UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.   )

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

PENN ENTERTAINMENT, INC.

Payment of Filing Fee (Check the appropriate box):

Dear Fellow Shareholders:

I am proud of the significant operational and financial milestones PENN Entertainment achieved in 2023 as our brands and businesses further evolved to meet the needs of our growing customer base. We executed across our retail footprint, transformed our digital business, invested in high growth projects, pioneered new technology, and advanced our corporate social responsibility (“CSR”) priorities. Our performance is underpinned by our talented team’s unwavering dedication to delivering superior integrated entertainment, casino and online sports betting and gaming experiences to our customers.

Best-in-Class Retail Operations Empower Our Growth Strategy

The continued strength and health of our retail business was evident in 2023, as we generated more than $2 billion in property-level EBITDAR. We delivered on our strategic targets and met our margin goals, all while navigating an uncertain macroeconomic environment. Led by our best-in-class operators, our regional gaming assets continue to deliver impressive and consistent results, providing a foundation for growth initiatives that are key to our long-term omnichannel strategy.

In 2023, we broke ground on four exciting new retail growth projects with an estimated overall budget of approximately $850 million. We are expanding our offerings at two of our best performing properties, Hollywood Columbus in Ohio and the M Resort in Las Vegas, Nevada, with the addition of a hotel at Columbus and a second hotel tower at the M Resort. In the Chicagoland market, we are relocating our riverboat licenses in Aurora and Joliet to create new best-in-class regional destinations in superior locations. We expect to complete these projects in the first half of 2026 and anticipate that expanding and modernizing these key properties will generate a strong return on our investment and create long-term value for our shareholders.

Transformative Strategic Alliance with ESPN Expands Our Value Proposition

After thoughtful deliberation and consideration of various alternatives by our Board, we made a significant pivot in our digital strategy in 2023, leading to our exclusive strategic alliance with ESPN, the undisputed leader in U.S. sports media. This transformative deal and the subsequent launch of ESPN BET™ last November, in alliance with ESPN, has already propelled our online business, delivering impressive download volumes, new registrations, and betting activity. While we are still in the early innings, ESPN BET is helping us reach new demographics of sports fans and grow the overall sports betting market in the U.S. We are now live in 18 states, and ESPN BET will be available to approximately 46% of the U.S. population following our launch in New York, which is expected in the second half of 2024. The early success of ESPN BET has also expanded our digital database by over 50% and bolstered our Hollywood-branded iCasino business through in-app cross-sell opportunities. We continue to see a growing convergence between sports media and sports betting, and our alliance with ESPN provides us with a compelling opportunity to fully capitalize on our investments in technology to create a differentiated sports betting and media experience, a truly unique and seamless value proposition for sports fans.

While we are pleased with the early ESPN BET adoption and engagement results, our primary focus in 2024 will be expanding our product offerings and introducing bespoke features to deliver a best-in-class experience for ESPN BET users. This will come from a combination of deep media and fantasy app integrations with ESPN, something no competitor in the industry can replicate, coupled with more expansive parlay and same game parlay offerings and an enhanced Hollywood-branded iCasino product. Strong execution in these areas will result in higher retention, share of wallet and spend per user.

Our Technology Investments and Growing Database Bolster Our Omnichannel Growth Strategy

Prior to the ESPN BET launch, our Interactive division achieved a major milestone in July with the full-scale migration of our U.S. online business to our proprietary technology platform. We acquired this technology platform in connection with our acquisition of theScore in 2021 and subsequently went live in 2022 in Ontario with strong results under theScore BET® brand. This seamless technology migration in the U.S. marked the culmination of a multi-year effort to bring all aspects of our North American online sports betting and iCasino operations in-house, and it would not have been possible without our strong team of talented engineers and product managers. Operating on our own technology has improved our efficiency, streamlined our ability to quickly introduce new features, and most importantly, provided us with complete control over our product roadmap as we work with ESPN to provide a best-in-class, fully integrated media and betting experience.

 

The launch of ESPN BET has further bolstered our industry-leading loyalty program, PENN Play™, which now includes more than 29 million members. Nearly one third of new customers acquired through the initial launch of ESPN BET are located within 50 miles of one or more of our 43 properties – underpinning the advantages of our omnichannel-focused strategy. Our investments in technology have also led to the success of our market leading 3C’s (cashless, cardless, contactless) offering, which is now deployed at 21 properties across the nation, representing approximately 70% of our retail EBITDAR.

World-Class Technology Leadership Team and Valuable Board Refreshment

To help accelerate our technology and product improvements, we recently announced the hiring of Aaron LaBerge as the Company’s first-ever Chief Technology Officer. Mr. LaBerge brings more than 20 years of experience at The Walt Disney Company, most recently serving as President and Chief Technology Officer for both Disney Entertainment and ESPN. In his new role, he will be responsible for driving technology strategy and execution for PENN, while leading a multinational team of technologists and serving as the key business leader for the Company’s Interactive division. To help guide and inform our growing technology initiatives, we recently appointed Anuj Dhanda as an independent director. Mr. Dhanda serves as EVP, Chief Technology & Transformation Officer for Albertsons Companies, and he brings extensive technology, cybersecurity and business transformation experience to our Board.

Focused on Driving Sustainable Shareholder Value Creation

Our Company has a long-term track record of creating shareholder value through a relentless focus on delivering best-in-class margins, accretive M&A, organic growth and return on invested capital. While we are disappointed with our recent stock performance, we remain confident that the strategic investments we have made in our Interactive business, together with our four retail growth projects, are key to fortifying our omnichannel strategy, providing us with a solid foundation for future growth and long-term shareholder value.

Lastly, our Company’s success relies on the quality and development of our over 23,000 team members and our reputation as a well-regarded member of the communities in which we operate. I’m extremely proud of the strides we have collectively made to further our CSR objectives. Across the Company we donated more than $8 million in support of local charities and veterans-focused organizations in 2023, and our team members throughout North America volunteered over 9,500 hours with organizations that serve our local communities. We also continued to advance our sustainability initiatives by completing our first Scope 3 greenhouse gas emissions inventory, one of the many steps we are taking to ensure that we remain good stewards of our planet’s natural resources.

On behalf of myself, our Board and our leadership team, I would like to thank you, our valued shareholders, for your continued investment, support and confidence. 2024 is sure to be another exciting year at PENN Entertainment.

 

Voting Matters

At or before the 2024 Annual Meeting of Shareholders (“Annual Meeting”), we ask that you vote on the following items:

Important Notice Regarding the Availability of Proxy Material for the Annual Meeting to be Held on June 4, 2024.

Please note that we are furnishing proxy materials and access to this Proxy Statement to our shareholders via our website instead of mailing printed copies. This reduces our impact on the environment and helps us save costs.

Beginning on April 23, 2024, we will make available to each of our shareholders a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access our proxy materials and vote online. If you attend the Annual Meeting virtually, you may withdraw your proxy and vote online during the Annual Meeting.

Your vote is important. We encourage you to vote promptly, regardless of whether you plan to attend the Annual Meeting.

By Order of the Board of Directors,

Christopher Rogers

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 4, 2024: Our Proxy Statement and 2023 Annual Report are available free of charge on our website at https://investors. pennentertainment.com/reports-filings/sec-filings. In addition, our shareholders may access this information, as well as submit their voting instructions, at www.proxyvote.com by having their proxy card and related instructions in hand.

INDEX OF FREQUENTLY REQUESTED INFORMATION

Special Note Regarding Forward-Looking Statements

This Proxy Statement contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of 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. Specifically, forward-looking statements include, but are not limited to, statements regarding: future revenue and Adjusted EBITDAR; the Company’s expectations of future results of operations and financial conditions, the scale and timing of the Company’s product and technology investments; the Company’s expectations regarding results, and the impact of competition, in retail/mobile/online sportsbooks, iCasino, social gaming, and retail operations; the Company’s development and launch of its Interactive segment’s products in new jurisdictions and enhancements to existing Interactive segment products, including features and content for the ESPN BET and theScore Bet; the benefits of the Sportsbook Agreement between the Company and ESPN; the Company’s expectations regarding its Sportsbook Agreement with ESPN and the future success of its products; the Company’s expectations with respect to the integration and synergies related to the Company’s integration of theScore and the continued growth and monetization of the Company’s media business; the Company’s expectations with respect to the ongoing introduction and the potential benefits of the cashless, cardless and contactless (3C’s) technology; and the Company’s development projects. 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 should not be unduly relied upon and 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, 2023, 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.

About the 2024 Annual Meeting of Shareholders

Voting Matters

At or before the 2024 Annual Meeting of Shareholders (“Annual Meeting”), we ask that you vote on the following items:

General

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 2024 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 5, 2024, 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/PENN2024. 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, 2023 (“2023 Annual Report”)) on or about April 23, 2024. 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 2023 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.

Our Company

 

2023 Performance Highlights

2023 was a year of significant operational and financial achievements for PENN. Our retail business achieved strong property-level margins, generating more than $2 billion in property-level EBITDAR, and we broke ground on all four of our exciting retail growth projects in Illinois, Ohio and Nevada. Our regional gaming assets delivered impressive results, providing a foundation for growth initiatives in our Interactive segment and facilitating our long-term omnichannel strategy.

It was also a transformative year for our Interactive division. In July, we successfully completed a full-scale migration of our online sports betting business to our proprietary technology platform across 17 states. Importantly, this migration provides us with full control of our product and technology roadmap, allowing us to quickly introduce enhancements for our Interactive offerings while maximizing cross-sell opportunities with our retail business. Then, in August, we entered into a long-term strategic alliance with ESPN, Inc. and ESPN Enterprises, Inc. (together, “ESPN”), the undisputed leader in U.S. sports media, securing the exclusive right to use the ESPN brand for our U.S. online sports betting offering. Finally, in November, we successfully completed a rebrand of our online sports betting product and launched ESPN BET across 17 states to very strong customer demand.

We are constantly looking for new strategic opportunities to drive long-term shareholder value, as demonstrated through our transformative alliance with ESPN and our four exciting retail growth projects in Illinois, Ohio and Nevada, which are all set to open by 2026. The continued strength of our retail business provides us with a solid foundation to strategically deploy capital into our high-growth digital business, which is a critical element of our value creation strategy. To this end, our ability to accelerate growth by leveraging the leading sports media brands in the United States (ESPN) and Canada (theScore) is key to our omnichannel strategy, positioning us to significantly expand our digital footprint and efficiently grow our customer base across our retail, Interactive and entertainment verticals.

Looking ahead, we believe that our media and content ecosystem, together with our retail, online sports betting and online gaming channels, position PENN for growth and strengthen our position as a leading North America gaming operator. In 2024, we remain focused on maximizing the value-creation opportunities presented by our omnichannel strategy, leveraging innovative new integrations with ESPN and launching ESPN BET in new jurisdictions, including North Carolina (in March) and New York (later this year). We will also continue to focus on reimagining our properties through the use of new technologies and strategic capital deployment, which will allow us to further enhance customer experiences and better appeal to our growing digital customer database.

 

Our Board of Directors

Our Board is composed of highly experienced directors who have led, advised, and established leading organizations and institutions. Our directors have the experience and skill sets that collectively add significant value to the strategic decisions made by the Company, and which enable them to provide oversight of management to ensure accountability to our shareholders. We believe our Board possesses the right balance between long-term understanding of our business and fresh external perspectives. With the addition of three new directors in the last four years, we have ensured diversity of backgrounds and perspectives within the boardroom. In addition to demographic diversity, our directors have extensive backgrounds as entrepreneurs, operational, financial and technology experts, investors, advisors, and public company and nonprofit board members.

Snapshot of Board Profile and Diversity

Board and Committee Membership

Director Qualifications, Skills and Experience

PENN’s Board believes that having a diverse mix of directors with complementary qualifications, skill sets and attributes is essential to meeting its oversight responsibility. The table below summarizes the key qualifications, expertise and attributes possessed by one or more of PENN’s directors that are of particular relevance to the Company’s business, strategy and risk management 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.

The above table of qualifications, skills and experience excludes Mr. Jacquemin, who is not standing for re-election at our 2024 Annual Meeting.

Corporate Governance Highlights

Off-season Shareholder Outreach and Engagement

Our Board considers shareholder feedback as a critical input in our annual corporate governance and executive compensation review process to promote transparency, develop a better understanding of shareholder perspectives, and support Board accountability. We maintain an active bi-annual, broad-based shareholder engagement program, which is led by our Board Chair and the Chairs of our Compensation Committee and Nominating and Corporate Governance Committee, to solicit shareholder insights and feedback on a range of topics, including strategic priorities, capital allocation, corporate governance, executive compensation, and sustainability initiatives, as well as on other topics of importance to our shareholders. Perspectives of our shareholders are shared with relevant Committees and the full Board and inform the Board meeting agendas throughout the year.

Outstanding share ownership calculated as of September 6, 2023

Many shareholders who participated in the 2023 engagement meetings expressed appreciation of the Board’s thoughtful approach to shareholder dialogue and responsive actions adopted last year, including enhanced proxy disclosure and continued evolution of sustainability practices.

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, compensation and disclosure enhancements over the last three years.

Environmental Sustainability, Social Responsibility and

Corporate Governance Highlights

Awards and Recognitions

 

Executive Compensation

Significant portion of our target executive compensation is at risk. In 2023, 90% of our Chief Executive Officer’s total target compensation and 80% (on average) of our other Named Executive Officers’ total target compensation was at risk, subject to achievement of pre-set performance goals or tied to our long-term stock price performance.

 

 

 

 

Corporate Governance Highlights

Our commitment to corporate governance is integral to our business and reflects not only regulatory requirements, the Listing Rules of the Nasdaq Stock Market (the “Nasdaq Rules”) and broadly recognized governance practices, but also effective leadership and oversight by our Board and the senior management team. 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. Notable features of our corporate governance framework include the following:

Corporate Governance Documents

Director Independence

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 Evaluation Process

Board and Committee evaluations play a critical role in ensuring the effective functioning of our Board of Directors. It is important to evaluate Board, Committee and director performance and to solicit and act upon feedback received from each member of our Board. To this end, the Board and each Committee conduct a comprehensive annual self-evaluation process that is overseen by the Nominating and Corporate Governance Committee. The process for reviewing and taking action based on the Board and Committee annual evaluations is set out below.

Director Candidate Qualification and Selection Process

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 92).

Director Candidate Qualification and Selection Process (cont.)

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 submit the candidate 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.

Our Board and Committee evaluation process has resulted in regular Board refreshment, with three new independent directors added in the last four years, contributing extensive marketing, strategy, technology, media, cybersecurity, and digital transformation experience to our Board, ensuring effective oversight of our growth strategy.

Board Leadership

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 firm that provides M&A and strategic advisory services focused on the technology industry. 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 the Company’s digital transformation and in evaluating potential acquisitions and financing opportunities.

The Company’s governing documents allow the roles of Board Chair and CEO to be filled by the same or different individuals. This approach allows the Board flexibility to determine whether the two roles should be separated or combined based on our needs and the Board’s assessment of the Company’s leadership from time to time. The Board will periodically consider the advantages of having an independent Board Chair or a combined Board Chair and CEO and is open to different structures as circumstances may warrant. The roles of our Board Chair and Chief Executive Officer have been split for over ten 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 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. In addition to Board and Committee meetings, our Board of Directors and its Committees act 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, 2023, our Board met frequently to consider the Company’s strategic direction, resulting in the decision to enter into a strategic long-term alliance with ESPN, and each of the Company’s directors attended at least 75% of the meetings of the Board and Committees of the Board of which he or she was a member in 2023. The Company encourages directors to attend shareholder meetings, and each of the Company’s directors attended the 2023 Annual Meeting of Shareholders.

Committees of the Board

The Board maintains four standing Committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance Committee. Members serve on these committees until their resignation or until as otherwise determined by our board of directors. Mr. Jacquemin served on the Nominating and Corporate Governance Committee during 2023 and is not standing for re-election at the Annual Meeting. 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.

Audit Committee

In addition to being independent as noted above, the Board has determined that each member of the Audit Committee also meets the financial literacy requirements under the Nasdaq Rules and is an “audit committee financial expert” within the meaning of the rules and regulations of the SEC. In addition, Ms. Scaccetti has practiced as a certified public accountant since 1977 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.

Key Responsibilities:

In discharging its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention or that it 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. The Audit 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.

Compensation Committee

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

Key Responsibilities:

The CEO provides the Compensation Committee with 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 independent 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 recommendations to the Board regarding the CEO’s compensation. The Compensation 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.

Nominating and Corporate Governance Committee

Note: Mr. Jacquemin was a member of the Nominating and Corporate Governance Committee in 2023 and is not standing for re-election at our 2024 Annual Meeting. Ms. Black-Gupta was appointed to the Nominating and Corporate Governance Committee effective as of our 2024 Annual Meeting.

The Nominating and Corporate Governance Committee carries out responsibilities delegated by the Board relating to the Company’s director nomination processes and procedures, develops and maintains the Company’s corporate governance policies, oversees the Company’s ESG Committee and develops and maintains corporate social responsibility policies, and performs other matters as required by applicable laws, rules and regulations. The 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.

Key Responsibilities:

Compliance Committee

Note: Ms. Black-Gupta was a member of the Compliance Committee in 2023. Mr. Dhanda was appointed to the Compliance Committee effective as of our 2024 Annual Meeting.

The Compliance Committee is chaired by an independent non-director member, Thomas N. Auriemma, joined by three independent members of our 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.

Key Responsibilities:

Risk Management Oversight

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 each 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.

Board Committees

Management Committees

Executive Sessions of Non-Management Directors

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 sessions. 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 of our non-management directors are independent.

Board Resources

In fulfilling its objectives, many of the direct oversight functions of the Board are performed by the Board’s Committees with support from both senior internal resources as well as independent outside advisors. For example, the Audit Committee receives frequent reports directly from the Company’s Chief Financial Officer; Chief Accounting Officer; Legal Department; Executive Vice President, Operations; Chief Compliance Officer; Vice President, Internal Audit; and the independent registered public accounting firm. 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, receiving reports directly from the Company’s Chief Compliance Officer and other senior compliance staff, with regular access to other members of 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, 2023, 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 a 99-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. Mr. Auriemma is the Company’s former Vice President, Chief Compliance Officer and is also a 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 2023, 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 2023, 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.

Shareholder Outreach and Engagement

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

Shareholder Engagement Cycle

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.

2023 Off-season Shareholder Engagement Highlights

Outstanding share ownership calculated as of September 6, 2023

Many shareholders who participated in the 2023 engagement meetings expressed appreciation of the Board’s thoughtful approach to shareholder dialogue, responsiveness actions adopted last year, including enhanced proxy disclosure, executive pay program changes, and the continued evolution of our sustainability practices.

How to Contact Our Board

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, deal with functions of the Board or Committees of the Board or that the Secretary otherwise determines requires the attention of our Board.

Succession Planning for Senior Management

Our Board, in coordination with our Compensation Committee, carefully oversees CEO and senior management succession planning. 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 team’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.

Review and Approval of Transactions with Related Persons

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. Since January 1, 2023, there have been no related person transactions and none are currently proposed.

Deloitte’s reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2023 and 2022 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended December 31, 2023 and 2022, there were no (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to Deloitte’s satisfaction, would have caused Deloitte to make reference thereto in their reports, or (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).

As a result of the process noted above and following the review and evaluation of proposals from all participating firms, on September 26, 2023, the Audit Committee approved the appointment of PwC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024, and an engagement letter was subsequently signed on January 25, 2024.

During the fiscal years ended December 31, 2023 and 2022, neither the Company nor anyone on its behalf consulted with PwC regarding any of the matters described in Items 304(a)(2)(i) and (ii) of Regulation S-K.

Vote Required

The affirmative vote of a majority of the votes cast is required for approval of the ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2024. 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.

Non-Employee Director Compensation

The Company pays fees to each director who is not an employee of the Company. During the year ended December 31, 2023, 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 Chairs of the Compensation Committee and the Nominating and Corporate Governance Committee each receive a supplemental $10,000 annual retainer. For 2023, 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 for restricted stock lapsing on the first anniversary of the date of grant.

In 2023, each non-employee director other than the Board Chair received a grant of cash settled restricted stock units or restricted stock at his or her election with a grant value of $250,000, and the Board Chair received a cash settled grant of restricted stock units or restricted stock at his election with a grant value of $375,000. Each award of cash settled restricted stock units or shares of restricted stock vests on the first anniversary of the date of grant.

Director Stock Ownership Guidelines. We believe that equity ownership supports the alignment of director interests with those of the Company’s shareholders. To this end, the Compensation Committee has established stock ownership guidelines which provide that each non-employee director should own shares with a value equal to at least five times the current annual cash retainer amount, within five years from the date they joined the Board. All of our non-employee directors either currently meet our director stock ownership guidelines or we expect that they will meet the guidelines within five years of becoming a director. The Company’s Legal Department monitors compliance with these guidelines on an annual basis and apprises the Compensation Committee no less than annually regarding the same.

2023 Director Compensation Table

The following table sets forth information with respect to all compensation awarded to the Company’s non-employee directors for 2023.

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 I Directors—Continuing Directors.”

Felicia Hendrix has served as our Chief Financial Officer and Executive Vice President since March 2021, and Principal Accounting Officer since February 25, 2024. Ms. Hendrix oversees Accounting, Finance, Internal Audit, and Procurement. Prior to joining PENN, Ms. Hendrix spent 25 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 omnichannel strategy, including our efforts to use our expanded digital database to drive increased visitation to our casinos. Prior to his current role, 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. In 2023, Mr. Rogers was appointed as Secretary and also assumed responsibility for overseeing the Company’s legal and compliance functions. In his capacity as Chief Strategy Officer, Mr. Rogers leads the team in developing and pursuing PENN's strategic growth initiatives. Over his past ten 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 5, 2024. This table lists: (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 “2023 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 151,867,302 shares of our common stock outstanding as of April 5, 2024.

*Less than 1%.

Compensation Committee of the Board of Directors

Compensation Committee Report

As part of our commitment to effective corporate governance, 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 47% of our outstanding shares during off-season shareholder outreach. Each of our Board Chair, Nominating & Corporate Governance Committee Chair and Compensation Committee Chair personally attended the majority of our off-season shareholder engagement meetings and would like to thank all of those who met with us to share your valuable perspectives.

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.

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis (“CD&A”) discusses the principles underlying our executive compensation policies and decisions for 2023. Our named executive officers for 2023 were:

2023 Performance Highlights

2023 was a year of significant operational and financial achievements for PENN. Our retail business achieved strong property-level margins, generating more than $2 billion in property-level EBITDAR, and we broke ground on all four of our exciting retail growth projects in Illinois, Ohio and Nevada. Our regional gaming assets delivered impressive results, providing a foundation for growth initiatives in our Interactive segment and facilitating our long-term omnichannel strategy.

It was also a transformative year for our Interactive division. In July, we successfully completed a full-scale migration of our online sports betting business to our proprietary technology platform across 17 states. Importantly, this migration provides us with full control of our product and technology roadmap, allowing us to quickly introduce enhancements for our Interactive offerings while maximizing cross-sell opportunities with our retail business. Then, in August, we entered into a long-term strategic alliance with ESPN, the undisputed leader in U.S. sports media, securing the exclusive right to use the ESPN brand for our U.S. online sports betting offering. Finally, in November, we successfully completed a rebrand our online sports betting product and launched ESPN BET across 17 states to very strong customer demand.

2023 Performance Highlights (cont.)

We are constantly looking for new strategic opportunities to drive long-term shareholder value, as demonstrated through our transformative alliance with ESPN and our four exciting retail growth projects in Illinois, Ohio and Nevada, which are all set to open by 2026. The continued strength of our retail business provides us with a solid foundation to strategically deploy capital into our high-growth digital business, which is a critical element of our value creation strategy. To this end, our ability to accelerate growth by leveraging the leading sports media brands in the United States (ESPN) and Canada (theScore) is key to our omnichannel strategy, positioning us to significantly expand our digital footprint and efficiently grow our customer base across our retail, Interactive and entertainment verticals.

Looking ahead, we believe that our media and content ecosystem, together with our retail, online sports betting and online gaming channels, position PENN for growth and strengthen our position as a leading North America gaming operator. In 2024, we remain focused on maximizing the value-creation opportunities presented by our omnichannel strategy, leveraging innovative new integrations with ESPN and launching ESPN BET in new jurisdictions, including North Carolina (in March) and New York (later this year). We will also continue to focus on reimagining our properties through the use of new technologies and strategic capital deployment, which will allow us to further enhance customer experiences and better appeal to our growing digital customer database.

Alignment of Pay with Performance

Our executive compensation is predominantly at risk and long-term focused. We issue a significant majority of our executive compensation in the form of annual and at-risk, long-term incentives that deliver value only if our executives achieve pre-set performance goals or we achieve sustained long-term stock price appreciation.

Note: the above pie charts reflect the target values of new incentives awarded in 2023. These values vary from the grant values reflected in the Summary Compensation Table and the Grants of Plan-Based Awards Table, below, because the values included in those tables reflect portions of performance-based equity awards issued in 2021, 2022, and 2023 and associated with the 2023 performance period, in accordance with SEC disclosure rules. Because the performance targets for the 2021, 2022, and 2023 performance-based equity awards were set annually for 33% of each year’s overall targeted award, only the 33% portion of each year’s overall targeted performance-based equity award could be included in the proxy tables for the year in which the goals were established. In contrast, the above pie charts reflect 100% of the target value of the performance-based equity awarded in 2023, and none of the value associated with performance-based equity awards originally awarded in 2021 and 2022.

Annual total target opportunities adjusted to be closer to the peer median to maintain the competitiveness of our compensation program. Consistent with our pay for performance approach, the increase in target opportunity for our CEO in 2023 was delivered exclusively in the form of long-term equity incentives to foster a stronger alignment with the interests of our stockholders. Following these adjustments, the rate of our regular total target opportunities for our CEO and other NEOs remained positioned below the peer group median.

Incentive program payouts are aligned with performance. Our short- and long-term incentive payouts of 99.1% and 108.1% of the targeted levels respectively, were aligned with our robust 2023 financial and operational performance results, which were achieved despite ongoing macroeconomic headwinds and volatility in the retail and digital gaming spaces. Our leadership team remained focused on executing our omnichannel, tech-forward strategy that drove significant new user database growth, delivered on our property level margins goals and deepened our customer engagement across all product channels. These results reflect the momentum driven by our management team’s dedication to our highly differentiated growth strategy, one that positions the Company for successful long-term value creation in 2024 and beyond.

CEO realizable compensation for 2023 was 64% of target compensation levels, reflecting the alignment of our executive pay opportunities with company performance. As of the record date of this filing, stock options that represented 50% of the long-term incentive opportunities for our executives in 2021, 2022 and 2023 remain underwater and have zero intrinsic value, and likewise the 2021 CEO Supplemental Award is also underwater with no realizable value, which underscores the long-term alignment of our compensation program outcomes with our shareholders.

2023 Target and Realizable Executive Pay Outcomes

Target Compensation: 2023 base salary earned, 2023 target annual incentive compensation and 2023 target value of the annual equity awards.

Realizable Compensation Value: 2023 base salary earned, 2023 annual incentive earned, the value of 2023 performance-based equity issued and earned based on fiscal 2023 performance and valued at target for 2024 and 2025 tranches, and zero intrinsic value of Stock Options issued in 2023, in each case valued based on stock price of $26.02 as of December 29, 2023.

2024 Performance-Based Equity Awards to reflect a three-year performance period and predominantly financial metric structure. In response to feedback provided by shareholders in our engagement sessions since our 2023 Say-on-Pay voting, the Compensation Committee approved a three-year performance period for our 2024 performance-based equity program (which is settled in common stock) with vesting tied to financial metrics (70% weighting) and quantitative operational metrics (30% weighting). Our 2023 and 2022 performance-based equity award grants will serve as a bridge to the new program design, with vesting of two-thirds of the 2023 award and one-third of our 2022 award, for which targets were traditionally set at the start of each annual performance period, to be tied to a 2-year and 1-year performance period, respectively, with the same mix of financial metrics (70% weighting) and quantitative operational metrics (30% weighting) being used for the 2024 performance-based equity award grant.

2023 Say-On-Pay Vote and Shareholder Engagement

Our annual non-binding advisory Say-on-Pay vote on executive compensation is an opportunity for all of our stockholders to provide feedback on our executive compensation program. At our 2023 Annual Meeting, over 90% of shareholder votes cast – excluding abstentions and non-votes – were in favor of our Say-on-Pay resolution, which indicated restored confidence of our shareholders in our approach to executive compensation after significantly lower support in 2022. The shareholders we engaged with after our 2023 Annual Meeting provided positive feedback about our compensation program design and the changes the Compensation Committee implemented in response to the 2022 vote.

Our Board and the Compensation Committee recognize the importance of ongoing and regular dialogue with our shareholders beyond the annual Say-on-Pay vote and engage with our shareholders regularly about our strategic initiatives, compensation practices, corporate governance and sustainability priorities.

Outstanding share ownership calculated as of September 6, 2023

Key Themes from Shareholder Meetings

Our engagement team heard a diverse variety of feedback from shareholders in 2023. As noted, the shareholders we engaged with following our 2023 Annual Meeting provided overwhelmingly positive feedback about our compensation program design and the changes the Compensation Committee implemented in response to the 2022 vote. A majority of shareholders who met with us indicated they understood our current approach to compensation program design and performance metrics selection but indicated a preference for multi-year performance periods in the long-term incentive program, a stronger focus on financial metrics, and more detailed disclosure on our performance metrics, particularly for the long-term incentive program. In response to our shareholder feedback, for 2024 the Compensation Committee determined to update the design of our performance-based equity grants, approving a transition to a three-year performance period with a 70% weighting allocation to financial metrics. In addition, this year’s proxy statement reflects enhanced disclosure of the long-term incentive program metrics and earned performance-based equity awards for the last three performance cycles. We welcome our shareholder perspectives and look forward to continued shareholder engagement in 2024.

Compensation Philosophy

The Company maintains a compensation philosophy that is reviewed annually by the Compensation Committee to guide our compensation decisions and ensure we attract and retain the executive talent needed to grow and further the strategic interests of our 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 tied to the achievement of pre-established goals to align the executive compensation outcomes with the Company’s performance and their own individual contributions.

Compensation Framework

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 of our 2023 compensation program are described in more detail below.

Impact of ESPN Strategic Alliance on 2023 Compensation Outcomes

In the first quarter of 2023, the Compensation Committee set our executive compensation performance metrics for the year based on our annual financial and operational forecasts, including targets for overall adjusted EBITDAR under the short-term incentive plan and targets for our Interactive segment, omnichannel performance and key ESG initiatives under our LTIP. The Company’s alliance with ESPN was not anticipated when these executive compensation performance metrics were set, and was therefore not reflected in the Company’s business forecast for the year.

In August 2023, PENN entered into an exclusive U.S. online sports betting agreement with ESPN, forming a transformative strategic alliance. The success of our subsequent ESPN BET launch resulted in significant user growth, dramatically expanding our digital database and strengthening our foundation for future growth across our omnichannel ecosystem. The ESPN BET launch was more successful than anticipated and resulted in more new users than we forecasted. As a result, we incurred higher losses than expected, primarily related to promotional expenses associated with new user growth. When deliberating how to reflect the financial impact of this new strategic alliance with ESPN and the results of the ESPN BET launch on our 2023 performance, the Compensation Committee took a prudent and balanced approach to (i) eliminate the punitive short-term financial impact of the losses incurred to support the launch of ESPN BET from the STIP achievement, and (ii) remove the unanticipated positive impact of the Company’s change in Interactive strategy from the LTIP achievement, as described in more detail below.

The Compensation Committee determined that these adjustments to STIP and LTIP achievements were reasonable and balanced and ultimately resulted in executive incentives which were more closely aligned with our operating performance for the year. Details on payouts are further described below in the Annual Short-Term Incentive Plan (STIP) and Long-Term Incentive Program (LTIP) sections.

Compensation Process

The Compensation Committee is solely responsible for making the final decisions on compensation for our executive officers (our CEO’s pay is approved by the independent members of our Board), but 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, in its discretion, has sole authority to select, approve, retain, terminate and oversee its relationship with the independent compensation consultant. In 2023, Exequity did not provide any consulting services other than with respect to executive compensation matters, to PENN or any of its executive officers. 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 existed that would prevent Exequity from independently advising the Compensation Committee.

Risk Assessment

The Compensation Committee’s responsibilities include, among others, oversight of risks related to our compensation practices and plans to ensure they appropriately balance risks and rewards in relation to our overall business strategy and do not encourage excessive or unnecessary risk-taking behavior. In this regard, the Compensation 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 2023 was focused on achievement of a specific, readily quantifiable and meaningful financial goal (Adjusted EBITDAR) and was determined using absolute and objective performance criteria in reference to the Company’s annual budget. The other major component of our executive officers’

Risk Assessment (cont.)

compensation is long-term incentives through a mix (which may vary from year to year and by level) of stock options and performance-based equity 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 annual bonus and performance-based equity awards are subject to maximum payout limits.

We believe that the focus on annual short-term incentive pay is balanced by our long-term incentive awards, which are granted annually, continually ensuring that executives’ incentive pay is aligned with our share price performance over multiple years. These cash and equity incentive awards, especially when combined with the compensation clawback policy described on page 67 of this Proxy Statement, appropriately balance payment for performance and alignment of executive compensation with shareholders without encouraging imprudent conduct or excessive risk-taking. Additionally, 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 stock settled restricted stock units (ranging from six times for the CEO to three times for other named executive officers) to help ensure that the majority of executives compensation always has significant value tied to long-term stock price performance.

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.

Executive Compensation Peer Group

The Compensation Committee reviews the total compensation package for each of the executive officers against data from a pre-selected peer group of companies, which are chosen based on data compiled by an 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 Company peers. The Compensation Committee, with the assistance of its independent compensation consultant, reviews the Company’s peer group annually to determine whether any changes from the prior year’s group are warranted.

For setting 2023 target compensation levels, the executive compensation peer group consisted of the companies identified below, as recommended by the Compensation Committee’s independent compensation consultant and approved by the Compensation Committee. The peer group remained the same as the peer group the Company used for setting 2022 target compensation levels, as follows:

This executive compensation peer group is comprised of core gaming companies and online and digital entertainment companies, which reflects PENN’s evolving operational complexity and a greater emphasis on online and digital entertainment. These peer companies were selected because they met certain criteria based on similarity of their business, market capitalization and annual revenues, and the fact that they serve as competitors for PENN’s executive talent. The Compensation Committee reviewed the peer group in October 2022, and at that time the Company ranked at the 65th percentile of this group in annual revenue, at the 71st percentile in the number of employees, and at the 16th percentile in market capitalization.

Elements of Executive Compensation

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

Base Salary

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 them 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, individual contributions, 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 2022 and 2023 base salaries for each of our named executive officers, along with year-over- year percentage market-based pay increases that were designed to bring base salaries of our executives closer to the peer group median for the comparable executive roles and scope of responsibilities.

Annual Short-Term Incentive Plan (“STIP”)

Our executive officers are eligible to participate in the short-term cash incentive plan (STIP), which is intended to motivate the executive officers to achieve short-term company performance goals that are key to long-term Company success and strong share price performance. The STIP provides payout opportunities based on the achievement of pre-determined corporate performance objective(s), with actual STIP bonuses earned based on the achievement of such performance objective(s) 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 2023 target STIP opportunities for our named executive officers, as well as payout levels for threshold and maximum performance, remained unchanged from the prior year at 250% of base salary for our CEO and 100% of base salary for the other NEOs.

No compensation is awarded to executives for below-threshold performance, except in instances where the Compensation Committee determines that an adjustment to the performance metric(s) is warranted. If corporate performance is between performance levels (i.e., between threshold and target, or between target and maximum), the actual amount of the award that is earned will be determined by linear interpolation using the two identified levels of performance. Annual STIP incentive opportunities are capped at the maximum bonus levels, equivalent to 150% of target for each executive, regardless of the extent to which performance exceeds the maximum performance level.

2023 STIP Awards

The Compensation Committee approved Adjusted EBITDAR as the performance metric for the 2023 STIP because Adjusted EBITDAR is an objective and quantifiable measurement for the Company’s financial performance that balances an aggressive approach to executing on our highly differentiated strategy with a disciplined approach to spending to support our long-term growth priorities. It is also a common performance metric in the industry used by our investors to evaluate the Company’s performance relative to other industry peers.

In order to determine the appropriate rigor of Adjusted EBITDAR as the metric for the 2023 STIP, the Compensation Committee reviewed the Company’s 2023 operating plan. Based on this analysis, in early 2023, the Compensation Committee approved “threshold,” “target” and “maximum” performance levels for the Adjusted EBITDAR goal. The target performance level for Adjusted EBITDAR represented an increase over last year’s target and was deemed by the Compensation Committee to be rigorous and reflect the Company’s internal business plan and overall macroeconomic outlook at the start of 2023. At that time, the Company’s transformative strategic alliance with ESPN was not anticipated and therefore was not reflected in the Company’s business forecast for the year.

As described above, in August 2023, PENN entered into an exclusive U.S. online sports betting agreement with ESPN, forming a transformative strategic alliance. The success of our subsequent ESPN BET launch resulted in significant user growth, dramatically expanding our digital database and strengthening our foundation for future growth across our omnichannel ecosystem. The ESPN BET launch was more successful than anticipated and resulted in more new users than we forecasted. As a result, we incurred higher losses than expected, primarily related to promotional expenses associated with new user growth. When deliberating how to reflect the financial impact of this new strategic alliance with ESPN and the results of the ESPN BET launch on our 2023 performance, the Compensation Committee took a prudent and balanced approach to (i) eliminate the punitive short-term financial impact of the losses incurred to support the launch of ESPN BET from the STIP achievement, and (ii) remove the unanticipated positive impact of the Company’s change in Interactive strategy from the LTIP achievement, as described in more detail below.

The Compensation Committee retains the discretion to adjust quantitative results to account for factors that were unforeseen at the time compensation targets were established, and therefore made adjustments that it believed were reasonable and balanced, to reflect the impact of the strategic alliance with ESPN. These adjustments ultimately resulted in STIP achievement that was more closely aligned with our operating performance for the year.

2023 STIP Awards (cont.)

Full detail on the adjusted target, threshold, maximum and actual performance levels for the 2023 STIP metric are set forth below: