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Shareholder wants Insperity to look at sale, board change

April 28 2014

An Insperity shareholder, Stadium Capital Management, last week called for C-suite to look into the possibility of selling the company and a change to the makeup of the board, according to a filing with the U.S. Securities and Exchange Commission.

Stadium Capital Management reported it owns approximately 9 percent of the Texas-based professional employer organization and claimed the company was undervalued “because of both poor operating performance and severe corporate governance failures.”

In the letter, Stadium called for Insperity’s board to:

  • “Explore strategic alternatives such as selling the company.”
  • “De-classify the board.”
  • “Appoint three new directors designated by Stadium, with one of the three to become a truly independent chairman.”
  • “Immediately eliminate personal use of the company’s aircraft by executives and spouses. Establish a board committee to evaluate the company’s travel expenses and costs and benefits to the shareholders of owning and operating two enormous jets.”
  • “Change compensation agreements for management so that annual cash bonuses are more difficult to achieve and stock awards are subject to performance-based vesting, making them more aligned with shareholder value creation.”
  • “Deploy excess capital in the most advantageous manner for shareholders. Insperity has significant excess cash that it should immediately use to repurchase large amounts of stock. Not doing so suggests that the board lacks confidence in the company’s prospects and/or management’s ability to generate shareholder value.”

Insperity leadership responded with its own letter saying Stadium’s announcement was rife with inaccuracies and mischaracterizations.

In response, the company argued:

  • “Despite being a stockholder since 2004 (and a major stockholder since 2008) and a long history of open dialogue, Stadium Capital first raised these concerns in the past few weeks.”
  • “During recent discussions, Stadium Capital focused upon the number of seats that it could obtain on the Board and not on the other issues that were raised in its letter.”
  • “Despite making allegations of governance failures at Insperity, Stadium Capital demanded to circumvent important corporate governance policies and procedures designed to protect the interest of all stockholders.”
  • “Stadium Capital rejected the Board’s offer to add a Stadium Capital employee and another new independent director, potentially from another large stockholder, to the board.”

Stadium released another letter today in response to Insperity.

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