ADP Rejects Ackman's Nominees to Board -- WSJ

By Cara Lombardo Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 22, 2017).

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Automatic Data Processing Inc. board members have rejected activist investor William Ackman's bid for a board seat and those of two other people nominated by his firm, Pershing Square Capital Management LP.

ADP's board instead plans to nominate its 10 existing directors for re-election, leaving Mr. Ackman to plead his case for board seats directly to investors.

Pershing Square, which owns an 8% stake in ADP, earlier this month tapped its founder, Mr. Ackman, for a seat on ADP's board, along with Veronica Hagen, the former chief executive of materials company Polymer Group Inc., and V. Paul Unruh, a former Bechtel Group executive.

But ADP board members voted unanimously to reject all of them, announcing Monday morning that its nominating committee "determined that none of the Pershing Square nominees bring additive skills or experience."

Mr. Ackman fired back in a statement Monday afternoon. "The fact that the board believes that the company's largest owner with an 8.3% stake does not deserve even one board seat speaks to their insularity and lack of shareholder perspective," he said. "By contrast, the cumulative ownership of the board including the company's CEO is less than 0.09% of shares outstanding."

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Mr. Ackman has repeatedly clashed with ADP Chief Executive Carlos Rodriguez, whom he would like to see replaced.

Mr. Rodriguez earlier this month called Mr. Ackman a "spoiled brat" during an appearance on CNBC.

"Adding Mr. Ackman's nominees would not be an improvement," said John Jones, chairman of ADP's board. "Unlike Mr. Ackman's nominees, ADP's directors have a deep understanding and appreciation of the current state of ADP's business and its clients."

Mr. Ackman, who is known for aggressive tactics but typically gains board seats through negotiations rather than proxy fights, said last week that ADP's stock value could more than double by 2022. He thinks the company needs to build its own capabilities rather than buying them to prevent startups from further encroaching on its market share.

The board's rejection of Mr. Ackman's bid doesn't come as a surprise. Shortly after the nominations were announced, ADP took the unusual step of disclosing demands Mr. Ackman had made privately and said in a statement it believes it already has a "strong and independent board."

After Mr. Ackman presented his ideas for ADP last week on a conference call lasting several hours, the company issued another stinging statement. "We strongly disagree with many of the assertions made by Mr. Ackman in today's presentation, which betrays a fundamental lack of understanding of the current state of ADP's business and strategy."

(END) Dow Jones Newswires

August 22, 2017 02:47 ET (06:47 GMT)