ADP To File SEC Complaint Against Ackman As Proxy Battle Rages

Oct 31 2017 | 8:34pm ET

Automatic Data Processing, locked in an increasingly bitter proxy battle with Bill Ackman’s Pershing Square Capital Management, has strongly refuted several recent assertions made by the activist hedge fund manager and said it would be filing a complaint with the Securities and Exchange Commission about the “false and misleading” claims.

ADP released a statement Tuesday in which it took issue with Ackman’s Monday filing of an 18-page filing with proxy advisor Institutional Shareholder Services and rejected the allegation that the human resources giant provided “non-public, inaccurate and misleading information, claims and arguments" on which ISS’s decision to largely back two of ADP’s three-candidate board slate was based. 

Last week, ISS suggested shareholders support giving one board seat to Ackman. Two other proxy firms, Glass Lewis and Egan-Jones, endorsed Ackman's picks last week. 

Ackman Pershing Square’s launched its activist campaign against ADP in early August. The hedge fund owns some 8.3% of ADP’s stock (worth around $4 billion) and ratcheted up its campaign since late summer. In a conference call defending his positions on the company, Ackman said he thought ADP’s stock could double in five years if the company adopted a range of measures including cost cuts, better business unit integration, investments in technology and monetization of real estate. 

ADP has strenuously objected to Ackman’s characterizations, saying many of his suggestions are already underway at the company and that company performance has been strong in both absolute and relative terms. The battle has become heated at times, with ADP CEO Carlos Rodriguez saying on CNBC that Ackman reminded him of a “spoiled brat.”

"ADP will be submitting a complaint with the SEC regarding Mr. Ackman's false and misleading statements in yesterday's press releases and letter to ISS.” ADP said in the statement released on Tuesday. “Mr. Ackman's reckless and unfounded assertions continue to undermine his credibility and are inconsistent with the temperament of a reputable Board member." 

The ADP board election is scheduled for November 7.

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