Jay Snowden of Aurora Casino named the 3rd most overpaid CEO in new report
After a 1590% increase in pay over 2020, Penn Entertainment CEO is named the 3rd most overpaid CEO in the US and earns a CEO to worker pay ratio of 1942:1
Penn’s annual SEC report for 2022 notes revenues of $6.4 billion, acquisitions of two competitor companies for a total of $2.5 billion, and stock buybacks of $539 million
The new reports resurfaces concerns about the $68 million in subsidies given to Penn Entertainment for the move of the Hollywood Casino from Downtown Aurora to Farnsworth Ave.
CEO Report
Each year the consumer advocacy group, As You Sow, analyzes the compensation of CEO’s running the companies in the S&P 500 Index, and publishes their list of the 100 most overpaid. In this year’s report covering fiscal year 2021, Jay Snowden of Penn Entertainment, the parent company of Aurora’s Hollywood Casino, ranked as one of the most egregiously overpaid CEOs in the country, coming in at 3rd place with an annual compensation of $65,887,214. Snowden’s compensation ballooned from just $3.9 million in 2020 when he first joined the company, representing a surge of 1590%. With this increase, Snowden now earns more than 5x what any of the CEO’s in his peer group make.
Beyond the raw numbers, it is important to look at how Snowden’s compensation compares to the salaries of Penn Entertainment’s workers to get a full understanding of the gross overcompensation happening in this C-Suite. The report also analyzed this information and notes that the median annual salary across the organization comes in at a measly $33,930. This means that for every $1 made by a company worker, the CEO is taking home $1,942.
Penn’s 2022 annual report
This week Penn Entertainment published their 10-K, an annual SEC report that outlines the company's business and financial condition. In it, the company reported a final 2022 revenue of $6.4 billion and notes total assets of $17.5 billion on its balance sheet. Also reported were the company's recent acquisitions of two competitors, Score Media and Gaming, Inc and Barstool Sports, for $2.1 billion and $388 million respectively. Penn additionally detailed company stock buybacks of roughly $539 million during the 2022 fiscal year.
What are stock buybacks?
Stock buybacks are when a company buys back stock from shareholders rather than using their profits to invest in workers, or on projects like casino redevelopments. When the stock is bought back it lowers the supply of outstanding shares, thereby increasing demand for the stock and artificially raising its price. Company executives have every incentive to do stock buybacks since most of their compensation, including in the case of Penn Entertainment, derives from stock, so a higher stock price makes them personally richer.
The prevalence of stock buybacks have exploded over the last decade, but it hasn’t always been this way. In fact, up until 1982 when the SEC relaxed rules around stock buybacks, they were considered to be market manipulation. Now, 40 years later, studies show that around 75% of corporate profits are being used for stock buybacks in non-financial companies, contributing to the stagnation in worker wages and skyrocketing income inequality.
Aurora Casino Move
The reports come just months after the Aurora City Council approved $68 million in public subsidies for Penn Entertainment to move the Hollywood Casino in Downtown Aurora from its current location on the river, to land out by the Outlet Mall on Farnsworth Ave. The $68 million includes $8 million the city used to purchase the land for the Casino site, $2 million the city spent to demolish the former buildings, $50 million in municipal bonds directly to the company, and $8 million in financing costs related to the bond.
The city approved this deal despite push back from hundreds of Aurora residents who signed petitions and voiced concerns about the taxpayer subsidies, lack of traffic studies that had been conducted on the Farnsworth corridor, and concerns about the Casino choosing to move just as the TIF district they were already under was set to expire. The move means that the East Aurora school district will never receive the funding that the community was promised when the casino moved in in 1993.
City officials sold the deal by telling residents that Penn would be fully responsible for paying for the municipal bond issued and all financing costs, so the agreement wasn’t a subsidy. However, a closer look at the details of the deal shows that while the company is technically paying off the costs of the bond, they are doing this through funds from the new TIF district that they are receiving again at the Farnsworth location. That means that the funding the City of Aurora, local school districts, park districts, and other taxing bodies should be receiving from the property tax payments of the Casino, is instead being diverted to pay for the redevelopment.
The city couldn’t give Penn $68 million directly or residents would have been furious. Instead they gave the company $10 million in free land and then created a loophole in the deal that allowed the city to make the $58 million bond subsidy more palatable to residents through confusing terms and opaque tax agreements.
As recent reports show the company had $2.5 billion for buying competitors, $539 million to enrich shareholders, and $65 million to make its CEO one of the most overpaid executives in America, the question for many residents continues to be:
“Was this the best deal Aurora could get?”
As You Sow CEO Report: click here
Penn Entertainment 10-K Filing: click here
Roosevelt Institute Stock Buyback Fact Sheet: click here