TABLE OF CONTENTS

Composition, Skills and Independence

The Company’s Board of Directors currently consists of eight 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 Barstool Sports and Pinnacle 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. In 2020, the Board increased its size from seven to eight members and appointed Marla Kaplowitz to the Board. The Board believes Ms. Kaplowitz’s proven leadership in the marketing, consumer data, and digital transformation spaces will serve us well as the Company continues to evolve into the nation’s leading omnichannel provider of retail and interactive gaming, sports betting and entertainment.

The collective membership of the Board has a strong background in gaming, hospitality, capital markets, accounting, tax, technology, risk management, marketing, media 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 operate across 19 different states throughout North America. 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, other than Mr. Snowden, are independent under the current Listing Rules of the NASDAQ Stock Market (the “NASDAQ Rules”). 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 seven 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:

Chairman Emeritus

Peter M. Carlino, retired Chairman and founder of the Company, was appointed Chairman Emeritus on

June 12, 2019 and continues in this role at the request of the Board of Directors. For additional detail on the role of Chairman Emeritus, please see Section 4.02(e) of the Company’s bylaws.

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; Chief Legal Officer; 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 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 substantial internal staff and outside resources to assist them in carrying out their responsibilities. As of December 31, 2020, the Company maintained a 44 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 Thomas N. Auriemma, a non-director member, as the Chairman of the Compliance Committee and who is 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 achieve 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 55 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; Chief Legal Officer and Senior Vice President, Chief Human Resources Officer, 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:

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, 2020, 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, most recently with respect to Mr. Snowden’s appointment to CEO on January 1, 2020. Our CEO and our Senior Vice President, Chief Human Resources Officer 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, Chief Human Resources Officer, 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. 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, Chief Human Resources Officer and is complementary to the Board’s succession planning.

2020 Board and Committee Meetings

Each member of the Board contributes a substantial amount of time and effort to serve as a Board and committee member. During 2020:

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, 2020, 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 attended the 2020 Annual Meeting of Shareholders.

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 2020, Exequity LLP (“Exequity”), who has served as the Compensation Committee’s consultant for the previous eight 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 2020, 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 Nominating and Corporate Governance Committee (“Governance Committee”) is responsible for:

Compliance Committee

The members of the Compliance Committee are individuals who, by virtue of their familiarity with law enforcement, regulated businesses, and the business activities of the Company, are sensitive to the concerns of state gaming regulators and are capable of ensuring compliance 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 79). 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:

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 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 omni-channel gaming, sports betting and racing company.

Caring for Our Planet

Penn National is dedicated to creating a positive and lasting impact on the environment and has launched sustainability initiatives, led by our Corporate and property-level operating teams and designated “Green Teams,” at our 41 casinos, racetracks and resorts in 19 states throughout the United States.

All three of Penn National’s latest greenfield developments were certified as LEED^® Gold or LEED^® Silver by the U.S. Green Building Council.

At our two newest casinos under development in Pennsylvania in York and Morgantown, which are scheduled to open later this year, we have implemented new energy efficiencies, including:

We are planning to incorporate similar improvements to those listed above at all of our 23 hotel properties as we continue our regular room refreshing and remodeling plans in 2021 and beyond. Already, more than 80 percent of our properties have completed an energy-efficient lighting retrofit program. 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 (see chart below).

Given the significant COVID-19 related temporary property closures in 2020, the following summary is from 2019:

In addition, through regular audits of energy consumption at our properties, we’re continuing to develop custom initiatives, such as HVAC energy management projects and thermostat control systems, to ensure the most efficient use of electricity.

Last year, we installed integrated shower amenity dispensers containing shampoo, conditioner and body wash at more than half of our hotel properties. These new containers can significantly reduce the plastic and product waste generated annually by single-use

Caring for Our People and Our Communities

Penn National is deeply committed to cultivating a culture and environment where all of our team members, regardless of their differences, feel like they truly belong. Last year, amidst one of the most challenging times in our nation’s history, as the world grappled with an outpouring of racial and social anguish, we formed the Penn Diversity Committee. Its mission is to put Penn National’s longstanding support of diversity and inclusion into action.

The Diversity Committee is chaired by Justin Carter, Senior Vice President of Regional Operations. The committee, which reports directly to our CEO Jay Snowden, is comprised of underrepresented team members from around the country and at varying levels in the organization to ensure our Company has mechanisms in place to listen to team members about important ongoing social justice issues, and to help implement the following key initiatives:

The Penn National Gaming Foundation and our properties around the country are proud to support numerous local non-profit organizations serving our veterans and active service members. For example:

Penn National is also proud to spotlight our team members who served in the military through back-of-house “Honor Wall” displays and in our internal newsletter, “The Insider.” In addition, we host special

recognitions and events for team members and customers who are actively serving, or are veterans,

This year, we’re excited to launch a new program called myHeroes, which will honor our veterans, first responders, and their families through team member recognition, employment opportunities, and we’ll be providing an exclusive, fully integrated extension of our mychoice rewards loyalty program.

Team Member Wellness

Serving our Communities

The Penn National Gaming Foundation, a 501(c)(3) not-for-profit organization, 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 Penn National Gaming Foundation focuses its efforts on supporting charities within our corporate regions, which includes Wyomissing, PA and our 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. Most recently, we created the Hurricane Laura Relief Fund and have contributed more than $6.5 million to assist L’Auberge Lake Charles and the community, which includes covering full wages and benefits for our team members while the property was closed. In addition, our partners at Barstool Sports designed a special “Lake Charles Strong” t-shirt and hoodie, with 100% of net proceeds going to support our emergency relief fund.

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, Health and Medical-related initiatives and programs that support veterans, active members of the military and their families.

Last year, despite the financial impact from the ongoing COVID-19 pandemic, which saw all of our properties temporarily closed, we continued to support our charitable partners, contributing $6 million from the Penn National Gaming Foundation and our properties to worthwhile charities and civic organizations in our host communities. In addition, we generated more than $14 million in economic development funds for our host communities in Kansas, Indiana and Iowa. We also donated thousands of volunteer hours by team members in our respective communities.

While the American Cancer Society’s (ACS) Relay for Life events were temporarily placed on hold due to COVID-19, our team members around the country remained involved in support of their critical mission. 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.

Penn National and our Louisiana properties in Baton Rouge and Lake Charles are leading sponsors and active volunteers for Metanoia Manor, a one-of-a-kind refuge for adolescent victims of human trafficking. Metanoia’s shelter near Baton Rouge can house nearly two dozen 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 $160,000 to the cause over the last three years. In addition, we have hosted multiple law enforcement summits at our Lake Charles, Louisiana facility for officials from Texas, Louisiana, Arkansas and Mississippi to share best practices and discuss potential new legislation to help fight human trafficking.

Caring for our Guests

Penn National recognizes that caring for our people and our communities includes caring for our valued guests and customers. In conjunction with our Gold Level partnership with the International Center for Responsible Gaming (ICRG), our Company has established a comprehensive framework to promote a culture of responsible gaming throughout our organization.

Penn National maintains a Corporate Responsible Gaming Committee to oversee its responsible gaming programs and regularly consults with the ICRG and other partner responsible gaming organizations. The Committee’s goals include:

This Committee meets quarterly and consists of senior Penn National executives, including our President & CEO, Chief Legal Officer, Chief Compliance Officer, and senior executives in Human Resources, Marketing, Internal Audit, as well as the Senior Vice Presidents of Regional Operations.

The Penn National Corporate Responsible Gaming Committee has established a comprehensive Corporate Responsible Gaming Program (“Corporate RG Program”) based on the American Gaming Association’s (“AGA”) Code of Conduct for Responsible Gaming to meet the goals described above that governs all of its casino facilities and online products.

As required by the Corporate RG Program, each individual Penn National property maintains a property Responsible Gaming Committee, chaired by the property general manager, that sets property responsible gaming standards in accordance with Corporate RG Program standards, ICRG recommended practices, and the AGA’s Code of Conduct. In addition, Penn National’s internal audit department conducts regular responsible gaming audits at each property and its Interactive Division to ensure compliance with established responsible gaming standards.

In addition, to address our Interactive Division’s customers, our Company has developed a robust responsible gaming program, including internal controls for account registration. Part of a registrant’s information is checked through a database of public records to confirm the individual’s information and identity. Only upon verifying an identity is an individual allowed to deposit funds into their sports betting or online casino account and wager when physically located in a legally approved jurisdiction. There is no anonymous gaming on our online gaming offerings. Penn National goes above and beyond to ensure that registrants are not part of Penn National’s database of excluded patrons. At registration, each registrant’s name and date of birth is checked against that database. Penn National voluntarily employs an “exclude one, exclude all” policy, meaning that any individual excluded at any Penn National property is not allowed to gamble at sister properties or register for our online gaming products. Further, the Company will block any individual’s account if the individual subsequently places themselves on a respective jurisdiction’s voluntary or involuntary exclusion list. Penn National performs daily checks of its online players list to ensure that no one listed on a jurisdiction’s voluntary or involuntary exclusion list is allowed to participate in our online offerings.

Beyond its gatekeeping measures, Company online operations provide customers with a number of services to promote responsible gaming. Primarily, the online applications (“app”) provide a number of resources and literature to players in its “Responsible Gaming and Patron Protection” and “Limits” sections. Players can set

various monetary limits in an effort to stay within their budget. This includes deposit, single wager, and total wager (daily, weekly, or monthly) limits. Our online offerings further provide the option of setting time limits, which prevent players from logging into their account for 24 hours after the voluntarily set time limit is met. In addition, players can set a “check-in” alert that will notify a player when they have been active on the app for a certain amount of time.

To further promote responsible gaming, there are waiting periods of 24 hours, seven days, and one month to increase or remove limits, aimed at preventing a vulnerable player from changing responsible gaming settings impulsively. In addition, players can set a timeout of at least 72 hours where they will not be able to login during this cooling off period.

Further, consistent with the Penn National’s omni-channel approach, Penn National and Barstool Sports are creating a cohesive, consistent message regarding responsible gaming across its interactive products, including the Barstool Sportsbook and Casino.

When the Barstool Sportsbook launched, it did so alongside an authentic public service announcement from Barstool Sports founder Dave Portnoy and lead talent Dan “Big Cat” Katz, reminding their audience that “if you have a problem, call 1-800-GAMBLER”. In just seven months, that PSA has received over 570,000

views. Moreover, Penn National and Barstool Sports launched Barstool Sportsbook responsible gaming platforms on Twitter and Instagram, providing dedicated platforms with the sole goal of delivering meaningful responsible gaming messaging under the Barstool brand.

Penn National and Barstool Sports incorporate the traditional, industry standard responsible gaming message in its gaming content, focusing on the 1-800-GAMBLER hotline number to provide its audience with the industry leading, easily recalled, and nationally available avenue of support if in need. The app provides this number at several customer interaction points, from the account section, to the customer’s bet slip, to

an inactivity timeout. Moreover, because the bet slip provides the hotline number, any time a customer shares their bet slip with friends or on social media, that customer is joining our responsible gaming effort by sharing the 1-800-GAMBLER resource.

In addition, Barstool incorporates this messaging in its day-to-day content. For example, the nation’s leading sports podcast, Barstool’s “Pardon My Take”, often reminds its multi-million-person audience that gambling should always be viewed as a form of entertainment. In Big Cat’s own words, “Gambling should be for entertainment. 1-800-GAMBLER if you have a problem….this…should be fun, entertainment. Don’t bet more than you can afford.”

Beyond merely words, Barstool transparently tracks and discloses gambling picks and results. A constant part of Barstool content is personalities admitting their lack of expertise and discussion of gaming losses. Barstool routinely shares daily win/loss records in shows, podcasts, and on social media. As Big Cat has said, “I’m still a bad gambler. Maybe I should put this into my Twitter bio. Don’t follow my picks expecting to win. I lose. I am a lifelong loser. A Loser with a capital ‘L’.”

Penn National and Barstool are improving the way we talk about responsible gaming to engage our entire audience in a meaningful way and will continue to focus on the well-being of our customers.

The Board has adopted a resolution approving, and recommending to our shareholders for their approval and adoption, the Company’s Second Amended and Restated Articles of Incorporation (“Articles of Incorporation”), to increase the number of authorized shares of our common stock, par value $0.01 per share, from the 200,000,000 shares currently authorized to 400,000,000 shares (the “Amendment”).

Reasons for the Proposed Increase in Authorized Shares of Common Stock

As of April 6, 2021, 156,568,828 shares of the Company’s common stock were outstanding, and the number of shares of common stock issuable upon the exercise of options outstanding is 3,713,926. In addition, as of April 6, 2021, the Company has also reserved for issuance 1,153,197 shares of Company common stock pursuant to our 2008 Long Term Incentive Compensation Plan and 7,360,998 shares of Company common stock pursuant to our 2018 Long Term Incentive Compensation Plan.

The Board believes that increasing the number of authorized shares of our common stock is in the best interests of the Company and its shareholders. The Board further believes that the additional shares of common stock will provide the Company with the necessary flexibility to utilize shares for various corporate purposes that may be identified in the future. These corporate purposes may include, but are not limited to, potential strategic transactions (such as mergers, acquisitions and other business combinations), stock dividends, equity or equity-linked offerings and other capital-raising or financing transactions, grants and awards under equity compensation plans and other types of general corporate purpose transactions. We believe that it is crucial to have the flexibility to issue shares of common stock beyond the amount remaining, and we believe the failure to approve the proposed Amendment would likely hinder our ability to pursue shareholder value-enhancing transactions.

The Board has not proposed the increase in the number of authorized shares with the intention of discouraging tender offers or takeover attempts of the Company. Rather, the proposed Amendment has been prompted by business and financial considerations, as set forth above, and it is the intended purpose of the Amendment to provide greater flexibility to the Board in considering and planning for our potential future

corporate needs. The availability of additional authorized shares for issuance may, however, have anti-takeover effects in that it may discourage a merger, tender offer, proxy contest or other attempt to obtain control of the Company. In this regard, if the Company was to become concerned that it may be a potential target of an unsolicited acquisition attempt, it could try to impede the acquisition by issuing additional shares of common stock or rights or other equity interests related thereto, thereby diluting the voting power of the other outstanding shares and increasing the potential cost to the bidder of the acquisition. The Board is not currently aware of any attempt or plan to acquire control of the Company.

The additional shares of common stock to be authorized by the adoption of the Amendment would have rights identical to our currently outstanding shares of common stock. Adoption of the proposed Amendment would not affect the rights of holders of currently outstanding shares of the Company’s common stock, except for effects incidental to increasing the number of shares of the Company’s common stock outstanding, such as dilution of earnings per share and voting rights of current holders of common stock, if and to the extent additional shares of common stock are ultimately issued. The proposed Amendment will not affect the number of shares of preferred stock authorized.

The Amendment is attached to this Proxy Statement as Appendix A. If the Amendment is approved, it will become effective upon its filing with the Department of State of the Commonwealth of Pennsylvania, which will occur as soon as practicable after the approval.

The Board of Directors unanimously recommends that shareholders vote “FOR” approval of the Company’s Second Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 200,000,000 to 400,000,000.

We are asking shareholders to approve an amendment and restatement (the “Amendment and Restatement”) of the Penn National Gaming, Inc. 2018 Long Term Incentive Compensation Plan (the “2018 Plan”).

The key change made by the Amendment and Restatement is to expand the eligibility provisions in the 2018 Plan to allow us to grant awards to consultants and advisors of the Company and our subsidiaries (which is a standard provision in most public companies equity plans). Currently, the 2018 Plan only permits grants to employees and directors.

As described in more detail in the Compensation Discussion and Analysis beginning on page 51 of this Proxy Statement, we believe that the award of equity compensation is a critical component of the Company’s compensation program. Our equity compensation program has encouraged strong shareholder alignment and has been an integral component in the substantial increase in shareholder value generated by the Company over the last decade.

We believe it is important that the 2018 Plan’s eligibility provisions be expanded to allow us to grant equity-based awards to consultants and advisors, as our ability to attract, incentivize and retain talented consultants and advisors has become increasingly important to our success, and we believe providing equity-based awards under the 2018 Plan will help us attract, incentivize and retain these consultants and advisors.

Other changes made in the Amendment and Restatement, which are of a more technical nature, include making drafting changes to the no-repricing, tax withholding and Section 409A provisions of the 2018 Plan.

The Amendment and Restatement does not increase the number of shares reserved for issuance under the 2018 Plan or extend the term of the 2018 Plan.

If shareholders approve this proposal, the Amendment and Restatement of the 2018 Plan will become effective immediately.

If shareholders do not approve the Amendment and Restatement, the 2018 Plan will remain in place and the Amendment and Restatement will not become effective.

Information About Our Historic Use of the 2018 Plan and Best Practice Plan Features.

The Company has a strong record of using equity compensation prudently, as evidenced by our “overhang” and “burn rate” statistics. Overhang is a measure of the dilution to which the Company’s shareholders are exposed due to the possibility that future equity compensation will be awarded to employees of the Company, and it is calculated based on the total equity awards outstanding divided by the total number of shares of common stock outstanding. The Company’s overhang in 2020 was approximately 5.9%, which represents a reduction of approximately 2.3% from 2019 and 0.3% from 2018. Burn rate is a measurement of how quickly the Company is granting equity to employees and is calculated based on the number of awards granted divided by the weighted average shares of common stock outstanding. The Company’s burn rate in 2020 was 1.0%, and the average three-year burn rate (from 2018 to 2020) was 1.8%, which is far below the applicable 3.64% category burn rate benchmark established by Institutional Shareholder Services (ISS).

In addition, the 2018 Plan was designed to protect shareholder interests and promote shareholder value by incorporating, among other things, the following:

Summary of Material Terms of the 2018 Plan and Changes Made by the Amendment and Restatement

The following is a summary of the material terms of the 2018 Plan and the changes made in the Amendment and Restatement. The summary is not exhaustive and is qualified by reference to the full text of the 2018 Plan (as amended by the Amendment and Restatement) in its entirety, which is attached hereto as Appendix B of this proxy statement.

General. The 2018 Plan was first adopted by our Board of Directors on March 21, 2018 and was approved by our shareholders on June 13, 2018. The 2018 Plan permits the Company to issue stock options (incentive and/or non-qualified), stock appreciation rights, restricted stock, phantom stock units and other equity and cash awards to employees. Non-employee directors, any director emeritus, or chairman emeritus are also eligible to receive all such awards, other than incentive stock options.

On April 6, 2021, the Board of Directors approved, subject to shareholder approval, the Amendment and Restatement, which we are asking shareholders to approve in this Proposal No. 3. If shareholders approve the Amendment and Restatement, consultants and advisors of the Company and our subsidiaries will also be eligible to receive all such awards, other than incentive stock options. We provide more information regarding this proposed change to the 2018 Plan in the discussion of the 2018 Plan’s “Eligibility” provisions below.

Term. Awards may not be granted under the 2018 Plan after June 13, 2028, or such earlier date as may be determined by the Board of Directors.

Purpose. The purpose of the 2018 Plan is threefold:

Eligibility. Employees (including officers) of the Company and our subsidiaries and any parent entity are eligible to receive awards under the 2018 Plan. Non-employee directors of the Company and our subsidiaries are also eligible to receive all such awards, other than incentive stock options. If the Amendment and Restatement is approved by shareholders, consultants and advisors of the Company and our subsidiaries will also be eligible to receive awards under the 2018 Plan. Consultants and advisors who may be eligible to receive awards include those who are eligible to be offered securities registrable on Form S-8 under the Securities Act as well as those who do not comply with the requirements for Form S-8, provided they satisfy an exemption under the Securities Act.

For purposes of the 2018 Plan, the term “subsidiary” includes any corporation, partnership, joint venture or other entity in which we have made, directly or indirectly through one or more intermediaries, a substantial investment or commitment, including, without limitation, through the purchase of equity or debt or the entering into of a management agreement or joint operating agreement.

As of December 31, 2020 the Company had approximately 18,400 employees and seven directors eligible to participate in the 2018 Plan. If the Amendment and Restatement is approved by shareholders, approximately 9 consultants and advisors of the Company and our subsidiaries would become eligible to be selected to receive awards under the 2018 Plan.

Number of Shares Available for Issuance. Not more than 12,700,000 shares of the Company’s common stock may be issued under the 2018 Plan. Shares issued under

the 2018 Plan that are subsequently forfeited back to the Company before becoming fully vested will be available for future grants under the 2018 Plan. In addition, if an award under the 2018 Plan pursuant to which shares of the Company’s common stock are issuable is forfeited, expires or terminates, then the shares underlying such award will be available for future issuance under the 2018 Plan. Awards of stock options and stock appreciation rights will be counted against the 12,700,000 limit as one share of common stock for each share granted. Each share awarded in the form of restricted stock, phantom stock units or any other full value stock award will be counted as issuing 2.30 shares of common stock for purposes of determining the number of shares available for issuance under the 2018 Plan. The Compensation Committee will adjust the aggregate 12,700,000 share limit if it determines that a dividend, recapitalization, stock split, merger, consolidation or other similar corporate transaction or event equitably requires an adjustment.

Types of Awards. The 2018 Plan provides for the issuance of stock options, stock appreciation rights (“SARs”), restricted stock, phantom stock units and other equity-based awards. Rights to awards may be contingent on the continued employment or service or achievement of performance goals, which may be applied to the Company as a whole or a business unit or related company, and may be measured either annually or cumulatively over a period of years on an absolute basis or relative to a pre-established target, to a previous year’s results or to a designated comparison group.

Administration. The 2018 Plan is administered by or under the direction of the Compensation Committee. Except for matters required by the terms of the 2018 Plan to be decided by the Board of Directors or the CEO, the Compensation Committee has full power and authority to interpret and construe the 2018 Plan, to prescribe, amend and rescind rules, regulations, policies and practices, to impose such conditions and restrictions on awards as it deems appropriate and to make all other determinations necessary or desirable in connection with the administration of, or the performance of its responsibilities under, the 2018 Plan. Subject to limitations set forth in the Plan and as prescribed by the Compensation Committee, the Compensation Committee may delegate to the Company’s Chief Executive Officer or a designee thereof, the authority to grant awards to certain persons under the 2018 Plan.

Minimum Vesting Period. Subject to limited exceptions in the event of a change of control of the Company, stock options, restricted stock, phantom

performance units and any other award granted under the 2018 Plan are subject to a minimum vesting period of one year after the date of grant.

Amendment and Termination. The Board may at any time amend or modify the 2018 Plan in any or all respects, except that any such amendment or modification may not adversely affect the rights of any holder of an award previously granted under the 2018 Plan unless such holder consents. The Board may also terminate the 2018 Plan at any time.

Dividends. No dividends may be paid to a plan participant with respect to an award prior to the vesting of such award. An award may provide for dividends or dividend equivalents to accrue on behalf of a participant as of each dividend payment date during the period between the date the award is granted and the date the award is exercised, vested, expired, credited or paid, and to be converted to vested cash or shares at the same time and subject to the same vesting conditions that apply to the shares to which such dividends or dividend equivalents relate.

Adjustments. The Compensation Committee shall make certain adjustments to the 2018 Plan and to the outstanding awards under the 2018 Plan in the event that the Compensation Committee determines any dividend or other distribution (whether in the form of cash, shares of the Company’s common stock or other securities), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of the Company’s common stock, other securities of the Company, issuance of warrants or other rights to purchase shares of common stock or other securities of the Company, or other similar corporate transaction or event constitutes an equity restructuring transaction, as that term is defined in ASC Topic 718, Compensation – Stock Compensation, or otherwise affects the shares of the Company’s common stock. In the event of such a change, appropriate adjustments will be made to:

Any such adjustments to the outstanding awards will generally be effected in a manner as to preclude the enlargement or dilution of rights and benefits under such awards. However, in no event will fractions of an ordinary share be issued and the Compensation Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding down as appropriate.

No Repricing Without Shareholder Approval. The 2018 Plan prohibits the repricing of stock options and SARs without first obtaining stockholder approval. Specifically, except in connection with anti-dilution and similar equitable adjustments to awards to account for certain business transactions or other changes in capital structure, without first obtaining approval of the Company’s stockholders, the base amount or exercise price, as applicable, of stock options or SARs may not be reduced, whether through amendment, cancellation or replacement grant, or any other means. While not intended to be a substantive change to this provision, to conform to current drafting conventions, the Amendment and Restatement revises and elaborates on the wording of this provision to explicitly state that, except in connection with anti-dilution and similar equitable adjustments to awards to account for certain business transactions or other changes in capital structure, without first obtaining approval of the Company’s stockholders, we may not (1) cancel, surrender, replace or otherwise exchange any outstanding stock option or SAR where the fair market value of the common stock underlying such stock option or SAR is less than its exercise price for a new stock option or SAR, another award, cash, shares of common stock or other securities; or (2) take any other action that is considered a “repricing” for purposes of the shareholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Company’s common stock is quoted.

Withholding Tax. The 2018 Plan authorizes us to withhold taxes due with respect to awards in cash, shares of our Common Stock, other securities or other awards. While not intended to be a substantive change, the Amendment and Restatement revises this provision in light of changes to applicable accounting rules to address certain limitations applicable when tax withholding is satisfied via tendering, withholding or returning of shares of our Common Stock, including the condition that such withholding may not exceed, in the case of shares underlying awards that are withheld or

returned, the maximum statutory tax rates of the grantee’s applicable jurisdiction (or such other rate as would not trigger a negative accounting impact).

Section 409A Provisions. The 2018 Plan contains provisions relating to Section 409A of the Code. The Amendment and Restatement makes technical changes to these provisions, including to provide that all awards made under the 2018 Plan are intended to be exempt from or, in the alternative, to comply with Section 409A of the Code and the interpretive guidance thereunder, including the exceptions for stock rights and short-term deferrals, and that the 2018 Plan will be construed and interpreted in accordance with such intent. The Amendment and Restatement also clarifies that each payment under an award is treated as a separate payment for purposes of Section 409A of the Code.

U.S. Federal Income Tax Consequences

The following is a general summary as of the date of this proxy statement of the United States federal income tax consequences to the Company and persons participating in the 2018 Plan. Tax laws may change and the federal, state and local tax consequences for any participating employee will depend upon his or her individual circumstances. In addition, the following discussion does not purport to describe state or local income tax consequences in the United States. The following general description does not constitute tax advice and should not be relied upon as such. Each participating person is encouraged to seek the advice of a qualified tax adviser regarding the tax consequences of participation in the 2018 Plan.

Nonqualified Stock Options. A participant will generally not recognize any taxable income upon the grant of a nonqualified stock option and the Company will not receive a deduction at the time of such grant. Upon exercise of a nonqualified stock option, the participant generally will realize ordinary income in an amount equal to the excess of the fair market value of the ordinary shares on the date of exercise over the exercise price. The participant’s tax basis in the shares received will be equal to the exercise price plus the amount recognized as ordinary income. Upon a subsequent sale of such shares, the participant will recognize capital gain or loss. The Company or a subsidiary will generally be entitled to a deduction equal to the amount included in the participant’s ordinary income in the year in which such amount is recognized by the participant, subject to possible limitations imposed by Section 162(m) or Section 280G of the Code.

Incentive Stock Options. No taxable income is recognized by a participant at the time of grant of an incentive stock option, and no taxable income is generally recognized at the time the option is exercised. (However, the excess of the fair market value of the Company’s common stock received upon exercise over the option exercise price is an item of tax preference income which may be subject to the alternative minimum tax.) Instead, the participant will recognize taxable income in the year in which the acquired shares are sold or otherwise disposed of. If the sale or other disposition is made after the participant has held the shares for more than two years after the option grant date and more than one year after the date on which the shares are transferred to the participant (referred to as a “qualifying disposition”) pursuant to the option’s exercise, any gain or loss, generally measured by the difference between the amount realized on the sale of shares and the option exercise price, will be treated as long-term capital gain or loss. However, if either of

these two holding period requirements is not satisfied (referred to as a “disqualifying disposition”), then upon the disqualifying disposition, the participant generally recognizes ordinary income in the amount of the lesser of (i) the difference between the fair market value of the shares at the time of the option’s exercise and the option’s exercise price, or (ii) the difference between the amount realized on the sale and the option’s exercise price. Any ordinary income recognized is added to the participant’s basis for purposes of determining any additional gain on the sale and any such additional gain will be capital gain. If the participant makes a disqualifying disposition of the acquired shares, the Company or a subsidiary will generally be entitled to a deduction from its U.S. taxable income for the taxable year in which such disposition occurs, equal to the amount of ordinary income the participant recognizes, subject to possible limitations imposed by Section 162(m) and Section 280G of the Code. In no other instance will we be allowed a deduction with respect to the participant’s disposition of the acquired shares.

Share Appreciation Rights. The grant of a share appreciation right will generally not create any tax consequences for the participant or the Company. Upon the exercise of a share appreciation right, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the ordinary shares received from the exercise. The participant’s tax basis in any ordinary shares received upon the exercise of the share appreciation right will be equal to the ordinary income recognized with respect to the shares. Upon disposition of the shares, the participant will recognize capital gain or loss equal to the difference between the amount realized and his or her basis in the shares. Upon the exercise of a share appreciation right, the Company or a subsidiary will generally be entitled to a deduction in the amount of the compensation income recognized by the participant, subject to possible limitations imposed by Section 162(m) and Section 280G of the Code.

Restricted Stock. In general, a participant will not recognize income with respect to restricted stock awards, including restricted stock with performance-based vesting conditions, until the date that the restrictions lapse. Upon vesting, the participant will recognize ordinary income in an amount equal to the difference of the amount paid for such stock (if any) and the fair market value of the shares received. Generally, the participant’s tax basis in any shares is the amount included in his or her income and the amount paid for the stock (if any), and the participant’s holding period in the shares commences on the day after the restrictions lapse. Upon disposition of the shares, the participant

will recognize capital gain or loss equal to the difference between the amount realized and his or her basis in the shares.

A participant receiving restricted stock, including restricted stock with performance-based vesting conditions, may; however, make an election under Section 83(b) of the Code, commonly referred to as a “section 83(b) election,” to recognize as ordinary compensation income in the year that such restricted stock is granted, the amount equal to the spread between the amount paid for such stock (if any) and the fair market value on the date of the issuance of the stock. If such an election is made, the participant recognizes no further amounts of compensation income upon the lapse of any restrictions and any gain or loss on subsequent disposition will be long or short-term capital gain to the recipient. The section 83(b) election must be made within 30 days from the time the restricted stock is issued.

The Company or a subsidiary will generally be entitled to a deduction equal to the amount included in the participant’s ordinary income with respect to restricted stock awards in the year in which such amount is recognized by the participant, subject to possible limitations imposed by Section 162(m) and Section 280G of the Code.

Phantom Stock Units. In general, a participant will not recognize income with respect to phantom stock unit awards until there is a settlement of the award, unless Section 409A of the Code applies. Upon settlement, the participant will recognize ordinary income in an amount equal to the cash or fair market value of the shares received. The participant’s tax basis in any shares received is the amount included in his or her income, and the participant’s holding period in the shares commences on the day after receipt of the shares. Upon disposition of the shares received upon settlement of the phantom stock units, the participant will recognize capital gain or loss equal to the difference between the amount realized and his or her basis in the shares. The Company or a subsidiary will generally be entitled to a deduction equal to the amount included in the participant’s ordinary income in the year in which such amount is recognized by the participant, subject to possible limitations imposed by Section 162(m) or Section 280G of the Code.

Compliance with Section 409A of the Internal Revenue Code. To the extent applicable, it is intended that the 2018 Plan and any grants made under the 2018 Plan will comply with or be exempt from the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the participants. The 2018 Plan and any

grants made under the 2018 Plan will be administered and interpreted in a manner consistent with this intent.

Section 162(m) of the Code

Section 162(m) of the Code (“Section 162(m)”) generally imposes a $1 million limit on the amount a public company may deduct for compensation paid to certain current and former executive officers. Prior to 2018, this limitation did not apply to compensation that met Section 162(m)’s requirements for qualifying performance-based compensation. This performance-based compensation exemption was repealed, effective for taxable years beginning after December 31, 2017, such that awards paid to our covered executive officers in excess of $1 million will not be deductible, unless such award qualifies for transition relief applicable to certain arrangements that were in effect as of November 2, 2017 and are not materially modified thereafter (“grandfathered awards”). Consequently, although the Amendment and Restatement includes provisions that are applicable to awards intended to qualify as performance-based compensation under Section 162(m), the Company will not grant any such awards.

As in prior years, while deductibility of executive compensation for federal income tax purposes is among the factors we consider when structuring our executive compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of the Company.

Summary of the Proposal

Approval of this proposal will approve the 2018 Plan. A full text of the 2018 Plan is attached as Appendix B to this Proxy Statement.

The Board of Directors unanimously recommends that shareholders vote “FOR” the proposal to approve the Company’s Amended and Restated 2018 Long Term Incentive Compensation Plan, as described in this Proposal No. 3.

We are pleased to provide our shareholders with the opportunity to approve, on an advisory basis, the compensation of our named executive officers for 2020, pursuant to Section 14A of the Exchange Act, as described in the Compensation Discussion and Analysis section, and the subsequent tabular and narrative disclosure beginning on page 51 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 2021 Annual Meeting of Shareholders.”

We believe shareholders should approve of the Company’s 2020 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. Snowden, the Company’s Chief Executive Officer in 2020, 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 2020. 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 2020, 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 2020 achievements, as illustrated on page 52, 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 2022 Annual Meeting of Shareholders.

The Board of Directors unanimously recommends that shareholders cast their advisory vote “FOR” approval, on an advisory basis, of the compensation paid to the Company’s named executive officers.

Key Compensation Practices

The Committee, in consultation with our compensation consultant, 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 55 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.

Consideration of “Say on Pay Vote”

At the 2020 Annual Meeting, the shareholders approved, on an advisory basis, the compensation of our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, by 99% of votes cast, excluding abstentions and broker non-votes. The Committee reviewed and considered the final vote results for that resolution, and we have not made any

changes to our executive compensation policies or decisions as a result of the vote. 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.

Shareholder Outreach

During 2020, 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. In 2020, we had director outreach to our top shareholders with our Chairman of the Board and the Chair of our Compensation Committee, Nominating and Corporate Governance Committee and Lead Independent Director to discuss executive compensation and corporate governance 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 to ask questions. 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. 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 and are changing dramatically and will do so in the future. While our business competitors are our primary source for executive talent, we may need to find executive officers from other industries. As our business continues to evolve into an omni-channel gaming and sports betting operator, we will need to expand our executive talent and find additional executives from media and social platforms as well as other industries. Technology expertise will become a core competency for our executive officers. Many of the Company’s executives have been recruited from 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 are 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 omni-channel gaming, sports betting 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 2020, we used the following peer group:

OVERVIEW OF COMPENSATION PROGRAM

Objectives of the 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, 2020, the Company operated 41 properties in 19 states, employed approximately 18,321 full and part-time employees. 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:

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 provides 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 that require 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 65 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 that are reasonably likely to have a material adverse effect on the Company.

2020 Named Executive Officers

For 2020, our named executive officers were:

Mr. Sottosanti retired from the Company as EVP, General Counsel and Secretary on December 31, 2020. Mr. Williams became EVP and Chief Financial Officer on March 3, 2020 and resigned on December 31, 2020. Mr. Fair resigned as EVP and Chief Financial Officer on March 3, 2020. For summaries of the agreements relating to each of these departures, see “Sottosanti Retirement Agreement,” “Williams Separation Agreement,” and “Fair Executive Agreement” in this Proxy Statement. On January 1, 2021, Harper Ko joined the Company as the Executive Vice President, Chief Legal Officer and Secretary and on March 2, 2021, Felicia Hendrix joined the Company as the Executive Vice President and Chief Financial Officer.

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 in 2020 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 71% of total target compensation in 2020. Of this amount, 34% of the value at award date of long-term incentive grants awarded to such officers in 2020 were performance awards that are subject to performance-based vesting only upon the achievement of annual financial performance goals and synergies in connection with the Pinnacle acquisition and a three year restriction period.

Target 2020

Named Executive Officers Compensation*

The principal elements of the compensation program are described below. Please see “Analysis of 2020 Compensation” starting on page 60 for a discussion of the specific actions taken and payouts with respect to executive compensation for fiscal year 2020. 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 14 of this Proxy Statement.

Base Salary. The base salary of our executive officers as a group is benchmarked against the 50^th 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. Our objectives with establishing base salaries for our executive officers are to attract and retain talent, recognize career experience and individual performance, provide a competitive salary and recognize the internal relationship between pay and responsibility by level.

Annual Short-Term Incentive. The annual target short-term incentive compensation of our executive officers as a group is benchmarked against the 50^th 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 2020 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.