Ackman: Interactions With ADP Chief Rodriguez 'Unfairly Characterized'

Aug 14 2017 | 11:56pm ET

Pershing Square’s looming proxy battle with payroll processing firm Automatic Data Processing took a new turn Monday as the activist hedge fund said in an SEC filing that ADP had “unfairly characterized” the interactions between Pershing Square CEO Bill Ackman and ADP chief Carlos Rodriguez.

Pershing Square disclosed an 8.3% stake in ADP two weeks ago and last week nominated three people – including Ackman – to the company’s board after being rebuffed in efforts to delay the nomination deadline. In its filing Monday, Pershing provided a detailed account of its interactions with ADP management, including stating that Rodriguez mistakenly sent an email August 6 to Ackman that was originally intended to go to ADP’s general counsel, Michael Bonarti, forwarding an email from Ackman stating he was willing to work with Rodriguez. 

Following the disclosure of Pershing stake, ADP publicly described Ackman as “seeking effective control of the company” and initially requesting a 30-45-day extension of the proxy deadline. In the filing Monday, Pershing noted that it had modified its request for only a one-week extension. 

Pershing Square is scheduled to make its case about ADP on August 17.  In the meantime, the filing revealed more about Ackman’s investment thesis. “While the company has enjoyed a decades-long, leading market position and produced good historical results…ADP has been too slow to adapt to a rapidly evolving and highly competitive marketplace,” the Schedule 14A reads. “We believe that ADP can meaningfully improve its operating performance by improving the quality of its software and service offerings, significantly reducing operating costs, and increasing efficiency, which will accelerate growth and significantly improve profit margins.”

Importantly, the filing also noted that, “The board has not sufficiently challenged management to achieve ADP’s true potential and has not held management accountable for the Company’s underperformance relative to its competitors,” a statement sure to raise the ire of ADP given the company’s total shareholder return of 202% in the last six years, well in excess of the S&P 500’s gain of 128% over the same period. 

 ADP’s annual meeting is in November.

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