PENN Entertainment Inc

We maintain a long-term incentive program (LTIP) for our executive officers to encourage an ownership mindset and incentivize long-term value creation. The long-term incentives are delivered through a combination of time- and performance-based awards. Performance-based equity awards motivate progress toward our strategic and operational priorities that are critical for our ability to create long-term shareholder value. Both time- and performance-based awards are tied to our stock price value and vest over three- and four-year periods, respectively, to incentivize executives to drive sustained value creation by successfully executing a range of strategic initiatives that advance our long-term growth priorities.

Each fiscal year, the Compensation Committee determines an aggregate target value for the time-based and performance-based portions of the annual LTIP award for each executive officer, which in 2023 were below (but generally within a competitive range of) the median target opportunities, and which were generally consistent with incentive program design prevalence among the Company’s peer group, as well as broader industry and market standards and best governance practices.

Due to the transformational nature of our omnichannel growth strategy, at the beginning of 2023 the Compensation Committee determined that it was not feasible to forecast reliable three-year performance targets for the full 2023-2025 performance cycle. To maintain the rigor of the compensation program and effectively incentivize progress toward our strategic priorities, the Compensation Committee maintained the historical practice of setting annual performance targets for each year of the three- year performance cycle under the 2023 performance-based equity grant under the LTIP program. To foster alignment with our shareholders, any earned shares were subject to service-based vesting requirements through the end of the three-year performance cycle.

For 2024, in response to the input of our shareholders in the shareholder engagement sessions following our 2023 Say-on-Pay voting and given our recent transformational alliance with ESPN, the Compensation Committee determined to update the design of our long-term performance program by introducing a three-year cumulative performance period and to allocate a 70% weighting to financial metrics, with the remaining 30% weighting allocated to strategic operational metrics.

In light of the new design applicable to the 2024 performance-based equity awards, the Compensation Committee approved a cumulative two-year performance period for the 2024 – 2025 outstanding portion of the 2023 performance-based equity awards, instead of two one-year performance periods, and determined that this two-year performance period should utilize a performance metric structure that reflects a 70% allocation to financial performance measures and 30% allocation to strategic operational metrics. The third and final tranche of the 2022 performance-based equity awards will similarly be based on 2024 performance using this same 70% financial and 30% operational metric weighting, but with the remaining one-year performance period.

EXECUTIVE COMPENSATION