Hauppauge headquarters of TSR, a computer staffing company. The company's...

Hauppauge headquarters of TSR, a computer staffing company. The company's management has been having a long-running battle with its shareholders, who hold about 49 percent of the stock. Credit: Steve Pfost

TSR Inc., a Long Island staffing company, announced Thursday that its board had adopted a “shareholder rights agreement,” sometimes referred to as a “poison pill.”

Poison pills are adopted by companies to dilute the holdings of unwanted suitors in an effort to fend off hostile acquisition attempts.

The move comes days after members of an investor group that acquired the 41.8 percent stake from TSR founder Joseph Hughes and his wife, Winifred, denounced the company’s moves to pack an expanded board of directors with allies of the chief executive and “further enrich management at the expense of shareholders.”

Shares of TSR closed down 11.5 percent to $7.35 Wednesday. The stock was trading at $4.26 a year ago.

“It’s a good time to be in the staffing business,” said Mitchell O. Goldberg, president of ClientFirst Strategy Inc., a Melville investment firm. “That’s at the heart of this TSR poison pill.”

If the investor group “wants the company badly enough, they’ll have to step up with a price that satisfies the board,” he said.

In a news release Thursday, Hauppauge-based TSR said the board of directors had approved a stockholder rights agreement that would distribute one “right” for each outstanding share of the company’s common stock as of Wednesday.

The rights to buy shares at a discount would become exercisable only if a person or group acquires 5 percent or more of the company’s common stock in a transaction not approved by the board of directors, the news release said. In such a scenario, however, the rights held by the would-be acquirers “will become void.”

TSR chief executive Christopher Hughes became chairman and CEO when his father, Joseph Hughes, retired on July 5, 2017.

In June, Joseph and Winifred Hughes sent a letter to TSR’s board requesting that the company be sold.

The following month they sold their 41.8 percent stake to Manhattan-based Zeff Capital along with partners QAR Industries Inc., based in Mineral Wells, Texas, and Fintech Consulting LLC, based in Iselin, New Jersey. Zeff Capital had 4 percent of shares before the latest transaction.

In a government filing last Thursday, Zeff questioned the expansion of TSR’s board to seven members and its composition including “personal friends” and the sister and brother- in-law of the CEO.

“The board is not acting in the best interests of stockholders,” Zeff said in the filing.

A call seeking comment from Christopher Hughes was not immediately returned.

Daniel Zeff, president of Zeff Capital, said he would have “no comment at this time.”

TSR, founded in 1969, has offices in Hauppauge, Manhattan, and Edison, New Jersey, and provides IT staffing services to the utility, insurance, publishing, pharmaceutical and financial services industries.

Citigroup and Consolidated Edison accounted for 20.7 percent and 15.9 percent of revenues for the fiscal year ended May 31, according to a Securities and Exchange Commission filing. The company had 417 employees as of May 31, according to the filing.

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