☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
☒ | No fee required. |
☐ | Fee paid previously with preliminary materials. |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
2 PROXY REPORT - 2022 | | |
A LETTER TO OUR SHAREHOLDERS FROM THE CEO AND PRESIDENT | | | April 26, 2022 |
• | Exceeded pre-COVID FY2019 Net Income by 876% and Adjusted EBITDAR by 24%; |
• | Achieved rapid growth in our Penn Interactive segment while continuing our disciplined approach to customer acquisition despite a frenzied competitive environment; |
• | Launched sports betting in 10 states and iCasino in three, expanding our online sports betting operations to 11 states and iCasino operations to four states; |
• | Completed our acquisition of Score Media and Gaming, Inc. (“theScore”), one of North America’s leading sports media companies, giving us another strong brand and greater control over our technology roadmap; |
• | Completed our acquisition of the operations of Hollywood Casino Perryville in Maryland and opened two new casinos in Pennsylvania; |
• | Completed our acquisition of HitPoint and LuckyPoint Studios to serve as the foundation of Penn Gaming Studios, our in-house content development team comprised of highly-skilled designers, artists and engineers focused on creating exclusive iCasino content for our customers; |
• | Joined the S&P 500 Index, underscoring our evolution into a market leader; |
• | Expanded our diversity, equity and inclusion initiatives, contributing $4M to fund STEM scholarships at historically black colleges and universities (HBCUs) in our communities; and |
• | Created an Emerging Leaders development program, focusing on hourly and early career team members wanting to grow into leadership positions at Penn. |
| | Sincerely, | |
| |||
| Jay Snowden | ||
| Chief Executive Officer, President and Director |
| | PROXY REPORT - 2022 3 |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS | | | Tuesday, June 7, 2022 10:00 a.m. Eastern www.virtualshareholdermeeting.com/PENN2022 |
Items of Business | |||
1. | | | To elect the three Class II directors to serve until the 2025 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified. |
2. | | | To ratify the appointment of Deloitte & Touche LLP as our independent registered public accountant for the fiscal year ending December 31, 2022. |
3. | | | To approve (on a non-binding, advisory basis) the compensation of our named executive officers. |
4. | | | To approve our 2022 Long Term Incentive Compensation Plan (effective as of June 7, 2022). |
Record Date |
Shareholders of record of our common stock as of the close of business on April 8, 2022 are entitled to notice of and to vote at the Annual Meeting and any postponements or adjournments thereof. |
| | VIA THE INTERNET Go to www.proxyvote.com , available 24/7 | |
| | ||
| | BY TELEPHONE Use the toll-free number shown on your Proxy Card or Voting Instruction Form and follow the recorded instructions | |
| | ||
| | BY MAIL Mark, sign, date and return the enclosed Proxy Card and related instructions in the postage-paid envelope | |
| | ||
| | DURING THE MEETING Vote through the virtual portal at www.virtualshareholdermeeting.com/PENN2022 during the Annual Meeting |
4 PROXY REPORT - 2022 | | |
6 PROXY REPORT - 2022 | | |
| | PROXY REPORT - 2022 7 |
PROXY STATEMENT SUMMARY |
| | | | | | | | | | | | |||||||
| | DATE AND TIME | | | | | LOCATION | | | | | RECORD DATE | | | ||||
| | Tuesday, June 7, 2022 10:00 a.m., Eastern Time | | | | | Live webcast accessible at: www.virtualshareholdermeeting.com/PENN2022 | | | | | April 8, 2022 | | | ||||
| | | | | | | | | | |
VIA THE INTERNET Go to www.proxyvote.com , available 24/7 | | | BY TELEPHONE Use the toll-free number shown on your Proxy Card or Voting Instruction Form and follow the recorded instructions | | | BY MAIL Mark, sign, date and return the enclosed Proxy Card and related instructions in the postage-paid envelope | | | DURING THE MEETING Vote through the virtual portal at www.virtualshareholdermeeting .com/PENN2022 during the Annual Meeting |
Proposal | | | Board Vote Recommendation | | | Page Reference |
Proposal 1: Election of Class II Directors | | | FOR each Nominee | | | |
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm | | | FOR | | | |
Proposal 3: Non-binding, Advisory Vote to Approve the Compensation of Named Executive Officers | | | FOR | | | |
Proposal 4: Approve the 2022 Long Term Incentive Compensation Plan | | | FOR | | |
8 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
| | PROXY REPORT - 2022 9 |
PROXY STATEMENT SUMMARY |
| | | | | | | | | | | | |||||||
| | REVENUES $5,905M EXCEEDED 2020 & 2019 LEVELS | | | | | ADJUSTED EBITDAR(1) $1,994M EXCEEDED 2020 & 2019 LEVELS | | | | | 2020-2021 CUMULATIVE TSR 103% COMPARED TO PEER GROUP: 56% S&P 500 INDEX: 52% | | | ||||
| | | | | | | | | | | | |||||||
| | LOWEST LEASE-ADJUSTED NET LEVERAGE IN OUR HISTORY 4.1x | | | | | EXPANDED ONLINE SPORTS BETTING OPERATIONS TO 11 STATES iCASINO OPERATIONS TO 4 STATES | | | | | INCLUDED IN S&P 500 INDEX | | | ||||
| | | | | | | | | | | | |||||||
| | EXPANDED RETAIL OPERATIONS TO OUR 20th STATE and opened 2 new casinos in Pennsylvania | | | | | Acquired theScore, Canada’s leading sports media brand, for greater control over our techNOLOGY roadmap | | | | | EXPANDED DE&I INITIATIVES PLEDGED $4M TO FUND STEM SCHOLARSHIPS AT HBCUs | | |
(1) | Adjusted EBITDAR is a non-GAAP financial measure. For a definition and reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure, see the section entitled “Non-GAAP Measures” on pages 42 - 44 of our 2021 Annual Report. |
10 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
(1) | Peer Group includes: Boyd Gaming Corporation, Caesars Entertainment Inc., DraftKings Inc., Electronic Arts Inc., Las Vegas Sands Corp., Lions Gate Entertainment Corp., Live Nation Entertainment, Inc., MGM Resorts International, Red Rock Resorts, Inc., Roku, Inc., Sirius XM Holdings Inc., Wynn Resorts, Ltd., and Zynga Inc. |
(2) | On March 22, 2021, the Company was added to the S&P 500 Index. |
| | PROXY REPORT - 2022 11 |
PROXY STATEMENT SUMMARY |
(1) | Penn National’s Board and Committee leaders are: (i) Jane Scaccetti (Audit Committee Chair); (ii) Barbara Shattuck Kohn (Compensation Committee Chair); (iii) Marla Kaplowitz (Nominating and Corporate Governance Committee Chair); (iv) Thomas Auriemma (Compliance Committee Chair); (v) Barbara Shattuck Kohn (Lead Independent Director); and (vi) David Handler (Board Chair). Each of these Board and Committee leaders are independent directors except for Mr. Auriemma who serves as an independent non-director member of the Compliance Committee. Mr. Auriemma 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. |
(2) | As self-identified in the Board Diversity Matrix below. |
Gender: | | | Female | | | Male |
Directors | | | 4 | | | 5 |
Number of directors who identify in any of the categories below: | | | | | ||
African American or Black | | | 1 | | | 0 |
Asian | | | 1 | | | 0 |
Hispanic or Latinx | | | 1 | | | 0 |
White | | | 3 | | | 5 |
Two or More Races or Ethnicities | | | 2 | | | 0 |
LGBTQ+ | | | 1 | |||
Directors who are Military Veterans | | | 3 |
12 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
| | Age (1) | | | Independent | | | Audit | | | Compensation | | | Nominating and Governance | | | Compliance (2) | | | # Of Other Public Company Boards | |
Vimla Black-Gupta | | | 52 | | | Y | | | | | | | | | | | 0 | ||||
David Handler | | | 57 | | | Y | | | | | | | | | | | 0 | ||||
John Jacquemin | | | 75 | | | Y | | | | | | | | | | | 0 | ||||
Marla Kaplowitz | | | 56 | | | Y | | | | | | | | | | | 0 | ||||
Ronald Naples | | | 76 | | | Y | | | | | | | | | | | 0 | ||||
Saul Reibstein | | | 73 | | | Y | | | | | | | | | | | 1 | ||||
Jane Scaccetti | | | 68 | | | Y | | | | | | | | | | | 0 | ||||
Jay Snowden (3) | | | 46 | | | | | | | | | | | | | 0 | |||||
Barbara Shattuck Kohn | | | 71 | | | Y | | | | | | | | | | | 1 |
= Member | | | = Chair | | | = Financial Expert |
(1) | As of April 26, 2022. |
(2) | The Compliance Committee is chaired by an independent non-director member, Thomas N. Auriemma. Mr. Auriemma 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. |
(3) | Mr. Snowden serves as our Chief Executive Officer and President. |
| | PROXY REPORT - 2022 13 |
PROXY STATEMENT SUMMARY |
14 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
YES | | | • One Class of Common Stock with Equal Voting Rights | |||
| • Board and Committee Composition | |||||
| | | • Separate Chair and Chief Executive Officer | |||
| | | • Independent Non-Executive Chair | |||
| | | • Fully Independent Committees | |||
| | | • All Audit Committee Members are Financial Experts | |||
| | | • Compliance Committee with Broad Authority, Comprised of Independent Directors and Non-Director Compliance Professional | |||
| • Regular Executive Sessions of Independent Directors | |||||
| • Regular Board and Committee Self-Evaluations | |||||
| • Systemic Risk Oversight by Board and Committees | |||||
| | | • Environmental, Social and Governance Oversight by Board and Committees | |||
| | | • Cybersecurity Oversight by Board and Audit Committee | |||
| • Strong Investor Outreach Program | |||||
| • Strong Compensation Alignment | |||||
| | | • Robust Stock Ownership Requirements for Directors and Officers | |||
| | | • Robust Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies | |||
| | | • Clawback Policy | |||
| | | • “Double-Trigger” for Change in Control Severance Payments | |||
| | | • One-Year Minimum Vesting Period on Equity Grants | |||
| • Anonymous Whistle-Blower Hotline |
NO | | | • Poison Pill |
| • Excise Tax Gross-Up Provisions | ||
| • Repricing of Underwater Options or Share Appreciation Rights | ||
| • Supermajority Voting Requirements in Bylaws |
| | PROXY REPORT - 2022 15 |
PROXY STATEMENT SUMMARY |
In 2021, we contacted representatives of shareholders representing holders of approximately 59% of our then outstanding shares of common stock. Our Board Chair and Chair of our Compensation Committee and Lead Independent Director, who was also Chair of our Nominating and Corporate Governance Committee at the time, together with senior management engaged shareholders representing approximately 38% of our then outstanding shares of common stock. |
• Quarterly Earnings Presentations; • SEC Filings; • The Annual Report and Proxy Statement; | | | • The Annual Meeting of Shareholders; • Investor Meetings, Conferences and Web Communications; and • Our customary periodic engagement outreach program. |
| | • 80% of our properties have completed energy efficient lighting upgrades • Reduced annual kWh consumption by 10%, equaling 45,000 tons of greenhouse gas elimination • 25% of our properties have EV charging stations, with an additional 34% planned within next 12 months • Eliminated 7 tons of plastic from our hotels by converting to bulk amenity dispensers in 75% of our hotels • Continuing to prioritize sustainable food production and supply chains through fair trade, hormone-free and reduced-antibiotic F&B procurement | |
| | • Created $1 million annual Diversity Scholarship Fund for dependents of Penn National team members • Created a STEM Diversity Scholarship Fund in partnership with HBCUs in states in which we operate • Created an Emerging Leaders Development Program, focused on hourly and early career team members wanting to grow into leadership positions at Penn • Increased presence and sponsorship of minority business networking events • Contributed more than $7 million to fund COVID-19 and hurricane relief efforts, in addition to supporting worthwhile charities and civic organizations in the communities where we operate | |
| | • Appointed Ms. Black-Gupta as an independent director • Honored by two prominent organizations for the gender diversity of our Board • Refreshed Board Committee Assignments • Established ESG oversight by our Nominating and Corporate Governance Committee and published our first Corporate Social Responsibility Report |
16 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
| | | | | | Element | | | Form | | | Description and Objective | |||
| | | | | | Base Salary | | | Fixed Cash | | | • Attracts, motivates, retains and rewards high-performing executives • Provides competitive fixed compensation considering the job responsibilities, individual performance, experience, expertise and qualifications | |||
At-Risk or Performance -Based Compensation | | | | | | | Short-Term Incentive Plan | | | Performance-Based Cash | | | • Promotes short-term business objectives aligned to support our long-term growth strategy • Incentivizes executives to enhance margins | ||
| | | 50% | | | Long-Term Incentive Program | | | Performance-Based Common Stock | | | • Performance-based common stock that vests over a three-year performance period • Promotes long-term value creation and growth strategies • Aligns performance with the advancement of the Company’s long-term strategy • Promotes retention, motivates performance and encourages long-term stock ownership | |||
| | | 50% | | | Stock Options | | | • Non-qualified stock options that vest 25% per year over a four-year period • Promotes long-term value creation and growth strategies • Aligns interests of executives with those of shareholders by encouraging maximization of shareholder value • Promotes retention, motivates performance and encourages long-term stock ownership |
| | PROXY REPORT - 2022 17 |
PROXY STATEMENT SUMMARY |
(1) | The CEO’s total compensation excludes his supplemental performance-based equity award. For additional information regarding Mr. Snowden’s supplemental performance-based equity award, see “CEO Supplemental Performance-Based Equity Award” below in the Compensation Discussion and Analysis section of this Proxy Statement. |
Performance Metric | | | Weighting | | | Alignment with Long-Term Value Creation |
Adjusted EBITDAR margin improvement in 2021 as compared to 2019 | | | | | • Encouraged innovative improvements to operating efficiency, thoughtful expense management, and profitability to enable future growth investments • Supported our ability to invest in future growth of our Interactive segment that is strategically important for our long-term success and shareholder value creation | |
Online sports betting and/or iCasino platforms in operation as of year end | | | | | • Designed to accelerate scale of our Interactive segment by incentivizing infrastructure growth and deployment of our online sports betting and/or iCasino platforms in operation • Increased scale of our Interactive segment needed to support future growth that is at the core of our highly-differentiated organic cross-selling strategy and our ability to generate near- and long-term returns for our shareholders |
18 PROXY REPORT - 2022 | | |
PROXY STATEMENT SUMMARY |
| | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total ($) | |
Jay Snowden Chief Executive Officer and President | | | 1,786,154 | | | - | | | 4,362,212 | | | 4,050,022 | | | 6,750,000 | | | 246,476 | | | 17,194,864(1) |
Felicia Hendrix Executive Vice President and Chief Financial Officer | | | 537,500 | | | 375,000(2) | | | 518,491 | | | 779,989 | | | 975,000 | | | 45,987 | | | 3,231,967 |
Todd George Executive Vice President, Operations | | | 722,404 | | | - | | | 1,589,576 | | | 870,014 | | | 1,087,500 | | | 64,061 | | | 4,333,555 |
Harper Ko Executive Vice President, Chief Legal Officer and Secretary | | | 557,308 | | | - | | | 487,543 | | | 690,011 | | | 862,500 | | | 187,676 | | | 2,785,038 |
(1) | Mr. Snowden’s total compensation excludes his supplemental performance-based equity award. The supplemental award was designed based on shareholder input to incentivize Mr. Snowden to continue achieving transformational growth and creating long-term value for Penn National shareholders with vesting contingent upon achieving absolute stock price milestones and relative total shareholder return milestones. The award had an aggregate grant date fair value as computed in accordance with ASC 718 of $48,692,350. For additional information regarding Mr. Snowden’s supplemental performance-based equity award, see “CEO Supplemental Performance-Based Equity Award” below in the Compensation Discussion and Analysis section of this Proxy Statement. |
(2) | Sign-on bonus received in 2021. |
| | Over 88% of the votes cast on our 2021 say-on-pay proposal were voted in support of our named executive officer compensation program and policy. |
| | PROXY REPORT - 2022 19 |
20 PROXY REPORT - 2022 | | |
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH CLASS II DIRECTOR NOMINEE: (I) Barbara Shattuck Kohn; (II) Ronald Naples; and (III) Saul Reibstein. |
| | Barbara Shattuck Kohn Class II Director (Independent) Age: 71 Director Since: 2004 | |
Business Experience: | |||
Ms. Kohn serves as a director of Fluent, Inc. (NASDAQ: FLNT), an advertising and marketing services company. 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 her retirement, Ms. Kohn was a Principal at Hammond Hanlon Camp LLC, a strategic advisory and investment banking firm from 2012 to 2018, joining from Morgan Keegan – Raymond James, where she served as a Managing Director of it and several of its predecessor entities, including Shattuck Hammond Partners, an investment banking firm Ms. Kohn co-founded in 1993, as well as a principal at Cain Brothers, Shattuck & Company, Inc., an investment banking firm she also co-founded, and as a Vice President of Goldman, Sachs & Co. 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. 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. |
| | Ronald Naples Class II Director (Independent) Age: 76 Director Since: 2013 | |
Business Experience: | |||
Mr. Naples serves as a director of Glenmede Trust Company and the Philadelphia Contributionship. Mr. Naples served as Board Chair 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 Board Chair of Quaker Chemical Corporation (NYSE: KWR), a public specialty chemical company serving the metalworking and manufacturing industries worldwide, and he served as Quaker’s Chief Executive Officer from 1995 to 2008. Previously, Mr. Naples was Board Chair and Chief Executive Officer of Hunt Manufacturing Company, a public company, from 1981 to 1995. From 2000 to 2021, he served on the board of Glatfelter Corporation (NYSE:GLT), a leading global supplier of engineered materials. He also served as Chair of the Federal Reserve Bank of Philadelphia. Mr. Naples received a B.S. degree from the United States Military Academy at West Point, an A.M. degree from the Fletcher School at Tufts University, and an M.B.A. from Harvard Business School. He also had a distinguished career in the U.S Army before retiring at the rank of Captain in 1971. | |||
Other Public Company Boards: None. | |||
Mr. Naples possesses both significant business experience as a chief executive officer and director of large, publicly traded corporations and significant government and regulatory experience as Chair of the Pennsylvania Stimulus Oversight Commission, Chief Accountability Officer for the Commonwealth of Pennsylvania and as Chair 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 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. |
| | PROXY REPORT - 2022 21 |
| | Saul Reibstein Class II Director (Independent) Age: 73 Director Since: 2018 (and previously a director from 2011 to 2014) | |
Business Experience: | |||
Mr. Reibstein served on Penn National’s Board of Directors and was Chair 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 Penn National’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. (NYSE: CBIZ). 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. In addition, since July 2010, Mr. Reibstein has served as a member of the Board of Directors of Vishay Precision Group, Inc. (NYSE: VPG), a sensor manufacturer, where he is Chair 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. | |||
Other Public Company Boards: Vishay Precision Group, Inc. | |||
Mr. Reibstein brings to our Board and our Audit and Compensation Committees 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 in the gaming industry. |
| | David Handler Class I Director (Independent) Age: 57 Director Since: 1994 | |
Business Experience: | |||
Mr. Handler has served as Penn National’s Board Chair 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 Jacquemin Class I Director (Independent) Age: 75 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. |
22 PROXY REPORT - 2022 | | |
| | Vimla Black-Gupta Class III Director (Independent) Age: 52 Director Since: 2021 | |
Business Experience: | |||
Ms. Black-Gupta serves as the President of OURSELF, a skin care biotech startup. She previously served as the Global Chief Marketing Officer of Equinox Fitness Clubs, where she oversaw marketing strategy development and execution on behalf of Equinox and its growing portfolio of 100 global fitness club locations and the Equinox Hotel. Prior to Equinox, Ms. Black-Gupta served as the Senior Vice President of Global Marketing of Bobbi Brown Cosmetics at Estee Lauder where she managed, led and created their product, consumer and digital marketing strategy. Ms. Black-Gupta has also held Executive Global Marketing leadership roles at Procter and Gamble and the Gillette Companies. | |||
Other Public Company Boards: None | |||
Ms. Black-Gupta brings extensive marketing, strategy, media, and digital transformation experience to the Board, which is invaluable in the context of the Company’s strategy of organically cross-selling entertainment, sports content, and casino gaming experiences. |
| | Marla Kaplowitz Class III Director (Independent) Age: 56 Director Since: 2020 | |
Business Experience: | |||
Since 2017, Ms. Kaplowitz has served as President and Chief Executive Officer of the American Association of Advertising Agencies (4A’s), a trade association serving more than 600 member agencies throughout the United States. From 2011 to 2017, Ms. Kaplowitz served as Chief Executive Officer of North America of MEC Global (now Wavemaker Global), a global media agency. Ms. Kaplowitz also spent 12 years at MediaVest, where she led Procter & Gamble’s communications planning for North America and worked with brands including Avon, Denny’s, Heineken and Norelco. She began her career at DMB&B and later joined Ammirati Puris Lintas, where she managed the agency’s Labatt, Nickelodeon Networks, and Unilever accounts. | |||
Other Public Company Boards: None | |||
Ms. Kaplowitz brings significant marketing, media, and digital transformation expertise to the Board as President and Chief Executive Officer of the American Association of Advertising Agencies (4A’s) and other senior management positions, which is invaluable in the context of the Company’s strategy of organically cross-selling entertainment, sports content, and casino gaming experiences. |
| | Jane Scaccetti Class III Director (Independent) Age: 68 Director Since: 2015 | |
Business Experience: | |||
Ms. Scaccetti is the former Chief Executive Officer of Drucker & Scaccetti, P.C., a public accounting and business advisory firm, of which she had been a principal from 1990 to 2021, and she now serves as Firm Ambassador. Ms. Scaccetti serves as Chair of the Board of Directors of Mathematica Policy Research, Inc. and as a trustee of Temple University. In addition, Ms. Scaccetti was a director and audit committee chair of Myers Industries, Inc. (NYSE: MYE) from 2016 until 2021, The Pep Boys – Manny, Moe & Jack from 2002 until 2016 (formerly NYSE: PBY), 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: None. | |||
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. |
| | PROXY REPORT - 2022 23 |
| | Jay Snowden Class III Director (Executive Director) Age: 46 Director Since: 2019 | |
Business Experience: | |||
In August 2019, the Board appointed Mr. Snowden as a Board member. Effective January 1, 2020, Mr. Snowden became the Company’s Chief Executive Officer and President after serving as its President and Chief Operating Officer since March 2017, and since joining the Company in October 2011 as Senior Vice President-Regional Operations. 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, hospitality and interactive gaming, sports betting, and entertainment experience to our Board of Directors based on his extensive experience in the rapidly evolving gaming industry. Given his achievements in leading the Company as Chief Operating Officer and President and now as Chief Executive Officer and President, he has unique perspectives and experience related to the strategic direction of the Company and the broader gaming industry. |
24 PROXY REPORT - 2022 | | |
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANT FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022. |
| | PROXY REPORT - 2022 25 |
CORPORATE GOVERNANCE MATTERS |
WHAT WE DO | | | WHAT WE DON’T DO | ||||||
| | 89% Independent Directors. Eight of our nine directors standing for election have been determined by us to be “independent” as defined by the NASDAQ Rules. | | | | | No Poison Pill or Shareholder Rights Plan. We do not have a “poison pill” or shareholder rights plan. | ||
| | Independent Chair. Our Board Chair is an independent director. | | | | | No Significant Related Party Transactions. We do not currently have any significant related party transactions. In addition, no immediate family relationships exist between any of our directors or executive officers and any of our other directors or executive officers. | ||
| | Regular Board and Committee Self-Evaluations. The Board of Directors and each committee regularly conduct a comprehensive self-evaluation process. | | | | | No Option Trading or Short Selling of Our Securities. Our insider trading policy prohibits our directors and officers from trading in options, warrants, puts and calls or similar instruments on Company securities or sell Company securities “short”. | ||
| | Systemic Risk Oversight by Board and Committees. Our Board has overall responsibility for risk oversight, while each of our Audit, Compensation, Nominating and Corporate Governance, and Compliance Committees monitor and address risks within the scope of their expertise or charter. | | | | | No Hedging of Our Securities. Our insider trading policy prohibits our directors and officers from engaging in any hedging or monetization transactions involving our securities. | ||
| | Entirely Independent Committees. All the members of our Audit, Compensation, and Nominating and Corporate Governance Committees are independent. | | | | | No Pledging of Our Securities. Our insider trading policy prohibits our directors and officers from purchasing our securities on margin or pledging our securities as collateral for margin or other loans. | ||
| | Audit Committee Financial Experts. All the members of our Audit Committee qualify as an “audit committee financial expert” as defined by the SEC. | | | | | |||
| | Stock Ownership Guidelines for Directors. Our stock ownership guidelines require that each of our directors accumulate a holding of shares having a value of 5x the value of the annual retainer amount. | | | | | |||
| | Stock Ownership Guidelines for Executives. Our stock ownership guidelines require our CEO to accumulate a holding of shares equal to 6x his annual base salary, and our other executives to accumulate a holding of shares equal to 3x their respective annual base salaries. | | | | | |||
| | Shareholder Outreach. The Company has a long-standing practice of detailed, frequent communication and discussion with shareholders. | | | | |
26 PROXY REPORT - 2022 | | |
CORPORATE GOVERNANCE MATTERS |
• | | | Appointed Ms. Black-Gupta, a highly-qualified independent director with extensive marketing, strategy, media, and digital transformation experience, to support our strategy of offering integrated entertainment, sports content, and casino gaming experiences | | | • | | | Appointed Ms. Kaplowitz, a highly-qualified independent director with significant marketing, media, and digital transformation expertise, to support our strategy of offering integrated entertainment, sports content, and casino gaming experiences |
• | | | Amended stock ownership guidelines for our executive officers to increase holding requirements from 5x to 6x base salary for the CEO and to align all other officers at 3x base salary | | | • | | | Added ESG oversight to the responsibilities of the Nominating and Corporate Governance Committee, which includes environmental and sustainability initiatives, social responsibility, the Company’s culture, talent strategy, and diversity, equity, and inclusion initiatives |
• | | | Refreshed the composition of the Board’s Audit, Compensation, and Nominating and Corporate Governance Committees and appointed a new chair of the Nominating and Corporate Governance Committee – all committees have separate, independent Committee chairs | | | • | | | Formed the Penn National ESG Committee, which reports directly to our CEO, as well as the Nominating and Corporate Governance Committee and the Board |
• | | | The chairs of Audit, Compensation and Nominating and Corporate Governance Committee, and our Lead Independent Director are all female | | | • | | | Formed the Penn National Diversity Committee, under the executive sponsorship of our CEO, comprised of senior management as well as team members around the country and at varying levels in the organization |
| | PROXY REPORT - 2022 27 |
CORPORATE GOVERNANCE MATTERS |
Corporate Governance Guidelines | | | The Board 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. |
Code of Business Conduct | | | 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. |
Where to Find our Corporate Governance Documents |
You are encouraged to visit our website at www.pngaming.com/about-us to view or obtain copies of our Corporate Governance Guidelines, committee charters and Code of Business Conduct. The information found on, or accessible through, our website is not incorporated into, and does not form a part of, this Proxy Statement or any other report or document we file with or furnish to the SEC. You may also obtain, free of charge, a copy of our Corporate Governance Guidelines, committee charters and Code of Business Conduct by directing your request in writing to Secretary, Penn National Gaming, Inc., 825 Berkshire Boulevard, Wyomissing, PA 19610. Additional information relating to the corporate governance of our Company is also set forth below and included in other sections of this Proxy Statement. |
28 PROXY REPORT - 2022 | | |
CORPORATE GOVERNANCE MATTERS |
Board and Committee Evaluations: A Multi-Step Process |
Questionnaires: The Nominating and Corporate Governance Committee prepares and approves written questionnaires focusing on the performance of the Board and each of its committees. Each director completes his or her applicable written questionnaire(s). |
Discussion of Results: The chair of the Nominating and Corporate Governance Committee reviews the responses with the full Board and each committee chair. Each committee chair then reviews the committee responses with their committee. |
Use of Feedback: The Nominating and Corporate Governance Committee makes recommendations to the Board as may be appropriate following consideration of the results of each evaluation. The Board and each of its committees develop plans to take actions based on the results, as appropriate. |
Ongoing Feedback Incorporated: Directors provide ongoing, real-time feedback outside of the regular evaluation process. |
• | 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. |
| | PROXY REPORT - 2022 29 |
CORPORATE GOVERNANCE MATTERS |
• | consulting with the Board Chair 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 Board Chair and between the independent directors and senior management; |
• | presiding at all meetings of the Board at which the Board Chair is not present, including executive sessions of the independent directors; and |
• | in the event of the death, incapacity, resignation or removal of the Board Chair, serving as the acting Board Chair until a new Board Chair is selected. |
• | the Board held sixteen formal meetings; |
• | the Audit Committee held five formal meetings; |
• | the Compensation Committee held eight formal meetings; |
• | the Nominating and Corporate Governance Committee held two formal meetings; and |
• | the Compliance Committee held five formal meetings. |
30 PROXY REPORT - 2022 | | |
CORPORATE GOVERNANCE MATTERS |
| | Audit (1) | | | Compensation (2) | | | Nominating and Corporate Governance (3) | | | Compliance (4) | |
Vimla Black-Gupta | | | | | | | | | ||||
John Jacquemin | | | | | | | | | ||||
Marla Kaplowitz | | | | | | | | | ||||
Ronald Naples | | | | | | | | | ||||
Saul Reibstein | | | | | | | | | ||||
Jane Scaccetti | | | | | | | | | ||||
Barbara Shattuck Kohn | | | | | | | | | ||||
Thomas A. Auriemma (5) | | | | | | | | |
= Member | | | = Chair | | | = Financial Expert |
(1) | From January 1, 2021 through September 30, 2021, the members of the Company’s Audit Committee were Messes. Scaccetti and Kohn and Mr. Jacquemin. From October 1, 2021 through December 31, 2021, the members of the Company’s Audit Committee were Messes. Scaccetti and Kohn and Mr. Reibstein. |
(2) | From January 1, 2021 through September 30, 2021, the members of the Company’s Compensation Committee were Messes. Kohn and Kaplowitz and Messrs. Jacquemin and Naples. From October 1, 2021 through December 31, 2021, the members of the Company’s Compensation Committee were Messes. Kohn, Kaplowitz, and Black-Gupta and Mr. Reibstein. |
(3) | From January 1, 2021 through September 30, 2021, the members of the Company’s Nominating and Corporate Governance Committee were Ms. Kohn and Messrs. Jacquemin and Naples. From October 1, 2021 through December 31, 2021, the members of the Company’s Compensation Committee were Ms. Kaplowitz and Messrs. Jacquemin and Naples. |
(4) | From January 1, 2021 through September 30, 2021, the members of the Company’s Compliance Committee were Ms. Kaplowitz and Messrs. Auriemma, Naples and Reibstein. From October 1, 2021 through December 31, 2021, the members of the Company’s Compliance Committee were Messes. Black-Gupta and Scaccetti and Messrs. Auriemma and Naples. |
(5) | The Compliance Committee is chaired by an independent non-director member, Thomas N. Auriemma. Mr. Auriemma 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. |
| | PROXY REPORT - 2022 31 |
CORPORATE GOVERNANCE MATTERS |
• | serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system; |
• | review and appraise the audit efforts of the Company’s independent auditors and internal auditors and monitor their independence; and |
• | maintain free and open communication with and among the independent auditors, the internal auditors, and the financial and senior management of the Company and the Board. |
• | 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 regarding executive compensation; |
• | reviewing and approving awards under the long-term incentive compensation plan and annual 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. |
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CORPORATE GOVERNANCE MATTERS |
• | overseeing the Company’s practices relating to corporate social responsibility, including ESG programs and reporting for environmental and sustainability initiatives, social responsibility to communities, the Company’s culture, talent strategy, and diversity, equity, and inclusion initiatives; |
• | annually reviewing the Company’s corporate governance principles and guidelines; |
• | overseeing periodic evaluations of the Board and its committees and making recommendations to the Board as may be appropriate considering the results of such evaluations; |
• | reviewing and recommending the appropriate structure, composition and size of the Board and its committees; |
• | considering the Board’s leadership structure, including the separation of the Board Chair and CEO roles and the appointment of a Lead Independent Director; |
• | identifying and recommending, for the Board’s selection, nominees for election to the Board, including those candidates recommended by shareholders in accordance with the Company’s bylaws; |
• | 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; and |
• | overseeing the Company’s orientation programs for new directors and continuing education programs for directors, as may be necessary and appropriate. |
• | reviewing and assessing the adequacy of the Company’s compliance policies and procedures; |
• | reviewing and assessing the effectiveness of the Company’s compliance efforts, particularly the training on and implementation of procedures; |
• | monitoring audits and investigations conducted or overseen by the Company’s compliance personnel; |
• | monitoring administrative investigations of and disciplinary actions against the Company or its executives; and |
• | reporting to the Board any matters of concern regarding the Company’s compliance with various laws and regulations. |
| | PROXY REPORT - 2022 33 |
CORPORATE GOVERNANCE MATTERS |
• | The Compensation Committee oversees risks related to executive compensation matters and supports our ESG activities through the inclusion of diversity goals in its performance criteria for incentive compensation plans. A discussion of the compensation risk assessment process undertaken by the Compensation Committee is described on page 31 of this Proxy Statement. |
• | The Nominating and Corporate Governance Committee oversees risks associated with Board structure, including Board diversity, and other governance policies and practices. In 2020, the Board tasked the Nominating and Corporate Governance Committee with oversight of our ESG activities and policies. The Nominating and Corporate Governance Committee oversees and receives regular reports from the chair of the Company’s ESG Committee. |
• | The Audit Committee focuses on financial risks, including reviewing with management, our internal auditors, and our external independent auditor our major financial risk exposures, the adequacy and effectiveness of internal control over financial reporting, and the steps management has taken to monitor and control financial risk exposures. In addition, the Audit Committee reviews risks related to our financial reporting, and compliance with other applicable laws, regulations, and ethical standards. The Audit Committee is also responsible for directing management’s completion, with the assistance of external advisors, of our annual Enterprise Risk Management assessment designed to evaluate the spectrum of potential risks to our business and the realization of our strategic priorities as well as oversight of finance-related whistle-blower complaints. Management reports to the Audit Committee and Board of Directors with updated assessments of these identified risks, as well as any emerging risks. |
• | The Compliance Committee oversees risks associated matters of concern regarding the Company’s compliance with various gaming regulatory laws and regulations and the adequacy and effectiveness of the Company’s gaming regulatory compliance |
34 PROXY REPORT - 2022 | | |
CORPORATE GOVERNANCE MATTERS |
• | The Cyber Security Committee, comprised of senior management from different departments within the Company, focuses on information and cyber security risks and readiness. It oversees a robust cybersecurity program, which employs security scanning and monitoring tools, regular gap and threat assessments and audits and enterprise-wide security awareness exercises and training, as well the procurement of insurance for cyber events, including ransomware coverage. Our Chief Information Officer serves as the chair of the Cyber Security Committee and provides regular quarterly reports to the Board on cyber security matters, and, in the event of the Company experiences any material cyber events, engages with our Audit Committee and the Board directly in accordance with our Cyber Incident Response Policy. |
• | The ESG Committee, comprised of senior management from different departments within the Company, focuses on developing and implementing policies and practices designed to foster a culture that helps to attract and retain diverse and talented employees, reinforce our longstanding commitment to being a trusted and valued member of our communities and a responsible steward for the environment. Our SVP of Public Affairs serves as chair of the ESG Committee and provides regular quarterly reports to the Board on the Company’s ESG initiatives. |
• | The Diversity Committee, formed under the executive sponsorship of our CEO and comprised of senior management and team members from different levels of the organization, was formed to formalize and enhance the Company’s diversity, equity and inclusion practices within the organization as well as in our communities, including facilitation of Company-wide affinity groups, employee training and awareness programs, fostering relationships with other organizations that can further our DE&I commitment, such as the All-In Diversity Project, Historically Black Colleges and Universities, the National Minority Supplier Development Council and similar groups, and employee outreach such as our “Days of Listening” in which senior management and the Board receive feedback from our team members about the Company and its DE&I initiatives. The Diversity Committee is chaired by the SVP of Regional Operations and provides regular reports to the CEO, the Board and the Nominating and Corporate Governance Committee on the Company’s diversity initiatives. |
| | PROXY REPORT - 2022 35 |
CORPORATE GOVERNANCE MATTERS |
36 PROXY REPORT - 2022 | | |
CORPORATE GOVERNANCE MATTERS |
| | PROXY REPORT - 2022 37 |
Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) (1)(2) | | | Total ($) |
Vimla Black-Gupta (3) (4) | | | 48,357 | | | 250,000 | | | 298,357 |
David Handler (4) | | | 50,000 | | | 375,000 | | | 425,000 |
John Jacquemin (4) | | | 55,000 | | | 250,000 | | | 305,000 |
Marla Kaplowitz | | | 75,000 | | | 250,000 | | | 325,000 |
Barbara Shattuck Kohn | | | 80,000 | | | 250,000 | | | 330,000 |
Ronald Naples (4) | | | 65,000 | | | 250,000 | | | 315,000 |
Saul Reibstein (4) | | | 70,000 | | | 250,000 | | | 320,000 |
Jane Scaccetti (4) | | | 85,000 | | | 250,000 | | | 335,000 |
(1) | 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. |
(2) | As of December 31, 2021, the following stock awards were outstanding: (i) for Ms. Black-Gupta 3,404 shares of restricted stock; (ii) for Mr. Handler, 2,033 restricted stock units and 5,254 shares of restricted stock; (iii) for Mr. Jacquemin, 2,033 restricted stock units and 3,956 shares of restricted stock; (iv) for Ms. Kaplowitz, 3,091 shares of restricted stock; (v) for Ms. Kohn, 2,033 restricted stock units and 3,091 shares of restricted stock; (vi) for Mr. Naples, 9,408 restricted stock units and 865 shares of restricted stock; (vii) for Mr. Reibstein, 9,467 restricted stock units and 742 shares of restricted stock; and (viii) for Ms. Scaccetti, 8,409 restricted stock units and 4,018 shares of restricted stock. As of December 31, 2021, Mr. Reibstein also had 44,543 stock options outstanding related to his previous service as Chief Financial Officer of the Company. |
(3) | Ms. Black-Gupta joined the Company’s Board of Directors in June 2021. During 2021, Ms. Black-Gupta received a prorated portion of her 2021 cash retainer. |
(4) | In 2021, each non-employee director was permitted to elect to receive his or her retainer fees in shares of restricted stock, which vest on the first anniversary of the date of grant. In 2021, Ms. Black-Gupta, Mr. Handler, Mr. Jacquemin, Mr. Naples, Mr. Reibstein and Ms. Scaccetti elected to receive shares of restricted stock in lieu of cash. |
38 PROXY REPORT - 2022 | | |
EXECUTIVE OFFICERS |
Name | | | Age (as of April 26, 2022) | | | Position |
Jay Snowden | | | 46 | | | Chief Executive Officer, President and Director |
Felicia Hendrix | | | 53 | | | Executive Vice President, Chief Financial Officer |
Todd George | | | 52 | | | Executive Vice President, Operations |
Chris Rogers | | | 46 | | | Executive Vice President, Chief Strategy Officer |
| | PROXY REPORT - 2022 39 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
5% Shareholders, Officers and Directors | | | Number of Shares Beneficially Owned | | | Percentage of Common Stock |
Beneficial Owners of 5% or More of Our Common Stock: | | | | | ||
FMR LLC (1) | | | 20,292,951 | | | 12.2% |
The Vanguard Group, Inc. (2) | | | 17,857,600 | | | 10.7% |
BlackRock, Inc. (3) | | | 15,027,574 | | | 9.0% |
Invesco Ltd. (4) | | | 11,839,358 | | | 7.1% |
BAMCO, Inc. (5) | | | 10,682,115 | | | 6.4% |
Executive Officers and Directors: | | | | | ||
Vimla Black-Gupta | | | 9,723 | | | * |
David Handler | | | 172,552 | | | * |
John Jacquemin | | | 98,669 | | | * |
Marla Kaplowitz | | | 8,023 | | | * |
Ronald Naples | | | 18,366 | | | * |
Saul Reibstein (6)(7) | | | 79,206 | | | * |
Jane Scaccetti | | | 50,569 | | | * |
Barbara Shattuck Kohn (8) | | | 50,445 | | | * |
Jay Snowden (6) | | | 1,748,551 | | | 1.0% |
Felicia Hendrix (6) | | | 13,787 | | | * |
Todd George (6) | | | 108,470 | | | * |
Harper Ko (6) | | | 13,536 | | | * |
All current executive officers and directors as a group (12 persons) (6)(9) | | | 2,431,874 | | | 1.5% |
(1) | Based on its Schedule 13G/A filed with the SEC on February 9, 2022, the number of shares in the table includes shares beneficially owned as of December 31, 2021, by FMR LLC and its listed affiliates. FMR LLC has sole voting power over 4,123,180 shares, shared voting power over 0 shares, sole dispositive power over 20,292,951 shares and shared dispositive power over 0 shares. The address of FMR, LLC is 245 Summer Street, Boston, Massachusetts 02210. |
(2) | Based on its Schedule 13G/A filed with the SEC on February 10, 2022, the number of shares in the table includes shares beneficially owned as of December 31, 2021, by The Vanguard Group, Inc. and its listed affiliates. The Vanguard Group, Inc. has sole voting power over 0 shares, shared voting power over 203,357 shares, sole dispositive power over 17,314,471 shares and shared dispositive power over 543,129 shares. The address of Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. |
40 PROXY REPORT - 2022 | | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
(3) | Based on its Schedule 13G/A filed with the SEC on February 1, 2022, the number of shares in the table includes shares beneficially owned as of December 31, 2021, by BlackRock, Inc. and its listed affiliates. BlackRock, Inc. has sole voting power over 15,027,574 shares, shared voting power over 0 shares, sole dispositive power over 15,027,574 shares and shared dispositive power over 0 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. |
(4) | Invesco on its Schedule 13G filed with the SEC on February 14, 2022, the number of shares in the table includes share beneficially owned as of December 31, 2021, by Invesco Ltd. and its listed affiliates. Invesco Ltd. has sole voting power over 11,733,023 shares, shared voting power over 0 shares, sole dispositive power over 11,839,358 shares and shared dispositive power over 0 shares. The address of Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. |
(5) | Based on its Schedule 13G/A filed with the SEC on February 14, 2022, the number of shares in the table includes shares beneficially owned as of December 31, 2021, by BAMCO, Inc. and its listed affiliates. BAMCO, Inc. and its listed affiliates have sole voting power over 0 shares, shared voting power over 10,302,115 shares, sole dispositive power over 0 shares and shared dispositive power over 10,682,115 shares. The address of BAMCO, Inc. is 767 Fifth Avenue, 49th Floor, New York, New York 10153. |
(6) | The number of shares in the table includes shares that may be acquired upon the exercise of outstanding options, as follows: Mr. Reibstein (from his previous role as CFO of the Company), 44,543; Mr. Snowden, 1,218,346, Ms. Hendrix, 2,925; Mr. George, 67,758, Ms. Ko, 3,818, Mr. Rogers, 47,737, and all current executive officers and directors as a group, 1,381,309 shares. |
(7) | The number of shares in the table excludes 150 shares owned by Mr. Reibstein’s spouse, as to which shares Mr. Reibstein disclaims beneficial ownership. |
(8) | The number of shares in the table excludes 1,750 shares owned by Ms. Kohn’s spouse, as to which shares Ms. Kohn disclaims beneficial ownership. |
(9) | All current officers includes Mr. Rogers who was designated an executive officer effective January 1, 2022, and excludes Ms. Ko who was removed as an executive officer effective January 1, 2022. |
| | PROXY REPORT - 2022 41 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
| | Jan-Sept 2021 | | | Oct-Dec 2021 | |
Barbara Shattuck Kohn | | | | | | |
John Jacquemin | | | | | ||
Ronald Naples | | | | | | |
Saul Reibstein | | | | | ||
Marla Kaplowitz | | | | | | |
Vimla Black-Gupta | | | | |
| | = Member | | | | | = Chair |
COMPENSATION COMMITTEE REPORT |
42 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
| | | | | | ||||
Jay A. Snowden Chief Executive Officer, President and Director | | | Felicia R. Hendrix Executive Vice President, Chief Financial Officer | | | Todd George Executive Vice President, Operations | | | Harper Ko Executive Vice President, Chief Legal Officer and Secretary |
Executive Summary |
| | PROXY REPORT - 2022 43 |
EXECUTIVE COMPENSATION |
• | Expanded diversity, equity and inclusion initiatives, contributing $4 million to fund STEM scholarships at historically black colleges and universities (HBCUs) in our communities; |
• | Launched an Emerging Leaders Development Program, which focuses on helping hourly and early-career team members; |
• | Reduced annual Kwh consumption by 10% equaling 45,000 tons of GHG elimination; and |
• | Prioritized sustainable food production, supply chain management, fair trade, hormone-free and reduced antibiotic procurement. |
44 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
| | | | | | | | | | | | |||||||
| | REVENUES $5,905M EXCEEDED 2020 & 2019 LEVELS | | | | | ADJUSTED EBITDAR $1,994M EXCEEDED 2020 & 2019 LEVELS | | | | | 2020-2021 CUMULATIVE TSR 103% COMPARED TO PEER GROUP: 56% S&P 500 INDEX: 52% | | | ||||
| | | | | | | | | | | | |||||||
| | LOWEST LEASE-ADJUSTED NET LEVERAGE IN OUR HISTORY 4.1x | | | | | EXPANDED ONLINE SPORTS BETTING OPERATIONS TO 11 STATES iCASINO OPERATIONS TO 4 STATES | | | | | INCLUDED IN S&P 500 INDEX | | | ||||
| | | | | | | | | | | | |||||||
| | EXPANDED RETAIL OPERATIONS TO OUR 20th STATE and opened 2 new casinos in Pennsylvania | | | | | Acquired theScore, Canada’s leading sports media brand, for greater control over our techOLOGY roadmap | | | | | Expanded DE&I initiatives PLEDGED $4M TO FUND STEM SCHOLARSHIPS AT HBCUs | | |
| | PROXY REPORT - 2022 45 |
EXECUTIVE COMPENSATION |
(1) | Peer Group includes: Boyd Gaming Corporation, Caesars Entertainment, Inc., DraftKings Inc., Electronic Arts Inc., Las Vegas Sands Corp., Lions Gate Entertainment Corp., Live Nation Entertainment, Inc., MGM Resorts International, Red Rock Resorts, Inc., Roku, Inc., Sirius XM Holdings Inc., Wynn Resorts Ltd., Zynga Inc. |
(2) | On March 22, 2021, the Company was added to the S&P 500 Index. |
(1) | The CEO’s total compensation excludes his supplemental performance-based equity award. For additional information regarding Mr. Snowden’s supplemental performance-based equity award, see “CEO Supplemental Performance-Based Equity Award” below. |
46 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
Performance Metric | | | Weighting | | | Alignment with Long-Term Value Creation |
Adjusted EBITDAR margin improvement in 2021 as compared to 2019 | | | | | • Encouraged innovative improvements to operating efficiency, thoughtful expense management, and profitability to enable future growth investments • Supported our ability to invest in future growth of our Interactive segment that is strategically important for our long-term success and shareholder value creation | |
Online sports betting and/or iCasino platforms in operation as of year end | | | | | • Designed to accelerate scale of our Interactive segment through incentivizing infrastructure growth and deployment of our online sports betting and/or iCasino platforms in operation • Increased scale of our Interactive segment needed to support future growth that is at the core of our highly differentiated organic cross-selling strategy and our ability to generate near- and long-term returns for our shareholders |
(1) | Based on $36.96 per share closing price of our common stock as of the Record Date and the $132 per share minimum achievement level of the Stock Price Hurdle Award (described below). |
| | PROXY REPORT - 2022 47 |
EXECUTIVE COMPENSATION |
Component | | | Description | | | Primary Objective |
Base Salary | | | Fixed cash compensation | | | • Attract, motivate, retain and reward high-performing executives • Provide competitive fixed compensation considering the job responsibilities, individual performance, experience, expertise and qualifications |
Short-Term Incentive Plan (“STIP”) | | | Cash compensation tied to achievement of pre-determined quantitative performance goals | | | • Promote short-term business objectives aligned to support our long-term growth strategy • Incentivize executives to enhance margins |
Long-Term Incentive Program (“LTIP”) | | | Annual equity awards consisting of: • 50% performance-based shares/units that are earned on achievement of pre-set quantitative performance goals throughout a three-year performance period; and • 50% time-based non-qualified stock options that vests over a four-year period | | | • Promote long-term value creation and growth strategies • Align interests of executive with those of shareholders by encouraging maximization of shareholder value • Promote retention, motivate performance and encourage long-term stock ownership |
• | Maintain a robust pay-for-performance philosophy that aligns the interests of our executives with those of our shareholders; |
• | Double-trigger change in control payments; |
• | Maintain a clawback policy that covers both cash and equity incentives; |
• | Maintain meaningful director and executive officer stock ownership guidelines (6x for CEO, enhanced from 5x in 2020); |
• | Engage an independent compensation consultant; |
• | Maintain a significant ratio of the incentive opportunities for executives that are at risk and performance-based; |
• | Disallow excise tax gross ups upon a change in control; |
• | Prohibit pledging, hedging or short sale activities by our executives and directors; |
• | No defined benefit or supplemental retirement plans; |
• | Prohibit dividend payments on unvested equity awards; |
• | Prohibit repricing or buyouts of underwater options or stock appreciation rights without shareholder approval; and |
• | No plan design features that encourage excessive or imprudent risk taking. |
48 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
| | PROXY REPORT - 2022 49 |
EXECUTIVE COMPENSATION |
50 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
• | Boyd Gaming Corporation; |
• | Caesars Entertainment Corporation; |
• | Eldorado Resorts, Inc. (merged with Caesars Entertainment Corporation in June 2020); |
• | Las Vegas Sands Corp.; |
• | MGM Resorts International; |
• | Red Rock Resorts, Inc.; and |
• | Wynn Resorts, Ltd. |
• | Boyd Gaming Corporation; |
• | Caesars Entertainment Corporation; |
• | DraftKings Inc.; |
• | Electronic Arts Inc.; |
• | Las Vegas Sands Corp.; |
• | Lions Gate Entertainment Corporation; |
• | MGM Resorts International; |
• | Red Rock Resorts, Inc.; |
• | Roku, Inc.; |
• | Sirius XM Holdings Inc.; |
• | Wynn Resorts, Ltd.; and |
• | Zynga Inc. |
| | PROXY REPORT - 2022 51 |
EXECUTIVE COMPENSATION |
Named Executive Officer | | | 2020 Base Salary | | | 2021 Base Salary | | | Percent Increase from 2020 |
Jay Snowden | | | $1,400,000 | | | $1,800,000 | | | 28.6% |
Felicia Hendrix(1) | | | – | | | $650,000 | | | – |
Todd George | | | $650,000 | | | $725,000 | | | 11.5% |
Harper Ko(1) | | | – | | | $575,000 | | | – |
(1) | Ms. Hendrix and Ms. Ko both joined the Company in 2021. |
2021 STIP Opportunity (as % of Base Salary) | |||||||||
Named Executive Officer | | | At Threshold | | | At Target | | | At Stretch or Above |
Jay Snowden | | | 125% | | | 250% | | | 375% |
Felicia Hendrix | | | 50% | | | 100% | | | 150% |
Todd George | | | 50% | | | 100% | | | 150% |
Harper Ko | | | 50% | | | 100% | | | 150% |
52 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
Objective Corporate Performance Metrics • Adjusted EBITDAR margin improvement in 2021 as compared to 2019 – Weighted 50% • Online sports betting and/or iCasino platforms in operation as of year-end – Weighted 50% |
• | Adjusted EBITDAR margin is a non-GAAP financial measure. “GAAP” means the generally accepted accounting principles in the U.S. Adjusted EBITDAR margin is defined as Adjusted EBITDAR on a consolidated basis divided by revenues on a consolidated basis. Adjusted EBITDAR is defined as Adjusted EBITDA plus rent expense associated with our triple net operating 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 (principally consisting of interest expense, net; income taxes; depreciation and amortization; and stock-based compensation expense) added back for our joint ventures in Kansas Entertainment and Barstool Sports and rent expense associated with triple net operating leases. For a reconciliation of Net Income (Loss) to Adjusted EBITDAR, see the section entitled “Non-GAAP Measures” on pages 42 - 44 of our 2021 Annual Report. |
• | We launched our first online sports betting platform in October 2020. As of January 1, 2021, it was the Company’s sole online sports betting platform in operation, and no iCasino platforms had yet been launched. The fiscal 2021 target for the number of online sports betting and iCasino platforms in operation was ambitious and aligned with our internal business plan. However, the outcomes were highly uncertain and dependent on our ability to grow the interactive platform support team amid the challenging talent market environment and our ability to obtain licensing and regulatory approvals across different state jurisdictions in a timely manner. The last three online platforms were launched during the fourth quarter, underscoring the rigor and tremendous effort of the executive team. |
| | PROXY REPORT - 2022 53 |
EXECUTIVE COMPENSATION |
2021 STIP Performance Metric | | | Threshold (85%) | | | Target (100%) | | | Stretch (115%) | | | Outcome |
Adjusted EBITDAR margin improvement in 2021 as compared to 2019 | | | 250 basis points | | | 350 basis points | | | 450 basis points | | | Stretch Actual Result 655 Basis Points (1) |
Online sports betting and/or iCasino platforms in operation as of year-end | | | 10 platforms | | | 12 platforms | | | 14 platforms | | | Stretch Actual Result 15 Platforms (2) |
(1) | Reflects Adjusted EBITDAR margin improvement of 655 basis points for the year ended December 31, 2021 as compared to the year ended December 31, 2019. |
(2) | Reflects operation of 15 online sports betting and/or iCasino platforms as of December 31, 2021. |
Named Executive Officer | | | Base Salary | | | Total Short Term Incentive Payment | | | Achieved Short Term Incentive (% of Base Salary) |
Jay Snowden | | | $1,800,000 | | | $6,750,000 | | | 375% |
Felicia Hendrix | | | $650,000 | | | $975,000 | | | 150% |
Todd George | | | $725,000 | | | $1,087,500 | | | 150% |
Harper Ko | | | $575,000 | | | $862,500 | | | 150% |
Named Executive Officer | | | 2021 LTIP Award Target (% of Base Salary) | | | 2021 LTIP Award Target ($) |
Jay Snowden(1) | | | 450% | | | $8,100,000 |
Felicia Hendrix | | | 240% | | | $1,560,000 |
Todd George | | | 240% | | | $1,740,000 |
Harper Ko | | | 240% | | | $1,380,000 |
(1) | Excludes Mr. Snowden’s supplemental performance-based equity award. For additional information regarding Mr. Snowden’s supplemental performance-based equity award, see “CEO Supplemental Performance-Based Equity Award” below. |
54 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
| | Weighting | | | Vehicle | | | Metric | | | Vesting | |
Long-Term Incentive Awards | | | 50% | | | Performance Based | | | Adjusted EBITDAR margin improvement in 2021 as compared to 2019 Online sports betting and/or iCasino platforms in operation as of year-end | | | Amount Earned Vests at the End of the 3-Year Performance Period |
| 50% | | | Time-Based | | | – | | | 4-Year Annual Vesting |
| | | | Performance Awards (50% of Aggregate Target LTIP)(1) | | | |||||||||
Named Executive Officer | | | Aggregate Amount of Target LTIP Award | | | Threshold (85%) | | | Target (100%) | | | Stretch (150%) | | | Stock Options (50% of Aggregate Target LTIP)(2) |
Jay Snowden | | | $8,100,000 | | | $3,442,500 | | | $4,050,000 | | | $6,075,000 | | | $4,050,000 |
Felicia Hendrix | | | $1,560,000 | | | $663,000 | | | $780,000 | | | $1,170,000 | | | $780,000 |
Todd George | | | $1,740,000 | | | $739,500 | | | $870,000 | | | $1,305,000 | | | $870,000 |
Harper Ko | | | $1,380,000 | | | $586,500 | | | $690,000 | | | $1,035,000 | | | $690,000 |
(1) | The number of Performance Awards issued was determined by dividing the applicable dollar amounts by the closing stock price of our common stock as of April 9, 2021, the business day immediately prior to the grant date. |
(2) | The number of stock options issued was determined by dividing the applicable target dollar amount of such awards by the Black Scholes grant date fair value per option as of January 4, 2021. |
| | PROXY REPORT - 2022 55 |
EXECUTIVE COMPENSATION |
2021 Performance Goals • Adjusted EBITDAR margin improvement in 2021 as compared to 2019 – Weighted 50% • Online sports betting and/or iCasino platforms in operation as of year-end – Weighted 50% |
• | Third performance period of the 2019 Performance Awards |
• | Second performance period of the 2020 Performance Awards |
• | First performance period of the 2021 Performance Awards |
Relative Weighting | | | 2021 LTIP Performance Metric | | | Threshold (85%) | | | Target (100%) | | | Stretch (115%) | | | Outcome |
50% | | | Adjusted EBITDAR margin improvement in 2021 as compared to 2019 | | | 250 basis points | | | 350 basis points | | | 450 basis points | | | Stretch Actual Result 655 Basis Points (1) |
50% | | | Online sports betting and/or iCasino platforms in operation as of year-end | | | 10 platforms | | | 12 platforms | | | 14 platforms | | | Stretch Actual Result 15 Platforms (2) |
(1) | Reflects Adjusted EBITDAR margin improvement of 655 basis points for the year ended December 31, 2020 as compared to the year ended December 31, 2019. |
(2) | Reflects operation of 15 online sports betting or iCasino platforms as of December 31, 2021. |
56 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
Named Executive Officer | | | Restricted Stock | | | Restricted Stock Units | | | Restricted Stock | | | Restricted Stock Units | | | Restricted Stock |
| Earned from 2021 Performance Awards | | | Earned from 2020 Performance Awards | | | Earned from 2020 Performance Awards | | | Earned from 2019 Performance Awards | | | Earned from 2019 Performance Awards | ||
Jay Snowden(1) | | | 19,449 | | | – | | | – | | | 21,698 | | | 21,698 |
Felicia Hendrix(2) | | | 3,746 | | | – | | | – | | | – | | | – |
Todd George | | | 4,179 | | | 7,235 | | | 7,235 | | | – | | | 3,528 |
Harper Ko(2) | | | 3,314 | | | – | | | – | | | – | | | – |
(1) | Mr. Snowden received an equity grant in August 2019 upon the announcement of his imminent promotion to CEO on January 1, 2020, and therefore did not participate in the 2020 Performance Award Plan. |
(2) | Ms. Hendrix and Ms. Ko both joined the Company in 2021. |
LTIP Award | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | Payout Status by Year |
2021 Performance Award | | | | | | | 33% | | | | | | | Yr. 1 = 150% | ||||
2020 Performance Award | | | | | 66% | | | | | | | Yr. 1 = 150% Yr. 2 = 150% | ||||||
2019 Performance Award | | | 100% | | | | | | | Yr. 1 = 133.41% Yr. 2 = 150% Yr. 3 = 150% |
| | PROXY REPORT - 2022 57 |
EXECUTIVE COMPENSATION |
• | PHASE I - “Stock Price Hurdle Award”: a restricted stock grant with performance vesting conditions tied to the achievement of aspirational stock price hurdles, which must be maintained for 60 consecutive trading days, during the period ending December 31, 2025; and |
• | PHASE II - “Relative TSR Hurdle Award”: an award of stock-settled restricted stock units that, contingent upon achievement of a Stock Price Hurdle Award, provides an opportunity to earn additional shares if the Company’s five-year TSR measured at the end of 2026 and 2027 equals or exceeds the 75th percentile of the S&P 500 index. |
58 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
| | PROXY REPORT - 2022 59 |
EXECUTIVE COMPENSATION |
(1) | Based on $36.96 per share closing price of our common stock as of the Record Date and the $132 per share minimum achievement level of the supplemental award. |
Penn’s TSR Percentile Performance vs. the S&P 500 | | | Percent of Stock Price Hurdle Restricted Shares Earned |
Below 75th Percentile | | | 0% |
75th Percentile | | | 50% |
90th Percentile | | | 75% |
95th Percentile | | | 100% |
60 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
Measurement Year | | | Relative TSR Measurement Period |
2026 | | | 2022–2026 |
2027 | | | 2023–2027 |
| | PROXY REPORT - 2022 61 |
EXECUTIVE COMPENSATION |
Position | | | Required Value of Shares Held (2021) | | | Required Value of Shares Held (2015 - 2020) |
Chief Executive Officer | | | Six (6) times base salary | | | Five (5) times base salary |
Other Executive Officers | | | Three (3) times base salary | | | Three (3) times base salary(1) |
(1) | Two (2) times base salary for the chief legal officer and the chief development officer. |
62 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(a) | | | Option Awards ($)(a) | | | Non-Equity Incentive Plan Compensation ($)(b) | | | All Other Compensation ($)(c) | | | Total ($) |
Jay Snowden Chief Executive Officer and President | | | 2021 | | | 1,786,154 | | | – | | | 53,054,562 | | | 4,050,022 | | | 6,750,000 | | | 246,476 | | | 65,887,214 |
| 2020 | | | 1,215,677 | | | – | | | 2,431,391 | | | 0 | | | 0 | | | 251,587 | | | 3,898,655 | ||
| 2019 | | | 1,100,000 | | | – | | | 1,224,213 | | | 7,229,814 | | | 1,285,167 | | | 138,774 | | | 10,977,968 | ||
Felicia Hendrix Executive Vice President, Chief Financial Officer | | | 2021 | | | 537,500 | | | 375,000 | | | 518,491 | | | 779,989 | | | 975,000 | | | 25,000 | | | 3,210,980 |
| 2020 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 2019 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
Todd George Executive Vice President, Operations | | | 2021 | | | 722,404 | | | – | | | 1,589,576 | | | 870,014 | | | 1,087,500 | | | 55,920 | | | 4,325,414 |
| 2020 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 2019 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
Harper Ko Executive Vice President, Chief Legal Officer and Secretary | | | 2021 | | | 557,308 | | | – | | | 487,543 | | | 690,011 | | | 862,500 | | | 187,676 | | | 2,785,038 |
| 2020 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 2019 | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
(a) | Amounts set forth in the Stock Awards and Option Awards columns represent the aggregate grant date fair value of awards granted in each year as computed in accordance with ASC 718, disregarding estimates of forfeitures related to service-based vesting conditions. Performance Award values are based upon their probable outcome of the performance condition as of the grant date. For additional information about the assumptions used in these calculations, see Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The amounts presented in the Stock Awards column for each named executive officer during 2021 include the grant date fair value of their awards as follows: |
| | PROXY REPORT - 2022 63 |
COMPENSATION TABLES AND ARRANGEMENTS |
Performance Award Compensation Disclosed for 2021 | ||||||||||||||||||
| | Disclosed vs. Design | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | | 2023 | |
2021 Performance Award | | | Plan Design Value | | | | | | | 100% | | | | | ||||
| Value Disclosed in Summary Compensation Table | | | | | | | 33% | | | 33% | | | 33% | ||||
2020 Performance Award | | | Plan Design Value | | | | | 100% | | | | | | | ||||
| Value Disclosed in Summary Compensation Table | | | | | 33% | | | 33% | | | 33% | | | ||||
2019 Performance Award | | | Plan Design Value | | | 100% | | | | | | | | | ||||
| Value Disclosed in Summary Compensation Table | | | 33% | | | 33% | | | 33% | | | | |
(b) | The amounts reflect cash payments for 2021 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. A discussion of our annual short-term incentive plan may be found in our CD&A under “Annual Short-Term Incentive Plan.” |
(c) | For Mr. Snowden, All Other Compensation in 2021 consisted of: (i) $89,308 in Company matching contributions under the Company’s Deferred Compensation Plan (“DCP”); (ii) $8,551 in Company paid insurance premiums; (iii) $14,000 in tax and financial planning; (iv) $5,800 in matching 401(k) contributions; and (v) $128,817 representing aggregate incremental cost for use of the Company’s aircraft which is based on variable costs of operating the aircraft including fuel costs, landing costs and repairs and maintenance. |
64 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
Name | | | Grant Date(a) | | | Award Date(a) | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (#) | | | All Other Stock Awards: (#) | | | All Other Option Awards (#)(b) | | | Exercise Price of Option Awards ($/share) | | | Grant Date Fair Value of Stock and Option Awards ($)(c) | ||||||||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | |||||||||||||||||||
Jay Snowden | | | | | | | $2,250,000 | | | $4,500,000 | | | $6,750,000 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 1/5/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | – | | | 89,639 | | | 80.89 | | | 4,050,022 | |||
| 4/12/2021(d) | | | 2/14/2019 | | | – | | | – | | | – | | | 7,233 | | | 14,465 | | | 21,698 | | | – | | | – | | | – | | | 1,506,096 | ||
| 4/12/2021(e) | | | 2/14/2019 | | | – | | | – | | | – | | | 7,233 | | | 14,465 | | | 21,698 | | | – | | | – | | | – | | | 1,506,096 | ||
| 4/12/2021(h) | | | | | – | | | – | | | – | | | 6,483 | | | 12,966 | | | 19,449 | | | – | | | – | | | – | | | 1,350,020 | |||
| 4/12/2021(i) | | | | | – | | | – | | | – | | | 20,000 | | | – | | | 300,000 | | | – | | | – | | | – | | | 19,430,350 | |||
| 4/12/2021(i) | | | | | – | | | – | | | – | | | 300,000 | | | 450,000 | | | 600,000 | | | – | | | – | | | – | | | 29,262,000 | |||
Felicia Hendrix | | | | | | | $325,000 | | | $650,000 | | | $975,000 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 2/23/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | – | | | 11,697 | | | $117.82 | | | 779,989 | |||
| 4/5/2021(h) | | | | | – | | | – | | | – | | | 1,249 | | | 2,497 | | | 3,746 | | | – | | | – | | | – | | | 268,477 | |||
| 2/23/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | 2,122 | | | – | | | – | | | 250,014 | |||
Todd George | | | | | | | $362,500 | | | $725,000 | | | $1,087,500 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 1/5/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | – | | | 19,256 | | | $80.89 | | | 870,014 | |||
| 4/5/2021(d) | | | 2/14/2019 | | | – | | | – | | | – | | | 1,176 | | | 2,352 | | | 3,528 | | | – | | | – | | | – | | | 252,887 | ||
| 4/5/2021(f) | | | 3/4/2020 | | | – | | | – | | | – | | | 2,412 | | | 4,823 | | | 7,235 | | | – | | | – | | | – | | | 518,569 | ||
| 4/5/2021(g) | | | 3/4/2020 | | | – | | | – | | | – | | | 2,412 | | | 4,823 | | | 7,235 | | | – | | | – | | | – | | | 518,569 | ||
| 4/5/2021(h) | | | | | – | | | – | | | – | | | 1,393 | | | 2,786 | | | 4,179 | | | – | | | – | | | – | | | 299,551 | |||
Harper Ko | | | | | | | $287,500 | | | $575,000 | | | $862,500 | | | – | | | – | | | – | | | – | | | – | | | – | | | – | ||
| 1/5/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | – | | | 15,272 | | | $80.89 | | | 690,011 | |||
| 4/5/2021(h) | | | | | – | | | – | | | – | | | 1,105 | | | 2,209 | | | 3,314 | | | – | | | – | | | – | | | 237,512 | |||
| 1/5/2021 | | | | | – | | | – | | | – | | | – | | | – | | | – | | | 3,091 | | | – | | | – | | | 250,031 |
(a) | The grant date shown in the table was determined pursuant to ASC 718, which is the date our Compensation Committee (or our Board for the CEO) established the performance criteria for the first one-third of the 2021 Performance Awards, the second one-third of the 2020 Performance Awards and the final one-third of the 2019 Performance Awards. The award date shown above represents the date on which our Compensation Committee (or our Board for the CEO) awarded the target number of Performance Awards to the named executive officers when the date differs from the grant date. |
(b) | Option awards represent stock options granted to the executives as part of their annual equity incentive compensation. The option awards vest over four years, 25% on the first anniversary of the date of grant and 25% on each succeeding anniversary. |
(c) | 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 Note 2 to the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. |
(d) | Equity incentive awards represent performance-based restricted stock awards approved on February 14, 2019 in connection with the Company’s 2019 Performance Awards. 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) 43,397 for Mr. Snowden and (ii) 7,058 for Mr. George. |
(e) | Equity incentive awards represent performance-based restricted 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 restricted stock units having a three-year award period consisting of three one-year performance periods and a three-year service period were: (i) 43,397 for Mr. Snowden. |
(f) | Equity incentive awards represent performance-based restricted stock awards approved on March 4, 2020 in connection with the Company’s 2020 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 14,469 for Mr. George. |
(g) | Equity incentive awards represent performance-based restricted stock units approved on March 4, 2020 in connection with the Company’s 2020 performance share program. The aggregate target number of restricted stock units having a three-year award period consisting of three one-year performance periods and a three-year service period were 14,469 for Mr. George. |
(h) | Equity incentive awards represent performance-based restricted stock awards approved on April 12, 2021 for Mr. Snowden and April 5, 2021 for the other named executive officers in connection with the Company’s 2021 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) 38,897 for Mr. Snowden; (ii) 7,491 for Ms. Hendrix; (iii) 8,356 for Mr. George; and (iv) 6,627 for Ms. Ko. |
(i) | These awards consist of the Stock Price Hurdle Award and the Relative TSR Hurdle Award. A discussion of the Stock Price Hurdle Award and the Relative TSR Hurdle Award may be found in our CD&A under “CEO Performance Based Supplemental Equity Awards.” |
| | PROXY REPORT - 2022 65 |
COMPENSATION TABLES AND ARRANGEMENTS |
Name | | | 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($)(k) | | | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested(#) | | | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested($) | |||||
| Exercisable (#) | | | Unexercisable (#) | | |||||||||||||||||||
Jay Snowden | | | 237,437 | | | – | | | 12.87 | | | 2/9/2023 | | | 62,696(h) | | | 3,250,788 | | | – | | | – |
| 219,222 | | | – | | | 14.10 | | | 1/4/2024 | | | 62,696(h) | | | 3,250,788 | | | – | | | – | ||
| 79,327 | | | 26,442(a) | | | 30.74 | | | 1/3/2025 | | | 19,449(j) | | | 1,008,431 | | | 38,897(l) | | | 2,016,809 | ||
| 78,102 | | | 78,101(b) | | | 19.45 | | | 1/3/2029 | | | | | | | 300,000(n) | | | 15,555,000 | ||||
| 516,354 | | | 516,352(c) | | | 18.81 | | | 8/6/2029 | | | | | | | 600,000(o) | | | 31,110,000 | ||||
| – | | | 89,639(e) | | | 80.89 | | | 1/5/2031 | | | | | | | | | ||||||
Felicia Hendrix | | | – | | | 11,697(f) | | | 117.82 | | | 2/23/2031 | | | | | | | 2,122(p) | | | 110,026 | ||
| | | | | | | | | 3,746(j) | | | 194,230 | | | 7,491(l) | | | 388,408 | ||||||
Todd George | | | 5,375 | | | –(m) | | | 14.10 | | | 1/4/2024 | | | | | | | 21,404(q) | | | 1,109,797 | ||
| 10,020 | | | 3,340(a) | | | 30.74 | | | 1/3/2025 | | | 10,197(h) | | | 528,714 | | | – | | | – | ||
| 12,702 | | | 12,702(b) | | | 19.45 | | | 1/3/2029 | | | 14,470(i) | | | 750,270 | | | 7,235(l) | | | 375,135 | ||
| 15,266 | | | 45,795(d) | | | 26.14 | | | 1/3/2030 | | | 14,470(i) | | | 750,270 | | | 7,235(l) | | | 375,135 | ||
| – | | | 19,256(e) | | | 80.89 | | | 1/5/2031 | | | 4,179(j) | | | 216,681 | | | 8,355(l) | | | 433,207 | ||
Harper Ko | | | – | | | 15,272(e) | | | 80.89 | | | 1/5/2031 | | | | | | | 3,091(r) | | | 160,268 | ||
| | | | | | | | | 3,314(j) | | | 171,831 | | | 6,627(l) | | | 343,610 |
(a) | The vesting date is January 3, 2022. |
(b) | The vesting dates are January 3, 2022 and January 3, 2023. |
(c) | The vesting dates are August 6, 2022 and August 6, 2023. |
(d) | The vesting dates are January 3, 2022, January 3, 2023 and January 3, 2024. |
(e) | The vesting dates are January 5, 2022, January 5, 2023, January 5, 2024, and January 5, 2025. |
(f) | The vesting dates are February 23, 2022, February 23, 2023, February 23, 2024, and February 23, 2025. |
(g) | The stock awards consist of performance awards, which were made under the performance share program adopted under the 2018 Long Term Incentive Compensation Plan. |
(h) | The vesting date shall be in the first quarter of 2022 following the certification of performance by the Compensation Committee or the Board of Directors, as applicable. |
(i) | The vesting date shall be in the first quarter of 2023 following the certification of performance by the Compensation Committee or the Board of Directors, as applicable. |
(j) | The vesting date shall be in the first quarter of 2024 following the certification of performance by the Compensation Committee or the Board of Directors, as applicable. |
(k) | Calculated based on the closing price of $51.85 for the Company’s common stock on December 31, 2021, which was the last trading day of the Company’s 2021 fiscal year. |
(l) | These amounts represent the maximum number of performance-based restricted stock and restricted stock units for the performance periods ending December 31, 2022, December 31, 2023 and December 31, 2024. The final number of shares or units earned, if any, will be based on the performance achieved for such periods. |
(m) | This option award consists of a Cash Settled Stock Appreciation Award. |
(n) | These awards make up the Stock Price Hurdle Award. A discussion of the Stock Price Hurdle Award may be found in our CD&A under “CEO Performance Based Supplemental Equity Awards.” |
(o) | These awards make up the Relative TSR Hurdle Award. A discussion of the Relative TSR Hurdle Award may be found in our CD&A under “CEO Performance Based Supplemental Equity Awards.” |
(p) | Time-based Restricted Stock Award which vests ratably on February 23, 2022 and February 23, 2023. |
(q) | Cash settled time-based Restricted Stock Unit. The remaining units vest 46.67% on September 22, 2022, and 53.33% on September 22, 2023. |
(r) | Time-based Restricted Stock Unit which vests ratably on January 5, 2022, January 5, 2023, January 5, 2024, and January 5, 2025. |
66 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
| | Option Awards | | | Stock Awards | |||||||
Name | | | Number of Shares Acquired on Exercise(#) | | | Value Realized on Exercise($) | | | Number of Shares Acquired on Vesting(#)(a) | | | Value Realized on Vesting($)(b) |
Jay Snowden | | | 234,827 | | | 19,621,391 | | | 40,614 | | | 4,422,458 |
Felica Hendrix | | | – | | | – | | | – | | | – |
Todd George | | | – | | | – | | | 12,265 | | | 1,059,126 |
Harper Ko | | | – | | | – | | | – | | | – |
(a) | The number of shares acquired on vesting includes 7,135 restricted stock units, which were settled in cash, for Mr. George. |
(b) | Value realized represents fair value, per share, as of the trading day immediately prior to the vesting date. |
Name | | | Executive Contributions in Last Fiscal Year ($)(a) | | | Company Contributions in Last Fiscal Year ($)(b) | | | Aggregate Earnings in Last Fiscal Year ($)(c) | | | Aggregate Withdrawals/ Distributions ($) | | | Aggregate Balance at Last Fiscal Year End ($)(d) |
Jay Snowden | | | 178,615 | | | 89,308 | | | 454,486 | | | (2,078) | | | 3,714,748 |
Felicia Hendrix | | | 50,000 | | | 25,000 | | | 5,344 | | | (94) | | | 80,251 |
Todd George | | | 216,721 | | | 36,120 | | | 415,292 | | | (857) | | | 2,900,649 |
Harper Ko | | | 53,076 | | | 26,538 | | | 2,464 | | | (107) | | | 81,974 |
(a) | For each executive, the executive’s contribution is included in the executive’s Salary column for 2021, as reported in the Summary Compensation Table. |
(b) | For each executive, the Company’s contribution is included in the executive’s All Other Compensation column for 2021, as reported in the Summary Compensation Table. |
(c) | Amounts reflect the change in account value during fiscal year 2021. No amounts are reported in the Summary Compensation Table because the earnings were not above market or preferential. |
(d) | The amount of Mr. Snowden’s aggregate balance at fiscal year-end that was reported as compensation in the Summary Compensation Table for previous years was $796,951. |
| | PROXY REPORT - 2022 67 |
COMPENSATION TABLES AND ARRANGEMENTS |
Executive Payments | | | Voluntary Termination by Executive ($) | | | Termination without Cause by Company ($) | | | Termination for Cause by Company ($) | | | Termination upon Death ($) | | | Termination upon Disability ($) | | | Change in Control ($) | | | Change in Control Termination without Cause ($) |
Cash Severance Benefit(a) | | | – | | | 8,662,500 | | | – | | | 8,662,500 | | | 8,662,500 | | | – | | | 12,600,000 |
Benefit Continuation(b) | | | – | | | 39,524 | | | – | | | 39,524 | | | 39,524 | | | – | | | 39,524 |
Restricted Stock(c)(d) | | | – | | | 4,259,192 | | | – | | | 4,259,192 | | | 4,259,192 | | | – | | | 5,603,715 |
Unvested Stock Options(d) | | | – | | | – | | | – | | | 20,148,933 | | | 20,148,933 | | | – | | | 20,148,933 |
Unvested Restricted Stock Units(c)(d) | | | – | | | 3,250,771 | | | – | | | 3,250,771 | | | 3,250,771 | | | – | | | 3,250,771 |
Vested Stock Options(e) | | | 38,796,359 | | | 38,796,359 | | | – | | | 38,796,359 | | | 38,796,359 | | | 38,796,359 | | | 38,796,359 |
Vested Deferred compensation Balance(f) | | | 3,714,748 | | | 3,714,748 | | | 3,714,748 | | | 3,714,748 | | | 3,714,748 | | | 3,714,748 | | | 3,714,748 |
Total | | | $42,511,107 | | | $58,723,094 | | | $3,714,748 | | | $78,872,027 | | | $78,872,027 | | | $42,511,107 | | | $84,154,050 |
(a) | The basis for the cash severance benefit upon a termination is the base salary for 2021 plus the average of the last two full years bonuses. |
(b) | Represents employer cost of medical, dental and vision coverage. |
(c) | Restricted stock and restricted stock unit award values were computed based on the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share), which was the last trading day of 2021. |
(d) | Restrictions on unvested awards lapse upon death, disability or a change in control termination without cause. |
(e) | Amounts represent the difference between the exercise price of each named executive officer’s options and the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share). Vested stock options issued under the 2008 Plan and 2018 Plan are cancelled when an executive is terminated for cause by the Company. |
(f) | Company contributions to the Deferred Compensation Plan vest 20% per year during the first five years of service. However, vesting is accelerated upon death, change in control or, at the option of the committee administering the Deferred Compensation Plan, disability. |
68 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
Executive Payments | | | Voluntary Termination by Executive ($) | | | Termination without Cause by Company ($) | | | Termination for Cause by Company ($) | | | Termination upon Death ($) | | | Termination upon Disability ($) | | | Change in Control ($) | | | Change in Control Termination without Cause ($) |
Cash Severance Benefit (a) | | | – | | | 2,275,000 | | | – | | | 2,275,000 | | | 2,275,000 | | | – | | | 2,600,000 |
Benefit Continuation (b) | | | – | | | 43,601 | | | – | | | 43,601 | | | 43,601 | | | – | | | 43,601 |
Restricted Stock (c)(d) | | | – | | | 194,230 | | | – | | | 304,256 | | | 304,256 | | | – | | | 563,195 |
Unvested Stock Options (d) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Unvested Restricted Stock Units (c)(d) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Vested Stock Options (e) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Vested Deferred Compensation Balance (f) | | | 80,251 | | | 80,251 | | | 80,251 | | | 80,251 | | | 80,251 | | | 80,251 | | | 80,251 |
Total | | | $80,251 | | | $2,593,082 | | | $80,251 | | | $2,703,107 | | | $2,703,107 | | | $80,251 | | | $3,287,045 |
(a) | The basis for the cash severance benefit upon a termination is the base salary for 2021 plus target cash bonuses for 2021. |
(b) | Represents employer cost of medical, dental and vision coverage. |
(c) | Restricted stock and restricted stock unit award values were computed based on the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share), which was the last trading day of 2021. |
(d) | Restrictions on unvested awards lapse upon death, disability or a change in control termination without cause. |
(e) | Amounts represent the difference between the exercise price of each named executive officer’s options and the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share). Vested stock options issued under the 2008 Plan and 2018 Plan are cancelled when an executive is terminated for cause by the Company. |
(f) | Company contributions to the Deferred Compensation Plan vest 20% per year during the first five years of service. However, vesting is accelerated upon death, change in control or, at the option of the committee administering the Deferred Compensation Plan, disability. |
| | PROXY REPORT - 2022 69 |
COMPENSATION TABLES AND ARRANGEMENTS |
Executive Payments | | | Voluntary Termination by Executive ($) | | | Termination without Cause by Company ($) | | | Termination for Cause by Company ($) | | | Termination upon Death ($) | | | Termination upon Disability ($) | | | Change in Control ($) | | | Change in Control Termination without Cause ($) |
Cash Severance Benefit (a) | | | – | | | 2,265,625 | | | – | | | 2,265,625 | | | 2,265,625 | | | – | | | 2,900,000 |
Benefit Continuation (b) | | | – | | | 41,720 | | | – | | | 41,720 | | | 41,720 | | | – | | | 41,720 |
Restricted Stock (c)(d) | | | – | | | 1,495,717 | | | – | | | 1,495,717 | | | 1,495,717 | | | – | | | 2,034,594 |
Unvested Stock Options (d) | | | – | | | – | | | – | | | 1,659,442 | | | 1,659,442 | | | – | | | 1,659,442 |
Unvested Restricted Stock Units (c)(d) | | | – | | | 750,244 | | | – | | | 750,244 | | | 750,244 | | | – | | | 1,000,316 |
Vested Stock Options (e) | | | 1,218,462 | | | 1,218,462 | | | – | | | 1,218,462 | | | 1,218,462 | | | 1,218,462 | | | 1,218,462 |
Vested Deferred Compensation Balance (f) | | | 2,900,649 | | | 2,900,649 | | | 2,900,649 | | | 2,900,649 | | | 2,900,649 | | | 2,900,649 | | | 2,900,649 |
Total | | | $4,119,111 | | | $8,672,417 | | | $2,900,649 | | | $10,331,858 | | | $10,331,858 | | | $4,119,111 | | | $11,755,183 |
(a) | The basis for the cash severance benefit upon a termination is the base salary for 2021 plus the average of the last two full years bonuses. |
(b) | Represents employer cost of medical, dental and vision coverage. |
(c) | Restricted stock and restricted stock unit award values were computed based on the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share), which was the last trading day of 2021. |
(d) | Restrictions on unvested awards lapse upon death, disability or a change in control termination without cause. |
(e) | Amounts represent the difference between the exercise price of each named executive officer’s options and the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share). Vested stock options issued under the 2008 Plan and 2018 Plan are cancelled when an executive is terminated for cause by the Company. |
(f) | Company contributions to the Deferred Compensation Plan vest 20% per year during the first five years of service. However, vesting is accelerated upon death, change in control or, at the option of the committee administering the Deferred Compensation Plan, disability. |
70 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
Executive Payments | | | Voluntary Termination by Executive ($) | | | Termination without Cause by Company ($) | | | Termination for Cause by Company ($) | | | Termination upon Death ($) | | | Termination upon Disability ($) | | | Change in Control ($) | | | Change in Control Termination without Cause ($) |
Cash Severance Benefit (a) | | | – | | | 1,725,000 | | | – | | | 1,725,000 | | | 1,725,000 | | | – | | | 2,300,000 |
Benefit Continuation (b) | | | – | | | 31,920 | | | – | | | 31,920 | | | 31,920 | | | – | | | 31,920 |
Restricted Stock (c)(d) | | | – | | | 171,831 | | | – | | | 332,099 | | | 332,099 | | | – | | | 561,173 |
Unvested Stock Options (d) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Unvested Restricted Stock Units (c)(d) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Vested Stock Options (e) | | | – | | | – | | | – | | | – | | | – | | | – | | | – |
Vested Deferred Compensation Balance (f) | | | 81,974 | | | 81,974 | | | 81,974 | | | 81,974 | | | 81,974 | | | 81,974 | | | 81,974 |
Total | | | $81,974 | | | $2,010,725 | | | $81,974 | | | $2,170,993 | | | $2,170,993 | | | $81,974 | | | $2,975,067 |
(a) | The basis for the cash severance benefit upon a termination is the base salary for 2021 plus target cash bonuses for 2021. |
(b) | Represents employer cost of medical, dental and vision coverage. |
(c) | Restricted stock and restricted stock unit award values were computed based on the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share), which was the last trading day of 2021. |
(d) | Restrictions on unvested awards lapse upon death, disability or a change in control termination without cause. |
(e) | Amounts represent the difference between the exercise price of each named executive officer’s options and the closing price of the Company’s common stock on December 31, 2021 ($51.85 per share). Vested stock options issued under the 2008 Plan and 2018 Plan are cancelled when an executive is terminated for cause by the Company. |
(f) | Company contributions to the Deferred Compensation Plan vest 20% per year during the first five years of service. However, vesting is accelerated upon death, change in control or, at the option of the committee administering the Deferred Compensation Plan, disability. |
| | PROXY REPORT - 2022 71 |
COMPENSATION TABLES AND ARRANGEMENTS |
72 PROXY REPORT - 2022 | | |
COMPENSATION TABLES AND ARRANGEMENTS |
| | (a) | | | (b) | | | (c) | |
Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted average exercise price of outstanding options, warrants and rights ($) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by shareholders | | | 4,909,753(1) | | | 24.73 | | | 4,434,660(2) |
Equity compensation plans not approved by shareholders(3) | | | 913,242 | | | 14.80 | | | 207,156 |
(1) | Includes 1,363,224 shares issuable at maximum in connection with performance-based restricted stock awards granted under performance share plans adopted under the 2018 Plan. |
(2) | The 2018 Plan provides that, while awards of stock options and stock appreciation rights are counted as one share of common stock granted under such plan, awards of restricted stock, or shares issued pursuant to any other full value awards, are counted as issuing 2.30 shares of common stock per share awarded for purposes of determining the number of shares available for issuance under such plan. Awards that are settled in cash rather than shares of stock are not counted against the limit in the 2018 Plan. |
| | PROXY REPORT - 2022 73 |
COMPENSATION TABLES AND ARRANGEMENTS |
(3) | In connection with our October 19, 2021 acquisition of theScore, we assumed the Score Media and Gaming Inc. Second Amended and Restated Stock Option and Restricted Stock Unit Plan (the “Score Media Plan”). Upon the assumption of the Score Media Plan, the remaining share reserve thereunder was converted into a share reserve relating to shares of Company common stock based on the equity award exchange ratio applicable to outstanding equity awards of theScore. The Score Media Plan was approved by the Score Media and Gaming Inc. security holders prior to the acquisition but has not been approved by our shareholders. The Score Media Plan permits grants of stock options and restricted share units to directors, officers, employees of theScore at the time of the acquisition (“eligible persons”) (or wholly-owned corporations of such eligible persons). If the 2022 Long Term Incentive Compensation Plan is approved as presented in Proposal 4 below, no future awards will be granted under the Score Media Plan. |
74 PROXY REPORT - 2022 | | |
NON-BINDING, ADVISORY VOTE TO APPROVE THE COMPENSATION OF NAMED EXECUTIVE OFFICERS |
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADVISORY APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION. |
| | PROXY REPORT - 2022 75 |
PROPOSAL 4: APPROVAL OF THE COMPANY’S 2022 LONG TERM INCENTIVE COMPENSATION PLAN |
76 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
Outstanding Awards | | | Number of Shares | | | Weighted Average Exercise Price of Stock Options | | | Weighted Average Remaining Term |
Stock Options | | | 3,635,535 | | | $26.70 | | | 6.48 years |
Non-Vested Full Value Awards | | | | | | | |||
Restricted Stock | | | 160,226 | | | | | ||
Performance Stock | | | 454,708 | | | | | ||
Restricted Stock Units | | | 956,805 | | | | | ||
Performance Stock Units | | | 869,954 | | | | | ||
Total Non-Vested Full Value Awards | | | 2,441,693 | | | | | ||
Total Stock Options and Non-Vested Full Value Awards | | | 6,077,228 | | | | |
• | To advance the interests of the Company and its shareholders by providing a means by which the Company and its participating subsidiaries and affiliates can motivate selected key employees (including officers and directors who are employees), non-employee directors and consultants to direct their efforts to those activities that will contribute materially to the Company’s success; |
• | To link remunerative benefits paid to employees, non-employee directors and consultants who have substantial responsibility for the successful operation, administration and management of the Company and/or its subsidiaries and affiliates with the enhancement of shareholder value; and |
• | To enable the Company to attract and retain in its service highly qualified persons (including non-employee directors and consultants) for the successful conduct of its business. |
| | PROXY REPORT - 2022 77 |
EXECUTIVE COMPENSATION |
78 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
• | the number and type of shares of the Company’s common stock or other securities which thereafter may be made the subject of Awards, including the aggregate and individual limits specified in the 2022 Plan; |
• | the number and type of shares of the Company’s common stock or other securities subject to outstanding awards under the 2022 Plan; |
• | the grant, purchase, SAR Base Amount or Option Price with respect to any award, or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding award; and |
• | other value determinations applicable to outstanding awards. |
| | PROXY REPORT - 2022 79 |
EXECUTIVE COMPENSATION |
80 PROXY REPORT - 2022 | | |
EXECUTIVE COMPENSATION |
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” the APPROVAL THE COMPANY’S 2022 LONG TERM INCENTIVE COMPENSATION PLAN. |
| | PROXY REPORT - 2022 81 |
REPORT |
82 PROXY REPORT - 2022 | | |
FEES AND SERVICES |
| | Fiscal 2021 | | | Fiscal 2020 | |
Audit Fees(1) | | | $6,345,837 | | | $6,406,587 |
Audit-Related Fees(2) | | | $873,000 | | | $222,500 |
Tax Fees(3) | | | $115,447 | | | $118,616 |
Other Fees(4) | | | $109,661 | | | — |
Total Fees | | | $7,443,945 | | | $6,747,703 |
(1) | Audit fees include fees associated with the annual audit, reviews of the Company’s quarterly reports on Form 10-Q, registration statement on Forms S-3 and S-8, 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. |
(2) | Audit related fees in 2021 included fees associated with due diligence for various acquisitions. |
(3) | Tax fees for 2021 included fees for tax compliance services for Sam Houston. |
(4) | Other fees for 2021 include fees with respect to an enterprise risk program. |
| | PROXY REPORT - 2022 83 |
OTHER MATTERS |
84 PROXY REPORT - 2022 | | |
OTHER MATTERS |
| | PROXY REPORT - 2022 85 |
ABOUT THE MEETING: QUESTIONS AND ANSWERS |
Proposal 1: Election of Class II Directors |
The election of three Class II directors to our Board of Directors, each for a term expiring at the 2025 annual meeting of shareholders or until their respective successors are elected and qualified “FOR” |
Proposal 2: The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accountant |
The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 “FOR” |
Proposal 3: Advisory Vote on Executive Compensation |
The approval (on a non-binding, advisory basis) of the compensation of our named executive officers “FOR” |
Proposal 4: Approval of 2022 Long Term Incentive Compensation Plan |
The approval of our 2022 Long Term Incentive Compensation Plan (effective as of June 7, 2022) “FOR” |
86 PROXY REPORT - 2022 | | |
ABOUT THE MEETING: QUESTIONS AND ANSWERS |
• | Attending the Annual Meeting: To attend the Annual Meeting, visit www.virtualshareholdermeeting.com/PENN2022. You will be asked to enter the 16-digit control number found on the proxy card and the voting instruction form that accompanied your proxy materials. |
• | Voting During the Annual Meeting: If you are a shareholder as of the record date, you may vote during the Annual Meeting by following the instructions available on the meeting website during the meeting. |
• | Technical Support for the Annual Meeting: If you have difficulty accessing the virtual Annual Meeting, Technicians will be available to assist you via the toll-free phone number listed at www.virtualshareholdermeeting.com/PENN2022. |
• | Vote by Internet. To vote on the Internet, you must go to www.proxyvote.com , have your Notice of Availability, Proxy Card or voting instruction form in hand and follow the instructions. If you vote via the Internet, you do not need to return your Proxy Card. |
• | Vote by Phone. To vote by telephone, you must call the toll-free number listed on your Notice of Availability and/or Proxy Card, have your Notice of Availability, Proxy Card or voting instruction form in hand and follow the instructions. If you vote by telephone, you do not need to return your Proxy Card. |
• | Vote by Mail. To vote by mail, if you have not already received one, you may request a Proxy Card from us as instructed in the Notice of Availability and sign, date and mail the Proxy Card in the postage-paid envelope provided. Properly signed and returned proxies will be voted in accordance with the instructions contained therein. |
| | PROXY REPORT - 2022 87 |
ABOUT THE MEETING: QUESTIONS AND ANSWERS |
• | notifying our Secretary in writing that you would like to revoke your proxy; or |
• | attending our Annual Meeting (virtually) and following the instructions available on the meeting website during the meeting. |
88 PROXY REPORT - 2022 | | |
ABOUT THE MEETING: QUESTIONS AND ANSWERS |
90 PROXY REPORT - 2022 | | |
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| | PROXY REPORT - 2022 A-11 |
A-12 PROXY REPORT - 2022 | | |
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