SEC filing: Penn National restores management team’s salaries

October 5, 2020 11:30 AM
  • Howard Stutz, CDC Gaming Reports
October 5, 2020 11:30 AM
  • Howard Stutz, CDC Gaming Reports

Penn National Gaming has restored the salaries of the company’s top three executives, all of whom took pay cuts in April after the coronavirus pandemic forced the shutdown of the casino operator’s nationwide portfolio.

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In a filing with the Securities and Exchange Commission late Friday, Penn National said CEO Jay Snowden, CFO David Williams, and General Counsel Carl Sottosanti had had their salaries restored on Oct. 1. Snowden took a 25% pay cut on April 1, while the other two executives had their pay cut by 20%.

“As a result of virtually all the company’s properties being open for several months and a substantially improved liquidity position … the company entered into amendments to the employment agreements with the executive officers to restore the salaries,” according to the filing.

According to the filing, Snowden’s salary returned to $1.4 million, Williams’ salary is $650,000, and Sottosanti’s salary is $695,250.

The executives took the pay cuts at the same time Penn furloughed roughly 26,000 employees nationwide on April 1 after closing its 41 properties in 19 states during mid-March.

The company paid its employees their wages and benefits through early April and maintained health benefits through June 30.

Since reopening its gaming properties, Penn has not said how many of its employees had been returned to work. In many of the states in which the company operates, Penn filed WARN Act notices during the summer months alerting of potential layoffs.

The Tropicana Las Vegas was the last major property the company reopened when the locks came off last month. In April, the company sold the Strip resort to Gaming and Leisure Properties but retained the operations through a lease agreement.

GLPI, a real estate investment trust, granted Penn $307.5 million in rent credits that were applied to the existing leases for May, June, July, August, October, and a portion of November. GLPI owns the land and buildings for more than 30 of Penn’s regional casinos. Another $30 million was credited toward for sale of a small casino in Pennsylvania that is currently under development.

Penn had been trying to sell the Tropicana since last year. The lease agreement covers two years, unless GLPI sells the Tropicana, and includes three one-year extensions at GLPI’s option.

Penn’s shares are up more than 800% since mid-March when the company’s stock price fell to $3.75 after the pandemic closed the casinos. Penn shares closed at $72.75 on the Nasdaq on Friday.

In a research note last week, Deutsche Bank gaming analyst Carlo Santarelli suggested Penn’s stock price was inflated and will tumble over the next year. He said the market has overestimated the value of sports betting.

“We believe the fundamental and valuation support under Penn is lacking, and when some or all of these things happen, we would anticipate a considerable contraction in shares,” Santarelli wrote in a research note.

Last week, Penn raised $932.1 million through a stock sale, with the casino company saying that the proceeds would help accelerate the launch of its Barstool sports betting app into new markets. The company launched the much-anticipated app in Pennsylvania during September, recording some 65,000 downloads on the opening weekend.

Snowden has said the company would bring the app to Michigan and then roll out the product in New Jersey, Indiana, Iowa, West Virginia, and Colorado in early 2021. That could change, based on the stock sale and the reception of the app by Pennsylvania’s sports bettors.

Penn National spent $163 million in January to acquire 36% of sports media platform Barstool, which has roughly 66 million viewers of its website and social media content.

The plan is to rebrand Penn’s retail sportsbooks under the Barstool brand and launch the app in hopes of changing the demographic make-up of Penn’s customer base, which traditionally skews to age 45 and older.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.