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As we look back on 2022, it was another transformative year for our Company. We completed a successful rebrand to PENN Entertainment (“PENN”), and despite ongoing macroeconomic headwinds, generated record revenues of $6.4 billion and adjusted EBITDAR of $1.9 billion, which is more than 20% higher than pre-COVID levels and the 2nd highest in Company history. These results were driven by our highly diversified land-based casino portfolio and our rapidly expanding Interactive segment, which achieved profitability in the fourth quarter against a highly competitive landscape.

Further, our Interactive segment achieved a tremendous milestone in April 2022, with the launch of theScore Bet in Ontario using PENN’s proprietary player account management platform and its subsequent migration to our in-house risk and trading technology. With full control of our product roadmap, we have been able to quickly add new features and betting markets to theScore Bet, including our own same game parlay offering. We are confident that theScore Bet’s demonstrated success and momentum in Ontario is evidence that operating on our proprietary tech stack will accelerate opportunities for new product offerings and deliver improved results for Barstool Sportsbook in the US following its migration to this tech stack later this summer.

Our focused marketing strategy, new product offerings and technology enhancements generated approximately 1.3 million new rated customers last year in our PENN Play^TM database, including a significant increase in the 21 to 44 year old age segment. We have seen steady annual growth in play from this key demographic, with total retail theoretical value growing from 10.8% of companywide revenues in 2017 to 18.5% in 2022. To further attract and retain this younger group of customers, we continue to reimagine our properties. In 2022, we opened six new Barstool Sportsbooks and announced four new major retail growth projects in Illinois, Ohio and Nevada, which we expect to generate attractive returns. We also continued to revitalize our properties with new games, enhanced technology, refreshed hotel offerings and new third-party restaurant concepts.

Last year, we also made continued progress with the roll out of our industry-leading cashless, cardless and contactless technology (“3C’s”), which is now deployed at twenty-one properties, representing approximately 70% of our retail EBITDAR. Guests who use 3C’s at our properties enjoy a better guest experience and demonstrate superior loyalty through increased visitation, time on device and total theoretical value.

We continue to believe that our stock price does not reflect PENN’s intrinsic value, which is why we repurchased $601 million of PENN stock in 2022 under the $750 million share repurchase program authorized in January 2022 and initiated an additional $750 million share repurchase program in January 2023. As we think about the cadence of our share repurchase program in 2023 and beyond, we will balance our repurchases against our operating cash needs, leverage and opportunities for strategic growth and investment opportunities.

So far in 2023, we closed on our acquisition of Barstool Sports, Inc. (“Barstool”) and are actively integrating Barstool into the PENN family. Barstool’s vast audience, combined with the reach and highly engaged user base of theScore, creates a significant digital footprint and customer ecosystem that we believe will propel our properties, Barstool Sportsbook, theScore Bet and our uniquely integrated media and gaming business in 2023 and beyond. With the recent rebranding of our loyalty program to PENN Play, we are also taking steps to better align all our brands under the PENN umbrella and create a more seamless omni-channel experience for our customers, which we believe will have a meaningful impact on both our retail and online gaming performance.

I’m also proud to report that we made significant progress on our ESG journey in 2022, in partnership with the Nominating and Corporate Governance Committee of our Board, as well as our internal ESG and Diversity Committees. We were the top publicly traded gaming company honored by Forbes magazine on their list of “America’s Best Employers for Diversity,” and were also recognized by Forbes as one of “America’s Best Large Employers”. In addition, PENN was once again named an “Employer of First Choice” in the annual Bristol Associates-Spectrum Gaming’s Executive Satisfaction Survey. Separately, our Interactive segment received top honors in Bristol’s iGaming and mobile sports betting category. Finally, with female members comprising 44% of our Board, we were named a “Champion of Board Diversity” by the Forum of Executive Women for a second year in a row. I encourage you to read our latest CSR Report for additional details on our rapidly expanding ESG and DE&I initiatives and enhanced disclosures, including our inaugural SASB disclosure.

As always, I’d like to thank you, our valued shareholders, for your ongoing support and confidence. We hope you are as excited as we are for what the future holds for PENN.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares now as instructed in the proxy statement.

This Proxy Statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified using forward-looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends,” “plans,” “goal,” “seeks,” “may,” “will,” “should,” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties. Such statements are all subject to risks, uncertainties and changes in circumstances that could significantly affect the Company’s future financial results and business. Accordingly, the Company cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include those factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the U.S. Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements except as required by law. Considering these risks, uncertainties and assumptions, the forward-looking events discussed in this Proxy Statement may not occur.

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

The board of directors (the “Board of Directors” or “Board”) of PENN Entertainment, Inc. (“PENN Entertainment,” “PENN,” “the Company,” “we,” “us” and “our”) is soliciting proxies to be voted at the 2023 Annual Meeting of Shareholders (the “Annual Meeting”). This proxy statement (the “Proxy Statement”) provides the information shareholders need to know to vote by proxy or in person (virtually) at the Annual Meeting. Shareholders do not need to attend (virtually) the Annual Meeting to vote. If, at the close of business on April 10, 2023, you were a shareholder of record or held shares through a broker, bank or other nominee, you may vote your shares by proxy via the Internet, by telephone or by mail. For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions to your broker, bank or other nominee. Please refer to information from your broker, bank or other nominee on how to submit voting instructions.

The Annual Meeting will be a “virtual meeting” of shareholders, which will be conducted exclusively online via audio webcast. You will be able to attend the virtual meeting online by visiting www.virtualshareholdermeeting.com/PENN2023 . You also will be able to vote your shares electronically at the virtual meeting. PENN Entertainment believes that hosting a virtual meeting will enable greater shareholder attendance and participation. Importantly, the virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. Additional information about how to vote and participate at our virtual meeting can be found at the end of this Proxy Statement under “About the Meeting: Questions and Answers.”

PENN Entertainment is utilizing the Securities and Exchange Commission (the “SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we mailed to our shareholders a Notice Regarding the Availability of Proxy Materials (the “Notice of Availability”) instead of a paper copy of the proxy materials (including the proxy card (the “Proxy Card”), the Proxy Statement, and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Annual Report”)) on or about April 25, 2023. We also provided access to our proxy materials over the Internet beginning on that date. The Notice of Availability contained instructions on how to access the Proxy Statement and the 2022 Annual Report and how to vote online or by toll-free number. After receiving the Notice of Availability, all shareholders can access the proxy materials over the Internet and request to receive a paper copy of the proxy materials by mail. Additionally, shareholders can access a copy of the proxy materials at www.proxyvote.com .

PENN Entertainment, Inc. (Nasdaq: PENN) is North America’s leading provider of integrated entertainment, sports content and casino gaming experiences. PENN operates 43 properties in 20 states, online sports betting in 17 jurisdictions and iCasino in five jurisdictions under a portfolio of well-recognized brands, including Hollywood Casino^®, L’Auberge^®, Barstool Sportsbook^® and theScore Bet Sportsbook and Casino^®. In 2023, PENN completed its acquisition of Barstool Sports, Inc. (“Barstool”). Barstool’s vast audience, combined with the reach and highly engaged user base of Score Media and Gaming Inc. (“theScore”), provide us with a significant digital footprint and growing customer ecosystem. PENN’s highly differentiated strategy, which is focused on organic cross-sell opportunities, is reinforced by its investments in market-leading retail casinos, sports media assets and technology, including a state-of-the-art, fully integrated digital sports and online casino betting platform, and an in-house iCasino content studio. The Company’s portfolio is further bolstered by its industry-leading PENN Play^TM customer loyalty program (formerly known as mychoice^®), which offers its approximately 26 million members a unique set of rewards and experiences across our business channels. PENN is deeply committed to fostering a culture that welcomes a diverse set of customers and dedicated team members. The Company has been consistently ranked in the top two as “Employer of First Choice” over the last nine years in the Bristol Associates-Spectrum Gaming’s Executive Satisfaction Survey. In addition, as a long-standing good corporate citizen, PENN is also committed to creating a culture of responsible gaming, being a trusted and valued member of its communities and acting as a responsible steward of our finite natural resources.

Our focused marketing strategy, new product offerings and technology enhancements generated approximately 1.3M new rated customers last year in our PENN Play database. A significant number of these new rated customers came from the 21 to 44 year old age segment. We have seen a steady annual increase in play from this key demographic, with total retail theoretical value growing from 10.8% of companywide revenues in 2017 to 18.5% in 2022. To further capture and retain this younger group of customers, we are continuing to reimagine our properties. We opened six new Barstool Sportsbooks last year and announced four new major retail growth projects in Illinois, Ohio and Nevada. We are also continuing to add new games, enhanced technology, refreshed hotel offerings, and new third-party restaurant concepts at our properties. As we look to the future, we believe that our media and content ecosystem, which was further bolstered when we closed on our acquisition of Barstool in February 2023, will continue to provide highly efficient cross-sell opportunities between our retail casino, online sports betting and online gaming verticals, as well as new channels for growth, including in the advertising and commerce spaces. As of April 25, 2023, our retail and interactive gaming footprint includes 43 retail properties across 20 states, retail sports betting in 13 states, online sports betting in 17 jurisdictions, and iCasino in five jurisdictions.

 

2022 was another transformative year for PENN Entertainment, in which we focused on executing our leading omni-channel growth strategy. The Company’s rebranding to PENN Entertainment, Inc. reflects our evolution into North America's leading provider of integrated entertainment, sports content and casino gaming experiences. We are also finding new ways to drive long-term shareholder value, as demonstrated through the addition of nearly 1.3M new rated players to our PENN Play database, the deployment of our cashless, cardless and contactless technology (“3C’s Technology”), the announcement of four exciting new retail growth projects at properties in Illinois, Ohio, and Nevada, and the launch of online sports betting in four jurisdictions and iCasino in one. Our Interactive segment reached a major milestone in April 2022, when theScore Bet launched in Ontario using PENN’s proprietary player account management platform (“PAM”) and subsequently migrated to our in-house risk and trading technology (together, the “PENN Online Platform”). The continued expansion of our Interactive segment and the successful deployment of the PENN Online Platform is a testament to our team’s ability to rapidly scale, notwithstanding the challenging market for talent attraction and retention.

Despite ongoing macroeconomic headwinds, our best-in-class operators were able to achieve 451 basis points of Adjusted EBITDAR margin improvement at our retail operations versus 2019 (the last full year of operations prior to Covid-19), while also achieving the second highest Adjusted EBITDAR in the Company’s history. Further, we took significant steps to improve our balance sheet, ending the year with one of the lowest lease-adjusted net leverage ratios in the Company’s history.

 

In 2023, we will continue to execute on our highly differentiated strategy to expand our ecosystem and drive shareholder value, including through the deeper integration of Barstool into the PENN family, the launch of retail and online sports betting and iCasino as new jurisdictions legalize, and the migration of Barstool Sportsbook onto the PENN Online Platform in July 2023, which we believe will accelerate opportunities for new product offerings and deliver improved results for Barstool Sportsbook.

Our Board is composed of highly experienced directors who have led, advised, and established leading organizations and institutions. Our Board has taken a thoughtful approach to board composition to ensure that our directors have the experience and skillsets that collectively add significant value to the strategic decisions made by the Company and that enable them to provide oversight of management to ensure accountability to our shareholders. Our directors have extensive backgrounds as entrepreneurs, operational and financial experts, investors, advisors, and public company and nonprofit board members. We believe our Board has achieved the right balance between long-term understanding of our business and fresh external perspectives by adding four new directors in the past six years while ensuring diversity of backgrounds and perspectives within the boardroom. PENN has been recognized by two prominent organizations for the gender diversity on our Board. In addition to gender and demographic diversity, we also recognize the value of other diverse attributes that directors may bring to our Board, including service in the U.S. military. We are proud to report that three of our nine current directors are also military veterans.

PENN Entertainment’s Board believes that having a diverse mix of directors with complementary qualifications, expertise, and attributes is essential to meeting its oversight responsibility. The table below summarizes the qualifications, expertise and attributes possessed by one or more of PENN Entertainment’s directors that are of particular relevance to the Company’s business and structure, but does not encompass all qualifications, expertise and attributes of the Board. These factors were considered by the Nominating and Corporate Governance Committee and the Board in connection with this year’s director nomination process.

 

We are committed to sustainable corporate governance practices that promote long-term value creation, transparency and accountability to our shareholders. Below are the highlights of our corporate governance practices.

Shareholder engagement is vital to the achievement of our strategic and business objectives and to the ongoing review of our corporate governance, environmental sustainability, social responsibility, and executive compensation programs and practices. We regularly communicate with our investors on matters relating to our business, strategy and performance, corporate governance, board composition and structure, executive compensation program and corporate responsibility and sustainability initiatives.

We recognize that the investment community, our team members, community partners and our customers have an expectation for PENN Entertainment to serve as a good corporate citizen. The Nominating and Corporate Governance Committee oversees ESG risks and initiatives, which includes environmental and sustainability initiatives, social responsibility, the Company’s culture, talent strategy, and diversity, equity, and inclusion (DE&I).

 

You can read more about the many ways we are continuing to care for our people, our communities and the planet in our 2022 Corporate Social Responsibility Report on our website at https://www.pennentertainment.com/corp/esg-resources . Our most recently filed EEO-1 survey data is available at https://www.pennentertainment.com/Corporate-Responsibility/People . This information is provided for convenience only and the 2022 Corporate Social Responsibility Report, the EEO-1 survey data, and the website references throughout this Proxy Statement are not incorporated by reference in, and do not form a part of, this Proxy Statement.

Significant portion of our target executive compensation is at risk. In 2022, 89% of our Chief Executive Officer’s total target compensation and 77% (on average) of our other Named Executive Officers’ total target compensation was variable and at risk, subject to achievement of pre-set performance goals or tied to our long-term stock price performance.

 

Differentiated metrics support progress toward our strategic priorities. In response to shareholder feedback, for our 2022 incentives we adopted differentiated financial performance metrics for our short- and long-term incentive programs. These differentiated performance metrics are focused on our financial priorities and reflect key operational growth metrics that are important to PENN and its shareholders.

Incentive program payouts are aligned with performance. Our short- and long-term incentive payouts were aligned with our robust 2022 financial and operational performance results, which were achieved despite ongoing macroeconomic headwinds and market volatility. Our leadership team remained focused on executing our omni-channel, tech-forward strategy that drove significant PENN Play database growth and deepened customer engagement across our product verticals. We generated revenues of $6.4 billion and Adjusted EBITDAR of $1.9 billion for the year, while also achieving Q4 2022 profitability for our Interactive segment against a highly competitive landscape. These results demonstrate the alignment of management incentives with long-term value creation and position the Company for success in 2023 and beyond.

We delivered financial and operational results in 2022. Despite ongoing macroeconomic headwinds, our best-in-class operating team delivered 451 basis points of Adjusted EBITDAR margin improvement at our retail operations versus 2019 (the last full year of operations prior to Covid-19), while also achieving the second highest Adjusted EBITDAR in the Company’s history. Further, we took significant steps to improve our balance sheet, ending the year with one of the lowest lease-adjusted net leverage ratios in the Company’s history. We also continued to drive shareholder value through the expansion of our PENN Play database, the continued deployment of our 3C’s Technology, the announcement of four exciting new retail growth projects at properties in Illinois, Ohio, and Nevada, and the launch of online sports betting in four jurisdictions and iCasino in one. Finally, our Interactive segment reached a major milestone when theScore Bet launched in Ontario using PENN’s PAM platform and subsequently migrated to the full PENN Online Platform.

The table below summarizes the total regular annual compensation awarded to each named executive officer with respect to 2022. See pages 48 through 78 of this Proxy Statement for further detail.

Below is the biographical information about the director nominees, including the specific experience, qualifications, attributes and skills that led to our Board of Directors and Nominating and Corporate Governance Committee to conclude that each should be nominated to serve as a director.

Our commitment to corporate governance is integral to our business and reflects not only regulatory requirements, the Nasdaq Rules and broadly recognized governance practices, but also effective leadership and oversight by our senior management team and Board. To maximize shareholder value, the Board strives to maintain a governance environment where: (i) entrepreneurship and prudent risk taking are encouraged, with a focus on both long- and short-term value creation; (ii) shareholder perspectives are understood and long-term relationships with shareholders are fostered through frequent, candid and comprehensive engagement with and disclosure to the Company’s shareholders and the investment community; (iii) integrity and accountability are integrated into the Company’s management philosophy and operations; and (iv) the Company is able to attract, develop and retain industry-leading executive talent to manage the Company’s increasingly complex operations.

The Board regularly evaluates the governance environment to enable the Company to respond appropriately to changes, practices and market conditions, as well as suggestions from shareholders and other stakeholders, all in a manner that we believe will continue the Company’s long-term record of increasing shareholder value. Notable features of our corporate governance framework include the following:

We are committed to maintaining high standards of corporate governance to promote long-term value creation, transparency and accountability to our shareholders. Proactively and in response to our shareholder priorities, we have adopted several governance and disclosure enhancements.

 

The Board has determined that all the directors, other than Mr. Snowden, are independent under the Nasdaq Rules. Notably, the Board’s Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee are comprised exclusively of independent directors. The independent Board directors typically meet several times per year in executive session.

Board and Committee evaluations play a critical role in ensuring the effective functioning of our Board of Directors. It is important to take stock of Board, Committee and director performance and to solicit and act upon feedback received from each member of our Board of Directors. To this end, the Board of Directors and each Committee conduct a comprehensive annual self-evaluation process overseen by the Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee considers candidates for Board membership suggested by, among others, its members, other Board members and management. The Nominating and Corporate Governance Committee will also consider recommendations of nominees for directors by shareholders (for information relating to the nominations of directors by our shareholders, please see “Director Nominations by Shareholders” on page 98). In addition, under its charter, the Nominating and Corporate Governance Committee is authorized to engage a search firm to assist in the identification of director candidates, to approve the search firm fees (which are paid by the Company) and other retention terms, and to obtain advice and assistance from internal and external legal, accounting or other advisors. In selecting nominees for director, the Nominating and Corporate Governance Committee considers a number of factors, including, but not limited to:

During the candidate review process, the Nominating and Corporate Governance Committee and its delegates conduct interviews with the potential nominee. In addition, the Nominating and Corporate Governance Committee will also request that the candidate submit to an investigation overseen by the Chief Compliance Officer to evaluate whether the candidate is suitable to serve on the Board of a highly regulated, multi-jurisdictional company subject to gaming regulatory oversight. A successful candidate will also be required to submit to applicable gaming regulatory suitability investigations, which include providing detailed financial and personal history information customarily requested by the Company’s gaming regulators.

David Handler, who is an independent director, has served as our Board Chair since June 12, 2019. Mr. Handler joined our Board in 1994 and is a partner at Tidal Partners, an independent financial advisory and private equity firm. The Board believes that Mr. Handler is best suited to serve as our Board Chair because of his considerable investment banking and capital markets experience, including a focus on mergers and acquisitions and other significant transactions (including many in the technology space), which complements his long-term exposure to the gaming industry. Mr. Handler’s background has been an invaluable asset to the Company over the years, particularly in connection with evaluating potential acquisitions and financing opportunities.

The roles of our Board Chair and Chief Executive Officer have been split for over seven years. Mr. Snowden, our Chief Executive Officer and President, is responsible for the general management and operation of the business, providing guidance and oversight to senior management and formulating the strategic direction of the Company. The Board Chair is responsible for the content, quality and timeliness of information provided to our Board and consults with our Board and Chief Executive Officer and President regarding oversight of our business affairs.

In addition, the Board has appointed Barbara Shattuck Kohn as its Lead Independent Director to, among other things, facilitate communication between management and the independent directors. The responsibilities of the Lead Independent Director include:

Each member of the Board contributes a substantial amount of time and effort to serve as a Board and Committee member. During 2022:

In addition to the Board and Committee meetings set forth above, our Board of Directors and its Committees acted by written consent from time to time as appropriate. Further, Board members are encouraged to, and regularly do, engage in informal discussions with each other and members of management, and they are provided periodic management reports and updates. The independent directors meet periodically in executive session.

During the year ended December 31, 2022, except as noted below, each of the Company’s directors attended 100%¹ of the meetings of the Board and Committees of the Board of which he or she was a member. The Company encourages directors to attend shareholder meetings. Each of the Company’s directors attended the 2022 Annual Meeting of Shareholders.

The Board maintains four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance Committee. The specific duties and operation of each committee are described in more detail below. The Board has determined that each director serving on the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee is independent under the Nasdaq Rules and the applicable rules and regulations of the SEC. The Compliance Committee also includes an independent non-director subject matter expert. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee operates under a written charter adopted by the Board of Directors that is reviewed annually and is available at https://www.pennentertainment.com/Investors/Corporate-Governance .

In addition to being independent as noted above, the Board has determined that each member of the Audit Committee also meets the financial literacy requirements under the Nasdaq Rules and is an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. In addition, Ms. Scaccetti has practiced as a certified public accountant since 1977 and has significant experience as an Audit Committee member on several public-company boards, which makes her particularly well qualified to serve as Chair of the Audit Committee.

The principal functions of the Audit Committee are to:

The Audit Committee is also responsible for reviewing and pre-approving all conflicts of interest and related-person transactions involving the Board members or the Company’s executive officers. In discharging its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention and any other matters that the Audit Committee believes should be investigated. The Audit Committee may at any time engage, at the expense of the Company, independent counsel or other advisors, as it deems necessary to carry out its duties.

In addition to being independent as noted above, each member of the Compensation Committee is also a non-employee director, as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an outside director, as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended.

The Compensation Committee’s authority and responsibilities include:

The CEO provides the Compensation Committee performance assessments and compensation recommendations for each executive officer of the Company (other than himself). The Compensation Committee considers the CEO’s recommendations with the assistance of the compensation consultant and sets the compensation of those executive officers based on its deliberations. The Compensation Committee regularly holds meetings in executive session regarding executive performance and compensation, including establishing the CEO’s compensation.

The Nominating and Corporate Governance Committee is responsible for:

The Compliance Committee is chaired by an independent non-director member, Thomas N. Auriemma and comprised of three independent members of the Board. 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.

The Compliance Committee serves as an independent party and is responsible for:

A key component of the Board’s role is to provide guidance on and oversight of the Company’s strategy. In connection with these responsibilities, the Board has an obligation to keep informed about the Company’s business, financial and operational performance and strategies. This involvement enables the Board to provide guidance to management in formulating and developing plans and to exercise independently the Board’s decision-making authority on matters of importance to the Company. Acting as a full Board and through the Board’s standing committees, the Board is directly involved in the Company’s strategic planning process.

Each year, senior management convenes to review and refine the Company’s overall corporate strategy. Strategic areas of importance and specific operating priorities are identified, which, in turn, inform the Company’s long-range planning. Some of the priorities will be short-term in focus; others will be based on longer time horizons. Senior management then reviews the conclusions reached with the Board at one or more meetings. These meetings involve both management presentations and input from the Board regarding the assumptions, priorities and strategies that form the basis for management’s operating plans.

At Board meetings, the Board continues to review the Company’s progress against its strategic priorities and to exercise oversight and decision-making authority regarding strategic areas of importance and associated authorizations. For example, after the end of each year, the Board typically reviews the Company’s overall annual performance and considers the operating budget and capital plan for the coming year. Shortly thereafter, the Board usually finalizes specific criteria against which the Company’s performance will be evaluated for the coming year. In addition, Board meetings held throughout the year target areas of the business for extended, focused Board input and discussion. These time frames are flexible, however, and the Board adjusts its meeting agendas and plans to reflect business priorities and developments.

The oversight and input provided by the Board is integral to the development and review of the Company’s strategy and operating plans. Through this rigorous and interactive process, the Board encourages the long-term success of the Company by exercising sound and independent business judgment on the strategic issues that are important to the Company’s business.

The Board recognizes that a prudent level of risk taking is an essential element of the Company's strategy. As such, the Board (as part of its meetings and through its Committees as described below) provides oversight with respect to our enterprise risk assessment and enterprise risk management activities that are designed to identity, prioritize, assess, monitor, and mitigate the various risks that have the potential to significantly impact the Company.

Where appropriate, the Board has delegated responsibility with respect to oversight of certain key risk areas to various Board and management committees. The Board's committees report to the full Board at least four times a year with updates on their areas of designated risk oversight responsibilities. Management is responsible for establishing and supervising day-to-day risk management processes and reporting to the Board and its Committees, as necessary.

Pursuant to our Corporate Governance Guidelines and the Nasdaq Rules, to promote open discussion among non-management directors, the non-management directors regularly meet in executive session without management participation. The executive sessions occur after regularly scheduled meetings of the Board of Directors and at such other times that the non-management directors deem necessary or appropriate. The Board Chair, or, in the absence of a Board Chair, the Lead Independent Director, shall preside at such sessions; in the absence of the Lead Independent Director, the non-management directors present will elect a committee chair to preside at such session. If the group of non-management directors includes any directors who are not “independent” (as such term is defined from time to time under the Nasdaq Rules), an executive session of the independent directors shall be scheduled at least once per year. Currently, all our non-management directors are independent.

In fulfilling its objectives, many of the direct oversight functions of the Board are performed by the Board’s committees with support from both senior internal resources as well as independent outside advisors. For example, the Audit Committee receives frequent reports directly from the Company’s Chief Financial Officer; Chief Accounting Officer; Chief Legal Officer; Executive Vice President, Operations; Chief Compliance Officer; Vice President, Internal Audit and its external auditor, Deloitte & Touche, LLP. The Audit Committee also has express authority to direct the Company’s internal audit staff. Additionally, the Company’s independent registered public accounting firm provides support through its annual audit and quarterly reviews of the Company’s financial statements. The Compliance Committee is structured in the same manner relative to the Chief Compliance Officer and the Company’s compliance staff and regular access to the Company’s senior management team.

Both the Audit Committee and the Compliance Committee have substantial internal staff and outside resources to assist them in carrying out their responsibilities. As of December 31, 2022, the Company maintained a 60-person internal audit staff overseen by the Company’s Vice President, Internal Audit, who reports to the Audit Committee, and an 89-person compliance staff overseen by the Company’s Chief Compliance Officer, who provides frequent reports to the Compliance Committee. Additionally, the Company has retained Thomas N. Auriemma, a non-director member, as the independent Chair of the Compliance Committee and who is the Company’s former Vice President, Chief Compliance Officer and former Director of the Division of Gaming Enforcement in New Jersey, with over 30 years of experience as a gaming regulator in the State of New Jersey.

The Compensation Committee retains the services of compensation consultants and legal advisors to provide such advice and assistance as it deems appropriate in its sole discretion. The Compensation Committee has the sole responsibility to oversee the work of any of its advisors. The Compensation Committee approves the fees and retention terms of such compensation consultants and advisors, which are funded by the Company, and can terminate their services in their discretion. The Compensation Committee engaged an independent third-party executive compensation consultant for 2022, Exequity LLP (“Exequity”). Exequity provides advice and assistance to the Compensation Committee in carrying out its duties and responsibilities with respect to the Company’s executive compensation programs and non-employee director compensation. Prior to engaging Exequity, and at least annually during the engagement, the Compensation Committee evaluates the independence of Exequity. This review includes receiving information regarding other services, if any, provided by Exequity to the Company, the Board of Directors or other committees of the Board of Directors, and periodically reviewing the fees incurred because of such other activities. In 2022, the Compensation Committee determined that Exequity was independent and that the retention of Exequity by the Compensation Committee did not give rise to any conflicts of interest.

It has been our long-standing practice to meet with shareholders throughout the year so that management and the Board can better understand shareholder perspectives on governance, executive compensation, and other topics. A general overview of our annual engagement process is below.

We relay shareholder feedback and trends on corporate governance, environmental sustainability, social responsibility, and executive compensation developments to our Board and its committees and work with them to enhance our practices and improve our disclosures.

The Company holds quarterly conference calls in which management provides brief prepared remarks followed by an open forum for questions, during which the Company provides financial and other disclosure beyond that which is required by the SEC on matters such as management’s views on Company performance, industry trends and pending legislation. Further, members of the Company’s senior management team actively engage in investor relations efforts including frequent participation at institutional investor conferences, shareholder meetings and management staffed tours of our properties. These regular, ongoing outreach efforts provide investors and prospective investors with constructive forums to discuss a wide variety of important subjects with management, including executive compensation, and provide useful feedback for management.

Additional information regarding comments concerning our executive compensation program, and some of the actions we have taken in response, are discussed in the “Compensation Discussion and Analysis – 2022 Say-on-Pay Vote and Shareholder Engagement” section of this Proxy Statement.

Shareholders who wish to contact our Board can do so by writing to PENN Entertainment, Inc., 825 Berkshire Boulevard, Suite 200, Wyomissing, PA 19610, Attention: Secretary. The Secretary of the Company reviews all such correspondence and forwards to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Secretary, deals with functions of the Board or Committees of the Board or that the Secretary otherwise determines requires the attention of our Board.

Our Board, in coordination with our Compensation Committee, carefully oversees CEO and senior management succession planning, most recently with respect to Mr. Snowden’s appointment as Chief Executive Officer and President on January 1, 2020. Our CEO, in consultation with our Senior Vice President, Chief Human Resources Officer, provides the Board with recommendations on, and evaluations of, and potential successors to the CEO and other members of senior management. Our Board reviews potential internal candidates with our CEO, including the qualifications, experience and development priorities for these individuals. Further, our Board periodically reviews the overall composition of our senior management’s qualifications, tenure and experience. The Company’s talent management program, which seeks to develop, hire and retain talent below the senior management level, is led by our Executive Vice President, Operations and our Senior Vice President, Chief Human Resources Officer and is complementary to the Board’s succession planning.

Pursuant to the terms of its charter, the Company’s Audit Committee reviews all potential conflicts of interest and related person transactions. Any such matters that the Audit Committee determines are actual conflicts of interest or related person transactions are further subject to Audit Committee pre-approval. For purposes of the Audit Committee’s review, related-person transactions are transactions, arrangements or relationships where the Company is a participant and in which an executive officer, a director or an owner of 5% or greater of the Company’s common stock (or any immediate family member of the foregoing persons) has a direct or indirect material interest. The Company’s Code of Conduct has a broad definition of conflict of interest, which includes related person transactions, and requires employees to report potential conflicts to the Chief Compliance Officer. All potential conflicts of interest involving an executive officer, director or 5% or greater shareholder of the Company are communicated by the Chief Compliance Officer (or other members of Company management) to the Vice President of Internal Audit. The Vice President of Internal Audit then consults with members of the compliance, legal and finance staffs to determine whether the proposed transaction represents a conflict of interest or a related-person transaction that must be presented to the Audit Committee. For transactions determined to require Audit Committee review, the Vice President of Internal Audit collaborates with members of the legal and finance staffs to prepare and present the transaction to the Audit Committee. In terms of standards applied by the Audit Committee in reviewing related person transactions, a director will not participate in the review of transactions in which such director or his or her immediate family member has an interest. The Audit Committee will only approve related person transactions that are not inconsistent with the best interests of the Company and its shareholders, based on a review of (i) the benefits to the Company of the transaction and (ii) the terms of the transaction and the terms available to or from unrelated third parties, as applicable.

Currently, the policies to review related-person transactions is evidenced in the Audit Committee Charter, the Code of Conduct and the Corporate Governance Guidelines, and certain of the procedures followed in considering related-person transactions are based on past practice and the advice of counsel.

Allison Bassman joined the Company in 2020 and was employed by Penn Interactive Ventures, LLC as the Senior Director of People and Culture until June 2022. Ms. Bassman is the daughter of Jane Scaccetti, a member of the Company’s Board of Directors. From January 1, 2022 until her departure, Ms. Bassman received compensation in the amount of $182,064. She received no bonus for services rendered in 2022.

Our Audit Committee has appointed the accounting firm of Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Action by shareholders is not required by law, the current Listing Rules of the Nasdaq Stock Market (the “Nasdaq Rules”) or our organizational documents in the appointment of an independent registered public accounting firm. This proposal is submitted by our Board of Directors for ratification as a matter of good corporate governance to give our shareholders a voice in the appointment of auditors. If the appointment is not ratified by our shareholders, our Board of Directors will further consider its choice of Deloitte as our independent registered public accounting firm and may, but will not be required to, appoint a different independent registered public accounting firm. Deloitte has served as our independent registered public accounting firm since 2017 and is considered by our management to be well-qualified. Deloitte has advised us that neither it nor any member thereof has any financial interest, direct or indirect, in our Company or any of our subsidiaries in any capacity.

For additional information regarding our independent registered public accounting firm, see “Principal Accountant Fees and Services” below. A representative of Deloitte will be present at the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires and will be available to respond to appropriate questions.

Prior to selecting Deloitte for the fiscal year ending December 31, 2023, the Audit Committee evaluated Deloitte’s performance with respect to fiscal year 2022. In conducting this annual evaluation, the Audit Committee considered management’s assessment of Deloitte’s performance in areas such as: (i) independence; (ii) the quality and the efficiency of the services provided, including audit planning and coordination; (iii) the adequacy of information provided on accounting issues, auditing issues and regulatory developments; (iv) the quality and effectiveness of communications with the Audit Committee and management, including the ability to meet deadlines and respond quickly; (v) reports of the Public Company Accounting Oversight Board and other available data regarding the quality of work performed by Deloitte; and (vi) the geographic reach and expertise of Deloitte in terms of quantity, quality and location of staff.

The Audit Committee also considered Deloitte’s tenure, the relative costs, benefits, challenges, overall advisability and potential impact on the Company of changing auditors and the reasonableness of Deloitte’s historical and proposed billable rates. The Audit Committee is responsible for the audit fee negotiations associated with the retention of Deloitte. To assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered accounting firm. Further, in conjunction with the rotation of the auditing firm’s lead engagement partner every five years, the Audit Committee and its chair will continue to be involved in the selection of Deloitte’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of Deloitte to serve as our independent external auditor is in the best interests of us and our shareholders.

The affirmative vote of a majority of the votes cast is required for approval of the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023. For purposes of the vote on this proposal, abstentions will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.

The Company pays fees to each director who is not an employee of the Company. During the year ended December 31, 2022, the annual compensation for each non-employee director consisted of an annual retainer of $50,000, plus an additional $10,000 for service on each of the Audit Committee, the Compensation Committee and the Compliance Committee, as applicable, and $5,000 for service on the Nominating and Corporate Governance Committee. The Chair of the Audit Committee receives an additional $15,000 annual retainer, and the Chair of the Compensation Committee and the Chair of the Nominating and Corporate Governance Committee each receive a supplemental $10,000 annual retainer. Each non-employee director had the opportunity to elect to receive his or her annual retainer in the form of either cash or shares of restricted stock with forfeiture restrictions lapsing on the first anniversary of the date of grant.

In 2022, each non-employee director other than the Board Chair received a grant of restricted stock units or restricted stock at his or her election with a grant value of $250,000, and the Board Chair received a grant of restricted stock units or restricted stock at his election with a grant value of $375,000. Each award of restricted stock units or shares of restricted stock vests on the first anniversary of the date of grant.

The following table sets forth information with respect to all compensation awarded to the Company’s non-employee directors for 2022.

Set forth below is certain information regarding each of our current executive officers, other than Mr. Snowden, whose biographical information is presented under “Proposal 1: Election of Class III Directors—Class III Director Nominees.”

Felicia Hendrix has served as our Chief Financial Officer and Executive Vice President since March 2021. Ms. Hendrix oversees Accounting, Finance, Internal Audit, and Procurement. Prior to joining PENN, Ms. Hendrix spent more than 20 years on Wall Street and was most recently a Managing Director and Equity Research Analyst at Barclays, covering the gaming, lodging and leisure industries. Before joining Barclays, Ms. Hendrix was a Managing Director at Lehman Brothers. Ms. Hendrix holds a Bachelor's Degree from the University of Virginia and an MBA from the Darden School of Business at the University of Virginia.

Todd George has served as our Executive Vice President, Operations since January 2020. Mr. George oversees PENN's Regional Operations, Interactive, Marketing and Information Technology, as well as Design and Construction. Mr. George plays a critical role in execution of our omni-channel strategy, including integrating the Barstool brand with PENN's core Interactive businesses. Over the past ten years at PENN, Mr. George served as Vice President and General Manager of Hollywood Casino in Lawrenceburg, Indiana, and Hollywood Casino St. Louis. In 2017, Mr. George was promoted to Senior Vice President, Regional Operations, overseeing nine properties in PENN's Midwest Region. Prior to PENN, Mr. George spent 12 years in various management positions at Pinnacle Entertainment, including leading the development and launch of Pinnacle's two St. Louis properties, River City Casino and Lumiere Place. Mr. George holds a bachelor's degree from LeMoyne College and an MBA from Villanova University.

Chris Rogers has served as our Executive Vice President, Chief Strategy Officer since January 2020. Mr. Rogers leads the team in developing and pursuing PENN's strategic growth initiatives. Over his past nine years with PENN, Mr. Rogers has served as Senior Vice President, Corporate Development, and Vice President, Deputy General Counsel. Prior to joining PENN, Mr. Rogers was a corporate attorney at the Dallas-based law firm Vinson & Elkins and the Boston-based law firm Ropes & Gray, as well as a CPA for PricewaterhouseCoopers and Arthur Andersen. Mr. Rogers holds a Bachelor of Business Administration from the University of Oklahoma's Price College of Business and a J.D. from Harvard Law School.

The following table sets forth certain information regarding the beneficial ownership of the Company’s common stock, as of April 10, 2023, by (i) each person known to us to beneficially own more than 5% of any class of the outstanding voting securities of the Company, (ii) each of our directors, (iii) each of our named executive officers listed in the table entitled “2022 Summary Compensation Table” below and (iv) all of our current directors and executive officers as a group. Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Unless otherwise noted below, the address of the persons listed in the table is c/o PENN Entertainment, Inc., 825 Berkshire Blvd., Wyomissing, PA 19610. The percentages shown in this table are calculated based on 154,149,376 shares of our common stock outstanding as of April 10, 2023.

cont.

During 2022, the members of the Compensation Committee were:

None of the members of the Compensation Committee during 2022 was an officer or employee or former officer or employee of the Company or its subsidiaries during 2022 or has any interlocking relationships that are subject to disclosure under the rules of the SEC relating to compensation committees.

As part of our commitment to effective corporate governance and in response to the 2022 “say-on-pay” vote, the Board engaged with our shareholders to obtain their perspectives on PENN’s business strategy, executive compensation, sustainability and governance practices. Members of our Board and leadership team met with shareholders representing 43% of our outstanding shares. Our Board Chair, Nominating & Corporate Governance Committee Chair and Compensation Committee Chair personally attended all of these shareholder engagement meetings and would like to thank all of you who met with us to share your valuable perspectives.

We heard from our shareholders that they were concerned about duplicative metrics used in the short- and long-term incentive programs. Several of our shareholders also wanted to understand better the unique multi-phased design of the 2021 CEO Supplemental Award and requested to see updates in our proxy disclosure on its vesting status. In 2022, the Compensation Committee implemented several changes to PENN’s compensation program in response to these requests, which we believe further strengthens alignment of our executive compensation program with the interests of our shareholders. Consistent with our stock price performance since the issuance of the 2021 CEO Supplemental Award, the rigor of the performance hurdles under the 2021 CEO Supplemental Award has significantly increased and the outcome of the award remains uncertain. We encourage you to review the following Compensation Discussion and Analysis (the “CD&A”) section of this proxy statement for additional details.

The following Compensation Committee report to shareholders shall not, in accordance with the rules of the SEC, be incorporated by reference into any of our future filings made under the Exchange Act or under the Securities Act, and shall not be deemed to be soliciting material or to be filed under the Exchange Act or the Securities Act.

The Committee has reviewed and discussed the following CD&A with the management of the Company. Based on the review and discussions described above, the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement.

Barbara Shattuck Kohn, Chair

Vimla Black-Gupta

Marla Kaplowitz

Saul Reibstein

The following Compensation Discussion and Analysis (“CD&A”) discusses the principles underlying our executive

compensation policies and decisions for 2022. Our named executive officers for 2022 were:

2022 was another transformative year for PENN Entertainment, in which we focused on executing on our leading omni-channel growth strategy. The Company’s rebranding to PENN Entertainment, Inc. reflects our evolution into North America’s leading provider of integrated entertainment, sports content and casino gaming experiences. We are also finding new ways to drive long-term shareholder value, as demonstrated through the addition of nearly 1.3M new rated players to our PENN Play database, the deployment of our 3C’s Technology, the announcement of four exciting new retail growth projects at properties in Illinois, Ohio, and Nevada, and the launch of online sports betting in four jurisdictions and iCasino in one. Our Interactive segment reached a major milestone in April 2022, when theScore Bet launched in Ontario using PENN’s proprietary PAM and subsequently migrated to the full PENN Online Platform. The continued expansion of our Interactive segment and the successful deployment of the PENN Online Platform demonstrates our team’s ability to rapidly scale, notwithstanding the challenging market for talent attraction and retention.

Increased Omni-channel, Tech-Forward Engagement. Our focused marketing strategy, diverse product offerings and technology enhancements generated approximately 1.3 million new customers last year in our PENN Play database. The continued emphasis on delivering high-quality customer experiences led to a 67% increase in guests who engage with us across multiple channels. We also saw positive momentum in our PENN Play app downloads and the adoption of our industry leading 3C’s Technology, which as of April 10, 2023 is deployed at twenty-one properties representing approximately 70% of our retail EBITDAR. Guests who use a digital wallet enjoy a better guest experience and demonstrate superior loyalty through increased visitation and engagement levels, which bodes well for the Company as we continue to drive the adoption of our 3C’s Technology across our properties.

Achieved Q4 2022 Profitability in Interactive Segment. Our rapidly expanding Interactive segment achieved profitability in the fourth quarter of 2022, despite a highly competitive landscape, as we continued to execute on our differentiated strategy to organically expand our ecosystem. The combined power of Barstool, theScore and PENN Game Studios (our in-house iGaming content studio) continues to propel our Interactive segment. The success that theScore Bet achieved in Ontario in 2022 on the PENN Online Platform, which includes features such as the ability to quickly add new online gaming features and betting markets, including same game parlay offerings, gives us confidence that transitioning the Barstool Sportsbook to the PENN Online Platform will deliver improved results for our US Interactive segment.

Timely OSB and iCasino Launches. In 2022, we launched Barstool Sportsbook’s online sports betting services in 3 additional states (Louisiana, Kansas and Maryland) and theScore Bet’s online sports betting and iCasino services in Ontario, Canada, bringing our total Interactive footprint to 15 jurisdictions for online sports betting and 5 jurisdictions for iCasino as of December 31, 2022. Importantly, all of our Interactive launches in 2022 occurred on the market open dates in the above jurisdictions.

Advanced our ESG efforts. In 2022, we continued to advance our commitment to responsible corporate citizenship, launching a series of new ESG initiatives to help take care of our team members, our communities and the planet. We completed our first Scope 1 & 2 greenhouse gas emissions assessment, as well as our inaugural SASB disclosure. In addition, PENN was the top publicly-traded gaming company named in Forbes magazine’s list of “America’s Best Employers for Diversity.”

Despite ongoing macroeconomic headwinds, our best-in-class operators were able to achieve 451 basis points of Adjusted EBITDAR margin improvement at our retail operations versus 2019 (the last full year of operations prior to Covid-19), while also achieving the second highest Adjusted EBITDAR in the Company’s history. Further, we took significant steps to improve our balance sheet, ending the year with one of the lowest lease-adjusted net leverage ratios in the Company’s history.

 

Entering 2023 with enhanced product offering and integrated media and gaming business. In 2023, we will continue to execute on our highly differentiated strategy to organically expand our ecosystem and drive shareholder value, including through the deeper integration of Barstool into the PENN family, the launch of retail and online sports betting and iCasino as new jurisdictions legalize, and the migration of Barstool Sportsbook onto the PENN Online Platform in July 2023, which we believe will accelerate opportunities for new product offerings and deliver improved results for Barstool Sportsbook.

Our program is aligned with long-term shareholder returns, with a significant portion of our executive compensation at risk. In 2022, 89% of our Chief Executive Officer’s total target compensation and 77% (on average) of our other named executive officers’ total target compensation was variable and at risk, subject to achievement of pre-set performance goals or tied to our long-term stock price performance.

 

Incentive program design reflects preferences of our shareholders. In response to shareholder perspectives, the Compensation Committee adopted diversified performance metrics for the short- and long-term incentive programs, including use of metrics in the long-term incentive program designed to support profitability, accelerate our omni-channel growth strategy, facilitate a successful Ontario launch and market share capture for theScore Bet, and encourage progress on our DE&I initiatives.

Incentive program payouts are aligned with performance. Our short- and long-term incentive payouts were aligned with our robust 2022 financial and operational performance results, which were achieved despite ongoing macroeconomic headwinds and volatility in the digital media space. Our leadership team remained focused on executing our omni-channel, tech-forward strategy that drove significant new user database growth and deepened our customer engagement across our product verticals. We generated revenues of $6.4 billion and adjusted EBITDAR of $1.9 billion for the year and achieved profitability for our Interactive segment in the fourth quarter of 2022. These results reflect the momentum stemming from our management’s dedication to our highly differentiated strategy that positions the Company for successful long-term value creation and growth in 2023 and beyond.

At our 2022 Annual Meeting, the advisory Say-On-Pay proposal received the support of approximately 42% of votes cast. In response to this vote outcome, the Compensation Committee and the full Board expanded and intensified the shareholder engagement effort to understand the full range of shareholder perspectives and concerns that drove the decline in the say-on-pay support and to develop appropriate responsiveness actions.

PENN has a long-standing tradition of holding detailed, frequent, candid and comprehensive engagement with shareholders about its compensation practices, corporate governance and sustainability priorities. The Board values the input and insights of our shareholders and believes that consistent and effective Board-shareholder communication strengthens the Board’s role as an active, informed, and engaged fiduciary.

The following members of the Board and management team participated in all of the shareholder engagement meetings:

In our meetings with shareholders, we discussed a range of topics, including our executive compensation program, ESG priorities and corporate governance. We gained valuable perspectives from our shareholders, which were conveyed to the full Board of Directors and relevant committees.

Shareholders we met with had diverse views on various aspects of our executive compensation program. The majority of these shareholders were generally supportive of our overall compensation approach. One common concern area raised by our shareholders was the use of performance metrics that were more strategic in nature than financial, including the partial overlap of some of these metrics within the short- and long-term incentive programs, which was largely in response to the significant impact of the Covid-19 pandemic on our operations and challenges with setting reliable financial performance targets at the start of 2021. In connection with the 2022 compensation cycle, the Compensation Committee approved certain changes to our compensation program, including a shift to diversified performance metrics for the short- and long-term incentive programs, which aligned with the shareholders who expressed a preference for diversified short- and long-term metrics and more traditional financial performance metrics in our incentive programs.

Many shareholders participating in the outreach sessions appreciated the Board’s thoughtful approach to designing the CEO Supplemental Award and wanted to understand better its multi-phased design and structure. During these meetings, our Compensation Committee Chair explained the award’s unique two-phased structure, including the entirely conditional nature of the Phase II incentive opportunity. In compliance with SEC requirements, the Phase II portion of the incentive opportunity, which accounted for 55% of the grant date fair market value of the award and was reported in the last year’s Summary Compensation Table at a maximum payout level, will not become available to the CEO unless at least some portion of the Phase I award is earned. Unless our stock price appreciates 352%⁽¹⁾ from the stock price on the Record Date in the remaining 2 years and 8 months of the performance period, the incentive opportunity under both Phase I and Phase II of the CEO Supplemental Award will be forfeited in full.

Below is a detailed summary of the common themes we heard during the engagement efforts and our Compensation Committee’s responses to the shareholder perspectives that were shared with us.

The Compensation Committee, in consultation with its compensation consultant, Exequity LLP (“Exequity”), regularly considers compensation practices suggested by the Company’s shareholders as a result of the Company’s ongoing shareholder dialogue, as well as those commonly identified as “best practices”. We believe that as a result of the actions implemented by the Compensation Committee and the Board in response to our shareholders’ views, we have further strengthened the pay and performance alignment of our executive compensation program.

We strive to incorporate into our compensation program the practices we believe will most effectively support the Company’s continuing efforts to create shareholder value. We will continue to evaluate and consider input from our shareholders and emerging “best practices” to ensure that our compensation programs contain the features necessary to properly align the interests of our executives and our shareholders.

The primary components of our executive compensation program are base salary, short-term incentive compensation (cash bonus plan) and long-term incentive compensation (equity). These components are described in more detail below.

In accordance with our compensation philosophy, adopted and reviewed annually to guide our compensation decisions, the Company intends to maintain an executive compensation program designed to attract and retain the executive talent needed to grow and further the strategic interests of the business. To this end, the Company provides a compensation and benefits program that is competitive with that of its peers and rewards the skills and expertise of its executive team. The Company’s program is designed to motivate and reward executives to achieve and exceed targeted performance results and enhance shareholder value. Compensation received by the executives is aligned with the performance of the Company, prevailing market rates among similarly situated companies in the industry, and their own individual contributions by linking compensation to the achievement of pre-established goals.

The Compensation Committee of our Board of Directors oversees our executive compensation program and evaluates and determines the appropriate executive compensation philosophy and objectives for PENN Entertainment, the process for establishing executive compensation, and the appropriate design and levels of our executive compensation program and compensation arrangements. The Compensation Committee consists entirely of independent directors who review and approve our overall executive compensation programs and practices and set the compensation of our executive officers (the compensation of our Chief Executive Officer is approved by the Board following the recommendation of the Compensation Committee). In determining compensation for our executive officers, other than our Chief Executive Officer, the Committee

considers, among other things, the recommendations of our Chief Executive Officer. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as the Compensation Committee may deem appropriate, in its sole discretion, and is also supported in its work by an independent compensation consultant, as described below. The Compensation Committee is, however, solely responsible for making the final decisions on compensation for our executive officers.

To ensure that compensation programs are aligned with our strategic objectives and appropriate performance goals, management provides input to the Compensation Committee with respect to the compensation-setting process. The Chief Executive Officer makes recommendations to Compensation Committee and provides the Compensation Committee with his perspectives on aligning executive compensation strategies with our business objectives. When determining compensation for our executive officers, the Chief Executive Officer provides the Compensation Committee with his input regarding executive performance and recommends base salary and annual short- and long-term incentive targets for each of our executive officers (other than himself). The performance of the Chief Executive Officer is assessed directly by the Compensation Committee (with input from other independent directors) in executive session.

The Compensation Committee engaged Exequity, an independent third-party, as its executive compensation consultant for 2022. Exequity provides advice and assistance to the Compensation Committee in carrying out its duties and responsibilities with respect to the Company’s executive compensation programs and non-employee director compensation. The Compensation Committee, in its sole discretion, has sole authority to select, approve, retain, terminate and oversee its relationship with the firm. Exequity did not provide any consulting services, other than with respect to executive compensation matters, to PENN or any of its executive officers in 2022. In selecting its compensation consultant, the Compensation Committee considered the independence of such consultant in accordance with the standards of the Nasdaq Rules, any applicable rules and regulations of the SEC and other applicable laws relating to independence of advisors and consultants. The Compensation Committee concluded that no conflict of interest exists that would prevent Exequity from independently advising the Compensation Committee.

At the Compensation Committee’s request, Exequity regularly attends Compensation Committee meetings. Exequity also communicates with the Chair of the Compensation Committee outside committee meetings regarding matters related to the Compensation Committee’s responsibilities.

The Compensation Committee’s responsibilities include, among others, oversight of risks related to our compensation practices and plans to ensure that such practices and plans are designed with an appropriate balance of risk and reward in relation to our overall business strategy and do not encourage excessive or unnecessary risk-taking behavior. In this regard, the Committee annually reviews the Company’s compensation and benefits programs in the context of potential risks. The executive compensation program is structured as a balanced mix between fixed and variable, annual and long-term, and cash and equity compensation.

Base salaries are reviewed and set annually. Annual short-term incentive pay in 2022 was focused on achievement of specific, readily quantifiable and meaningful financial goals (Adjusted EBITDAR) and is determined using absolute and objective performance criteria in reference to the Company’s annual budget. The other major component of our executive officers’ compensation is long-term incentives through a mix (which may vary from year to year and by level) of stock options and performance-based stock awards that we believe are important to help further align executives’ interests with those of our shareholders. Such grants are subject to long-term vesting schedules and the performance awards (both annual and long-term) are subject to maximum payout schedules.

In addition, we have share ownership guidelines that require our executive officers to own a given multiple of their base salary in the form of our common stock, restricted stock or restricted stock units (ranging from six times for the CEO to three times for

other executive officers) to help ensure that executives always have significant value tied to long-term stock price performance. The ownership guidelines must be achieved within five years of assuming the individual’s current position. Once achieved, ownership of the required amount must be maintained for as long as the individual is subject to the guidelines.

We believe that the annual short-term incentive pay is balanced by our long-term incentive awards, which are granted annually, always ensuring that executives’ incentive pay is aligned with share price performance over multiple years. These cash and incentive awards, especially when combined with the compensation clawback policy described on page 65 of this Proxy Statement, appropriately balance payment for performance and alignment of executive compensation with shareholders without encouraging imprudent or excessive risk taking. Based on the foregoing, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the Company’s ability to effectively identify and manage significant risks, are compatible with effective internal controls and are supported by the oversight of the Compensation Committee.

The Compensation Committee reviews the total compensation package for each of the executive officers against a pre-selected peer group of companies, based on data compiled by its independent compensation consultant. Consistent with the objectives of the Company’s executive compensation program, the Compensation Committee compares executive officer compensation against the median compensation opportunities of these peer companies to ensure that the Company is able to attract and retain highly qualified executive officers by providing a total compensation package that is competitive with those provided by the Company’s peers. The Compensation Committee, with the assistance of its independent compensation consultant, reviews the Company’s peer group annually to determine whether any changes are warranted from the prior year’s peer group.

As our business continues its journey as North America’s leading provider of retail and online gaming, live racing and sports betting entertainment, we believe that the most relevant pay comparisons include not only large, traditional gaming companies, but also the companies from entertainment, media, social platforms and other adjacent industry segments. As such, for fiscal 2022 compensation, we expanded our peer group to align with these broader threats to executive talent recruitment and retention. Technology expertise, in particular, is becoming more critical as a core competency for our executive officers. For these reasons, along with the continued growth of our Company, the Compensation Committee, with the assistance of Exequity, reviewed the composition of our peer group during 2021 and determined that the appropriate peer group for assessing the market competitiveness of our named executives’ pay should consist of the following companies:

Our executive compensation program consists of the following primary components: base salary, annual short-term incentive compensation (annual cash bonus plan) and long-term incentive compensation (equity).

Base salary is the fixed element of an executive officer’s annual cash compensation and is intended to attract and retain highly qualified executives and to compensate for expected day-to-day performance. The Compensation Committee reviews the base salary for each of our executive officers on an annual basis and considers the following factors in making its determinations: the executive officer’s position, responsibilities associated with that position, experience, expertise, knowledge and qualifications, market factors, the industry in which we operate and compete, recruitment and retention factors, the executive officer’s individual compensation history, salary levels of the other members of our executive team, the median salaries of similarly situated/comparable executives in our peer group, and our overall compensation philosophy. When establishing our named executive officers’ annual base salaries, the Compensation Committee references the peer group median salaries.

Set forth in the table below are the 2021 and 2022 base salaries for each of our named executive officers, indicating the year-over-year percentage increase. Effective as of January 1, 2022, the Board increased Mr. George’s salary to $800,000 in recognition of his increased responsibilities as an executive officer, and Ms. Hendrix’s salary to $715,000, in recognition of her expanded responsibilities, her increased contributions to the Company, and in order to better align her salary with comparable executives in our peer group. Effective May 23, 2022, the Board further increased Mr. George’s salary to $900,000 (from $800,000), in recognition of his assumption of responsibility for oversight of the Company’s Interactive segment and to recognize his increased contributions to the Company.

Our executive officers are eligible for short-term cash incentive compensation, which is intended to motivate the executive officers to achieve short-term company performance goals that will inure to the benefit of our Company and shareholders and to align executive officers’ interests with those of the shareholders. The STIP provides payout opportunities based on the achievement of pre-determined corporate performance objectives, with actual STIP bonuses earned based on the achievement of such performance objective(s) each fiscal year. Each fiscal year, the Compensation Committee sets the range of STIP opportunity payable to each executive as a percentage of annual base salary, consistent with the incentive programs and practices used by the Company’s peer group. When establishing our named executive officers’ target STIP opportunities, the Compensation Committee references the peer group median target bonus levels. The 2022 STIP opportunity for our named executive officers, expressed as a percentage of final 2022 base salaries, are set forth in the table below:

No compensation is awarded for below-threshold performance. If corporate performance is between performance levels (i.e., between threshold and target, or between target and stretch), the actual amount of the award that is earned will be determined by linear interpolation using the two identified levels of performance. Annual short-term incentive opportunities are capped at the maximum bonus levels for each executive, regardless of the extent to which performance exceeds targeted levels.

The “threshold,” “target” and “stretch” performance levels for 2022 performance metrics were approved by the Compensation Committee in early 2022. In order to determine the appropriate rigor of such performance levels with respect to the 2022 STIP, the Compensation Committee reviewed the Company’s 2022 operating plan and considered various performance metrics related to the objective of the operating plan. Based on this analysis, the Compensation Committee adopted Adjusted EBITDAR as the performance metric for 2022.

We measured 100% of our 2022 STIP based on Adjusted EBITDAR because Adjusted EBITDAR is an objective and quantifiable measurement for the Company’s financial performance, as well as for comparing the Company’s performance to others within the gaming industry, as Adjusted EBITDAR is a commonly used performance metric in the industry.

The Compensation Committee believes that achieving the Adjusted EBITDAR Target was the appropriate measure to use for the 2022 annual incentive program because this measure balanced an aggressive approach to executing on our highly differentiated strategy with a disciplined approach to spending. The targeted Adjusted EBITDAR level was deemed by the Compensation Committee to be challenging, but achievable given the Company’s budget and overall macroeconomic outlook at the start of 2022.

The Compensation Committee has the discretion to adjust quantitative results to account for factors that were unforeseen at the time compensation targets were established, and exercised its discretion to adjust the Company’s 2022 Adjusted EBITDAR for purposes of calculating the 2022 STIP awards to account for non-budgeted amounts associated with the California sports betting initiative and the settlement and resolution of certain litigation matters.

The metrics and the bonus payment thresholds corresponding to such metrics are set forth below:

During the first quarter of 2023, based on our Adjusted EBITDAR for 2022, the Compensation Committee approved the following STIP awards for the named executive officers (the Board approves the Chief Executive Officer’s STIP award following the recommendation of the Compensation Committee). These STIP awards were based solely upon Company Adjusted EBITDAR for all NEOs other than Mr. George, whose STIP was based upon Corporate Adjusted EBITDAR (50%) and Retail Adjusted EBITDAR (50%). At the time the Compensation Committee established the 2022 STIP performance metrics, Mr. George’s primary area of responsibility was the Company’s retail operations. As such, and due to the importance of retail operations in driving Company performance, the Compensation Committee determined it was appropriate to include both Corporate Adjusted EBITDAR and Retail Adjusted EBITDAR as equal weight components of Mr. George’s short-term incentive compensation.

We maintain a long-term incentive program, which provides for the granting of time-based and performance-based equity incentive awards under the 2022 Plan to the Company’s executive officers and to other employees, consultants and advisors as designated by the Chief Executive Officer. The LTIP was established in consultation with the Compensation Committee’s independent compensation consultant and is intended to closely align the interests of the Company’s executive officers, employees, consultants and advisors with the interests of our shareholders by encouraging participants to “think like owners” and to increase the long-term value of the Company by aligning their interests with those of the Company’s shareholders through a combination of time-based awards and performance-based awards with rigorous financial and operational performance metrics.

Each fiscal year, the Compensation Committee determines an aggregate target value for the time-based and performance-based portions of annual LTIP award for each executive officer generally consistent with the incentive programs and practices used by the Company’s peer group and establishes the performance conditions used for the performance-based portion of the LTIP, as well as the levels of performance (threshold, target and stretch) required to be achieved under the program (the Board approves the Chief Executive Officer’s LTIP award following the recommendation of the Compensation Committee). When establishing long-term incentive levels, the Compensation Committee references the median peer long-term incentive values among the peers.

For 2022, the LTIP award targets for the NEOs reflected market-based adjustments designed to maintain competitiveness of our executive compensation program and to foster closer alignment with the interests of our shareholders. The following table sets forth the aggregate 2022 annual long-term incentive award targets for our named executive officers: