into a grantor trust on a monthly basis in respect of these deferred compensation obligations. The Company generally sets aside separately the amounts deferred by the executives and the matching contributions thereon and, to protect against excess
liabilities, invests such amounts in the mutual funds notionally selected by each executive. This program is described in more detail beginning on page  43 of this Proxy Statement.
To help mitigate the financial impact of the ongoing COVID-19 pandemic, the Company suspended its contributions under the Deferred Compensation Plan effective on April 1, 2020.
Benefits and Perquisites.   We offer a standard set of benefits to all of our employees, including medical, dental and vision insurance, group life insurance, short and long-term disability and a 401(k) with certain contributions matched by us in 2019. We believe that executives should be offered some limited additional benefits and perquisites that are reasonable relative to the benefits provided to all employees, are consistent with competitive and industry practices among the Company’s peer group, and, in certain circumstances, may address a particular reasonable issue or concern of an executive. Consistent with these objectives, the Company also provides certain executive officers with selected supplemental benefits and perquisites, including financial and tax planning services. The description and value of such supplemental benefits and perquisites in 2019 can be found in the “All Other Compensation” column of the Summary Compensation Table in this Proxy Statement.
To help mitigate the financial impact of the ongoing COVID-19 pandemic, the Company suspended its 401(k) contribution match, effective on April 1, 2020.
 
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Analysis of 2019 Compensation
Total Target Compensation
Each year, we review the base salary of each executive officer against the base salaries of similarly positioned executives in the Company’s peer group. In doing so, we compare the base salary information contained in our peer group’s most recently available proxy statements (generally 2018 pay levels as reported in 2019 proxy statements) with 2019 pay targets for the Company’s executive officers. For instance, in 2019, our review indicated that the target total compensation of Mr. Wilmott, the Chief Executive Officer in 2019, was below the 50th percentile relative to similarly positioned executives (Chief Executive Officers) in the Company’s peer group (based on information in the peer group companies’ 2019 proxy statements). Mr. Wilmott’s total target pay for 2019 was approximately 16% below the peer CEO total, and the total compensation of each of the Company’s named executive officers was also below the median of similarly positioned executives in the Company’s peer group.
Base Salary
For 2019, in order to better align with the benchmark median pay levels among our peers, we deemed it appropriate to increase the base salary of our Executive Vice President, General Counsel and Secretary by 12.5%, following an analysis of his performance and compensation relative to similarly positioned executives in the Company’s peer group. Other than our Executive Vice President, General Counsel and Secretary, we did not increase the base salaries of any of the executive officers in 2019. The following table indicates the base compensation of each named executive officer for 2019:
Executive
2019
Base
Salary
Timothy J. Wilmott
Chief Executive Officer
$ 1,591,350
Jay A. Snowden
President and Chief Operating Officer
$ 1,100,000
William J. Fair
EVP, Chief Financial Officer
$ 721,000
Carl Sottosanti
EVP, General Counsel and Secretary
$ 675,000
In connection with Mr. Snowden’s promotion as Chief Executive Officer, Mr. Snowden’s salary was increased to $1.4 million effective as of January 1, 2020. In addition, Mr. Sottosanti received a 3% raise which increased his salary to $695,250 effective as of January 1, 2020. Further, in connection with his appointment on March 3, 2020, as Executive Vice President and Chief Financial Officer, David Williams’ salary was $650,000. To help mitigate the financial impact of the ongoing COVID-19 pandemic, the Committee reduced the base salaries of Mr. Snowden by $350,000, Mr. Williams by $130,000 and Mr. Sottosanti by $139,050, effective on April 1, 2020.
Annual Short-Term Incentive
In 2019, the Company achieved Adjusted EBITDA, after Lease Payments for purposes of the annual short-term incentive plan of $737.1 million, which is 105.05% of the target of $701.7 million. This Adjusted EBITDA, after Lease Payments amount reflects adjustments from the Company’s Adjusted EBITDAR to include the impact of rent payments made to our landlords under our triple net leases, exclude the Adjusted EBITDA from May 23, 2019 through December 31, 2019 associated with the Greektown Casino, an adjustment to exclude the rent payments made to our landlord under the Greektown lease, and include the impact of certain flood and windstorm weather events, and certain other non-recurring and unusual events as permitted by the terms of the 2018 Plan. For a discussion regarding the adjustments to the Adjusted EBITDA, after Lease Payments, please see the reconciliation of Net Income to Adjusted EBITDA, after Lease Payments included as Appendix A. This resulted in our named executive officers earning the amounts reflected in the table under the annual short-term incentive plan. The following table indicates the target bonus and actual amount paid to each named executive officer for the annual short-term incentive for 2019:
 
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Executive
Target Bonus
Actual Bonus
Timothy J. Wilmott
Chief Executive Officer
$ 2,387,025 $ 2,654,902
Jay A. Snowden
President and Chief Operating Officer
$ 1,100,000 $ 1,285,167
William J. Fair
EVP, Chief Financial Officer
$ 721,000 $ 842,368
Carl Sottosanti
EVP, General Counsel and Secretary
$ 675,000 $ 788,625
Equity Compensation
In 2019, we made annual equity compensation grants to our executive officers, which were based on a percentage of each such executive’s base salary. In determining the amount of such grants, the Committee considered the extent to which the grant would reward such officers for increasing shareholder value and such qualitative factors as specific position duties and responsibilities, tenure with the Company, individual contribution and position value to the Company. The Committee also considered the size of the grant in relation to the diluted shares outstanding, the Company’s recent and long-term performance and the Company’s total long-term incentive and total target pay positioning relative to the Company’s peers. In 2019, the Committee approved a new structure of long-term equity incentive compensation to consist of three components: (i) 33% of value at award date was in the form of options which vest at the rate of 25% per year, subject to the executive’s continued employment; (ii) 33% of the value at award date was in the form of performance-based restricted stock, with each grant subject to a three year vesting period and only to the extent certain performance hurdles have been achieved; and (iii) 33% of value at award date was in the form of performance-based phantom stock units, which are payable, if at all, in cash, with each grant subject to a three year vesting period and only to the extent certain performance hurdles have been achieved.
Long-Term Equity Incentive Compensation Structure
[MISSING IMAGE: tm202024d1-pc_ltiequity4c.jpg]
In 2019, as described above, with respect to the first performance period of the 2019 performance awards under the Performance Share Program, the Committee established an Adjusted EBITDA, after Lease Payments target of $701.7 million and synergies target of $50 million related to the Pinnacle transaction (as the first part of the full $100 million synergy target over the two year period following the closing of the Pinnacle transaction).
The Committee believes the long-term incentive allocation strikes an appropriate balance between incentivizing long-term objectives (through performance-based awards in the form of restricted stock and phantom stock units) and long-term shareholder performance (through options and the performance-based restricted stock and performance-based phantom stock units issued upon achievement of performance share objectives).
The following table indicates the option grants and target performance awards made to each of the named executive officers in 2019 as long-term incentive compensation:
 
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Executive
Option
Awards
Value of
Option Awards
Target Phantom
Stock Units
Value of Target
Phantom Stock
Units
Target
Performance
Awards
Value of Target
Performance
Awards
Timothy J. Wilmott
Former Chief Executive Officer
356,805 $ 2,387,025 33,043 $ 2,387,025 33,043 $ 2,387,025
Jay A. Snowden(1)
President and Chief Operating Officer
156,203 $ 1,045,000 14,466 $ 1,045,000 14,466 $ 1,045,000
William J. Fair
Former EVP, Chief Financial Officer
86,218 $ 576,800 7,984 $ 576,800 7,984 $ 576,800
Carl Sottosanti
EVP, General Counsel and Secretary
80,717 $ 540,000 7,475 $ 540,000 7,475 $ 540,000
(1)
The options granted in 2020, excludes the options Mr. Snowden was awarded in connection with his promotion to Chief Executive Officer on January 1, 2020.
In connection with his promotion to Chief Executive Officer as of January 1, 2020, the Committee granted Mr. Snowden options in August 2019 (which vest in four annual installments from the date of grant) with a grant date fair value of $6.3 million in lieu of any equity grant in 2020. In determining the size of the grant of options to Mr. Snowden, the Committee determined that the grant value of the options brought Mr. Snowden’s 2019 annual target compensation package to about 84% of the CEO median of the Company’s peer group and also took into account the fact that Mr. Snowden would not receive any equity grant in 2020. The Company expects that regular, annual long-term incentive awards for Mr. Snowden will resume in 2021, at the same time as awards are made to the other named executive officers.
During 2019, the Company achieved the following results with respect to the outstanding performance awards granted in 2017, 2018 and 2019:
Performance Metric
Target
($ in millions)
2019 Result
($ in millions)
Result as a
% of Target
Applicable Performance Awards
Adjusted EBITDA, after Lease Payments* $ 701.7 $ 737.14 105.05%

First tranche of 2019 performance awards

Second tranche of 2018 performance awards

Third tranche of 2017 performance awards
Synergies $ 50 $ 87 174%

First tranche of 2019 performance awards
*
This is a non-GAAP financial measure. See Reconciliations and Non-GAAP Financial Measures in this Proxy Statement.
As a result, the following shares of restricted stock or phantom stock units were earned and credited to our named executive officers under our Performance Share Program. The 2019 and 2018 performance awards remain subject to forfeiture for three years following the grant date during the full three year service period, subject to lapse of such forfeiture restrictions earlier in the event of involuntary termination of service, retirement, death or disability, or a change in control of the Company. The 2017 performance awards have completed their full three-year performance cycle and therefore have vested in full.
 
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Executive
Phantom Stock Units
Earned from 2019
Performance Awards
Restricted Stock
Earned from 2019
Performance
Awards
Restricted Stock
Earned from 2018
Performance
Awards
Restricted Stock
Earned from 2017
Performance
Awards
Timothy J. Wilmott
Chief Executive Officer
44,083 44,083 31,025 25,600
Jay A. Snowden
President and Chief Operating Officer
19,298 19,298 13,583 11,520
William J. Fair
EVP, Chief Financial Officer
10,652 10,652 7,496 7,829
Carl Sottosanti
EVP, General Counsel and Secretary
9,972 9,972 6,238 4,480
Other Compensation Policies
Hedging and Pledging Policy.   We believe that equity ownership fosters an atmosphere where directors and officers “think like owners” and are motivated to increase the long-term value of the Company by aligning their interests with those of the Company’s shareholders. Accordingly, we have adopted policies prohibiting each of the Company’s directors and employees (including executive officers) from engaging in hedging transactions (such as short sales, puts and calls and other derivatives), pledging Company shares as collateral for a loan or holding shares in a margin account.
Compensation Clawback Policy.   As a highly regulated, multi-jurisdictional gaming and racing company, the Company has maintained a long standing commitment to ensure that its executive officers adhere to the highest professional and ethical standards. Accordingly, the Company has adopted a policy pursuant to which misconduct by any executive officer that leads to a restatement of the Company’s financial results could subject such individuals to a disgorgement of prior compensation. In the event of a restatement, in light of the highly regulated nature of the Company’s business, the Committee has the authority to pursue an appropriate remedy, based on the facts and circumstances surrounding the restatement and existing laws. The Committee will amend the Company’s clawback policy to the extent required by any changes in law.
Stock Ownership Guidelines for Senior Management.   The Compensation Committee has established the following stock ownership guidelines for senior management, which are re-evaluated periodically.
Position
Required Value of Shares Held
Chief Executive Officer Five times base salary
Chief Operating Officer Three times base salary
Chief Financial Officer Three times base salary
General Counsel Two times base salary
The Chief Executive Officer is authorized to set ownership requirements for other members of the senior management team as appropriate. As with the director stock ownership guidelines, the value of a named executive officer’s stock ownership at any time will be based on the aggregate value of common stock, restricted stock and phantom stock units held by such named executive officer. Each named executive officer is required to achieve compliance with these guidelines within five years of assuming his current position and, once achieved, ownership of the required amount must be maintained for as long as the individual is subject to these guidelines. As of December 31, 2019, all named executive officers were in compliance with these guidelines.
Statutory and Regulatory Considerations.   In designing the Company’s compensatory programs, we consider the various tax, accounting and disclosure rules associated with various forms of compensation. We also review and consider the deductibility of executive compensation under Section 162(m) of the Code, which generally provides that the Company may not deduct certain compensation of more than $1 million that is paid to certain individuals. There may be limited situations in which the Company will be entitled to take tax deductions related to performance-based compensation outside of the $1 million limit under Code Section 162(m) where such amounts are payable under contracts in effect prior to November 2, 2017 for which there are no material modifications. We seek to preserve the Company’s tax deductions for executive compensation to the extent consistent with the Company’s executive compensation objectives. However, in light
 
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of the limitations of Code Section 162(m), we anticipate that we will consider and grant compensation that will not be tax deductible if we believe such compensation is warranted to achieve the Company’s objectives.
Timing of Equity-Based Awards.   In December 2015, the Company adopted an Equity Based Award Policy, under which, for annual equity-based awards to executive officers, the grant date will be the second trading day of the calendar year. From time to time, annual grants may be made on a later date in the year as a result of the timing of the determination of the awards, the determination of terms or other factors, such as performance metrics for a given year. For example, the Company grants performance based awards in February each year once the performance goals have been established. Also, Mr. Snowden was granted stock options in August 2019 in connection with his promotion as Chief Executive Officer. All equity-based grants, whether granted on the second trading day of the calendar year or later in the year, are priced in accordance with the terms of the applicable equity compensation plans or performance share programs, which require, among other things, that the exercise price of all stock options be established by reference to the closing price on the trading day immediately prior to the date of grant.
Reconciliations and Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDAR and Adjusted EBITDA, after Lease Payments are non-GAAP financial measures. For a discussion of Adjusted EBITDA and Adjusted EBITDAR and a reconciliation of Adjusted EBITDA and Adjusted EBITDAR to net income, see the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 27, 2020.
For a discussion of Adjusted EBITDA, after Lease Payments and a reconciliation to net income see Appendix A to this Proxy Statement.
 
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Compensation Committee Report
The Compensation Committee has reviewed and discussed the foregoing CD&A with the management of the Company. In addition, as discussed on page 9 of this Proxy Statement, the Committee retained the services of Exequity LLP as its independent compensation consultant in order to receive independent expert advice on executive compensation matters and guidance with respect to compensation best practices, among other things. The compensation actions taken in 2019 and described in this CD&A were taken in consultation with, and were supported by, Exequity. Based on the review and discussions described above, the Compensation Committee recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Compensation Committee of
the Board of Directors
Barbara Shattuck Kohn, Chair
John M. Jacquemin
Ronald J. Naples
 
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COMPENSATION TABLES
Summary Compensation
The following table sets forth information concerning the compensation earned during the fiscal years ended December 31, 2019, 2018 and 2017 by the Company’s Chief Executive Officer, Chief Financial Officer and the Company’s other most highly compensated individuals serving as executive officers during 2019 (collectively, the “Named Executive Officers”):
Name and Principal Position
Year
Salary ($)
Stock
Awards
($)(2)
Option
Awards
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
All Other
Compensation
($)(5)
Total
($)
Timothy J. Wilmott
Former Chief Executive Officer(1)
2019 1,591,350 2,781,338 2,385,961 2,654,902 119,998
9,533,549
2018 1,591,350 2,150,619 2,387,028 2,642,552 106,804
8,878,353
2017 1,544,135 646,718 2,160,813 2,725,490 104,667
7,181,823
Jay A. Snowden
President and Chief Executive Officer
2019 1,100,000 1,224,213 7,229,814 1,285,167 138,774
10,997,968
2018 1,100,000 958,081 1,044,998 1,276,629 122,550
4,502,258
2017 979,828 291,034 972,362 1,241,002 97,334
3,581,560
William J. Fair
Former Executive Vice President, Chief Financial Officer(1)
2019 721,000 706,581 576,541 842,368 96,284
2,942,774
2018 721,000 524,600 576,804 836,773 79,156
2,738,333
2017 700,000 158,616 660,829 752,122 56,575
2,328,142
Carl Sottosanti
Executive Vice President,General Counsel and Secretary
2019 675,000 585,242 539,756 788,625 87,186
2,675,809
2018 600,000 397,130 480,000 696,343 61,133
2,234,606
2017 540,447 113,170 378,141 512,660 47,452
1,591,870
(1)
Mr. Wilmott retired and resigned as Chief Executive Officer on December 31, 2019 and Mr. Snowden became President and Chief Executive Officer effective January 1, 2020. Mr. Snowden held the title Chief Operating Officer until December 31, 2019. Mr. Fair resigned as Executive Vice President and Chief Financial Officer on March 3, 2020.
(2)
The value in this column reflects the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”) for stock awards. Assumptions used in the calculation of these amounts are described in footnote 14 to the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The grant date fair value assuming the maximum level of performance achieved under performance awards are as follows: (a) $4,172,032 for Mr. Wilmott; (b) $1,836,344 for Mr. Snowden; (c) $1,059,432 for Mr. Fair; and (d) $877,900 for Mr. Sottosanti.
(3)
The value in this column reflects the full grant date fair value calculated in accordance with ASC 718 for option awards. Assumptions used in the calculation of these amounts are described in Note 3 to the Company’s audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In connection with his promotion to Chief Executive Officer on January 1, 2020, in August 2019, Mr. Snowden was granted stock options with a grant date fair value of $6.3 million. Mr. Snowden will not receive any grants of equity awards in 2020.
(4)
The amounts reflect cash payments for 2019 pursuant to the Company’s annual short-term incentive plan, which provided for the payment of incentive compensation upon the Company’s achievement of pre-established performance goals. For more information on the Company’s annual short-term incentive plan, see the discussion beginning on page  29 of this Proxy Statement.
(5)
For Mr. Wilmott, All Other Compensation in 2019 consisted of (1) $79,568 in Company matching contributions under the Company’s Deferred Compensation Plan (“DCP”); (2) $21,923 in Company paid insurance premiums; (3) $12,907 in tax and financial planning; and (4) $5,600 in matching 401(k) contributions. For Mr. Snowden, All Other Compensation in 2019 consisted of (1) $118,831 in Company matching contributions under the DCP; (2) $14,343 in tax and financial planning; and (3) $5,600 in matching 401(k) contributions. For Mr. Fair, All Other Compensation in 2019 consisted of (1) $77,889 in Company matching contributions under the DCP; (2) $12,795 in tax and financial planning; and (3) $5,600 in matching 401(k) contributions. For Mr. Sottosanti, All Other Compensation in 2019 consisted of (1) $68,279 in Company matching contributions under the DCP; (2) $12,907 in tax and financial planning; and (3) $6,000 in matching 401(k) contributions.
 
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2019 Grants of Plan Based Awards
The following table sets forth certain information regarding grants of plan based awards relating to 2019 for the Named Executive Officers.
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($)(1)
Estimated Future Payouts
Under Equity Incentive Plan
Awards (#)
All Other
Option
Awards
(#)(2)
Exercise
Price of
Option
Awards
($)/share)
Grant Date
Fair Value of
Stock and
Option
Awards(3)
Name
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Timothy J. Wilmott 1,591,350 2,387,025 3,182,700
1/3/2019 356,805 19.45 2,385,961
2/14/2019(4) 10,957 21,914 32,871 537,989
2/14/2019(5) 13,279 26,558 39,837 651,999
2/14/2019(6) 16,522 33,043 49,565 795,675
2/14/2019(7) 16,522 33,043 49,565 795,675
Jay A. Snowden 550,000 1,100,000 1,650,000
1/3/2019 156,203 19.45 1,044,532
8/6/2019 1,032,706 18.81 6,185,282
2/14/2019(4) 4,931 9,861 14,792 242,088
2/14/2019(5) 5,814 11,627 17,441 285,443
2/14/2019(6) 7,233 14,466 21,699 348,341
2/14/2019(7) 7,233 14,466 21,699 348,341
William J. Fair 360,500 721,000 1,081,500
1/3/2019 86,218 19.45 576,541
2/14/2019(4) 3,351 6,702 10,053 164,534
2/14/2019(5) 3,209 6,417 9,626 157,537
2/14/2019(6) 3,992 7,984 11,977 192,255
2/14/2019(7) 3,992 7,984 11,977 192,255
Carl Sottosanti 337,500 675,000 1,012,500
1/3/2019 80,717 19.45 539,756
2/14/2019(4) 1,918 3,835 5,753 94,149
2/14/2019(5) 2,670 5,340 8,010 131,097
2/14/2019(6) 3,738 7,475 11,213 179,998
2/14/2019(7) 3,738 7,475 11,213 179,998
(1)
As discussed in the “CD&A” section above, the following cash bonuses were awarded: (i) for Mr. Wilmott, $2,654,902; (ii) for Mr. Snowden, $1,285,167; (iii) for Mr. Fair, $842,368 and (iv) for Mr. Sottosanti, $788,625.
(2)
Option awards represent stock options granted to the executives as part of their annual equity incentive compensation, and in the case of Mr. Snowden, in connection with his promotion as Chief Executive Officer on January 1, 2020. The option awards vest over four years, 25% on the first anniversary of the date of grant and 25% on each succeeding anniversary.
(3)
Represents the full grant date fair value of awards under ASC 718. Generally, the full grant date fair value is the amount the Company expenses in its financial statements over the award’s vesting period. Assumptions used in the calculation of the amounts for stock option awards and performance awards are included in Notes 3 and 14 to the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
(4)
Equity incentive awards represent performance-based restricted stock awards approved on February 17, 2017 in connection with the Company’s 2017 performance share program. The aggregate target number of restricted stock having a three-year award period consisting of three one-year performance periods and a three-year service period were: (i) 65,744 for Mr. Wilmott; (ii) 29,585 for Mr. Snowden; (iii) 20,106 for Mr. Fair; and (iv) 11,505 for Mr. Sottosanti. As of December 31, 2019, performance goals for all three performance periods had been established for the 2017 awards. The grant date in the table above reflects the third tranche of these three-year performance awards. For further information, see “Analysis of 2019 Compensation — Equity Compensation” in the CD&A.
(5)
Equity incentive awards represent performance-based restricted stock awards approved on February 6, 2018 in connection with the Company’s 2018 performance share program. The aggregate target number of restricted stock having a three-year award period consisting of three one-year performance periods and a three-year service period were: (i) 79,674 for Mr. Wilmott; (ii) 34,880 for Mr. Snowden; (iii) 19,252 for Mr. Fair; and (iv) 16,021 for Mr. Sottosanti. As of December 31, 2019, performance goals for two performance periods had been established for the 2018 awards. The grant date in the table above reflects the second tranche of these three-year performance awards. For further information, see “Analysis of 2019 Compensation — Equity Compensation” in the CD&A.
 
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(6)
Equity incentive awards represent performance-based restricted stock awards approved on February 14, 2019 in connection with the Company’s 2019 performance share program. The aggregate target number of restricted stock having a three-year award period consisting of three one-year performance periods and a three-year service period were: (i) 99,129 for Mr. Wilmott; (ii) 43,397 for Mr. Snowden; (iii) 23,953 for Mr. Fair; and (iv) 22,425 for Mr. Sottosanti. As of December 31, 2019, performance goals for only the first performance period had been established for the 2019 award. The grant date in the table above reflects the first tranche of these three-year performance awards. For further information, see “Analysis of 2019 Compensation — Equity Compensation” in the CD&A.
(7)
Equity incentive awards represent performance-based phantom stock units that vest in cash approved on February 14, 2019 in connection with the Company’s 2019 performance share program. The aggregate target number of phantom stock units having a three-year award period consisting of three one-year performance periods and a three-year service period were: (i) 99,129 for Mr. Wilmott; (ii) 43,397 for Mr. Snowden; (iii) 23,953 for Mr. Fair; and (iv) 22,425 for Mr. Sottosanti. As of December 31, 2019, performance goals for only the first performance period had been established for the 2019 award. For further information, see “Analysis of 2019 Compensation — Equity Compensation” in the CD&A.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning equity awards outstanding as of December 31, 2019 for the Named Executive Officers:
Option Awards
Stock Awards
Number of Securities Underlying
Unexercised Options:
Option
Exercise
Price ($)
Option
Expiration
Date
Number of
Shares or
Units Held that
Have Not
Vested (#)(g)
Market Value of
Shares or Units
Held that Have Not
Vested ($)(k)
Equity
incentive
plan awards:
number of
unearned
shares, units
or other
rights that
have not
vested (#)(l)
Equity
incentive
plan awards:
market or
payout value
of unearned
shares, units
or other
rights that
have not
vested ($)(k)
Name
Exercisable
(#)
Unexercisable
(#)
Timothy J. Wilmott
50,505(a) 11.61 2/24/2021 78,736(h) 2,012,492
454,545 11.61 2/24/2021 61,848(i) 1,580,835 39,837 1,018,234
539,832 13.19 1/6/2022 44,083(j) 1,126,761 99,129 2,533,737
395,729 131,909(b) 12.87 2/9/2023 44,083(j) 1,126,761 99,129 2,533,737
243,581 243,581(c) 14.10 1/4/2024
60,401 181,201(d) 30.74 1/3/2025
356,805(e) 19.45 1/3/2029
Jay A. Snowden
21,970(a) 11.61 2/24/2021 35,432(h) 905,642
197,727 11.61 2/24/2021 27,077(i) 692,088 17,439 445,741
234,827 13.19 1/6/2022 19,298(j) 493,257 43,398 1,109,253
178,078 59,359(b)