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Starboard Value At Insperity ($NSP): 2 Board Seats, Bye Bye Corporate Jets

|Includes: Insperity, Inc. (NSP)

Insperity Inc. ($NSP) waved the white flag earlier this week in the proxy battle against Starboard Value. The personnel outsourcing company will back Starboard's two candidates for the board and increase its board count from eight to ten.

Jeff Smith's activist fund owns about 13% of Insperity and has been urging the company to sell itself, noting that its underperformance has been related to poor capital allocation and cost management.

As part of the Starboard Value win, Insperity will be selling its private jets and form an advisory committee. Recall when we noted,

"...Two extremely large corporate jets that NSP owns. Starboard estimates the total variable costs and capital costs of maintaining these aircraft to be approximately $10.5 million per year, or more than 15% of LTM EBITDA. At Insperity's current 8.8x EV/EBITDA multiple, this implies that management could improve the value of the Company by over $92 million, or approximately $3.65 per share, by simply discontinuing the use of these jets and eliminating this seemingly egregious expense. In addition, we estimate that, if sold, the sale proceeds from these jets would exceed $35 million, or an additional $1.38 per share of value."

The new committee will make recommendations how can Insperity can improve capital allocation and cut expenses -- sitting on the committee will be the two Starboard board nominees and two independent directors.

Prior Starboard-$NSP coverage:

Jan. 26, Activist Investor Tees Up Insperity ($NSP) For A Buyout

Jan. 21, Starboard Value's Letter To Insperity

Originally posted at stockpucker, here