ADP Plans SEC Complaint Against Ackman as Proxy Fight Heats Up

By Cara Lombardo Features Dow Jones Newswires

Human-resources software firm Automatic Data Processing Inc., locked in a proxy battle with William Ackman, says it will file a complaint with the Securities and Exchange Commission over what it calls "false and misleading" claims the activist investor made this week.

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ADP said in a statement Tuesday it "strongly rejects" statements made by Mr. Ackman, founder of Pershing Square Capital Management, referring to an 18-page letter he sent to proxy adviser Institutional Shareholder Services on Monday.

His chief claim was that ADP provided ISS "non-public, inaccurate and misleading information, claims and arguments" that prompted the adviser to primarily support ADP's nominees for its board. Mr. Ackman is fighting for board seats for himself and two other nominees in an election scheduled Nov. 7.

In a report last week, ISS recommended shareholders support two of ADP's three board candidates, which would leave an opening for Mr. Ackman but not each of his nominees.

Mr. Ackman said ISS's recommendation referenced ADP's coming release of a new large client platform, which he said hadn't been made public and must have been shared by ADP during discussions with ISS. He also accused ADP of providing misleading information on items such as its labor productivity and operating margin.

ADP rejected his claims Tuesday, saying information it shared during discussions with ISS was based entirely on an investor presentation filed with the SEC last month and other publicly available materials. The investor presentation, for example, referenced a platform it expects to launch in 2018 but didn't include its name, the company said.

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"Mr. Ackman's reckless and unfounded assertions continue to undermine his credibility and are inconsistent with the temperament of a reputable Board member," ADP said in a statement.

A spokesman for Pershing Square declined to comment.

Mr. Ackman took a roughly $4 billion stake in ADP in August. He has argued the company has focused too much on meeting revenue guidance and not enough on developing new technology. With his help, he believes ADP could double its stock value by building up its software capabilities.

ADP has resisted his efforts and rejected his bid for a board seat in August.

Two other proxy advisers, Glass Lewis and Egan-Jones, recommended all of Mr. Ackman's picks last week. Mr. Ackman nominated Veronica Hagen, chief executive of Polymer Group Inc., and V. Paul Unruh, a Symantec Corp. director and chair of its audit committee.

ADP shares, up 14% this year, were little changed in late-morning trading Tuesday.

Write to Cara Lombardo at cara.lombardo@wsj.com

Human-resources software firm Automatic Data Processing Inc., locked in a proxy battle with William Ackman, says it will file a complaint with the Securities and Exchange Commission over what it calls "false and misleading" claims the activist investor made this week.

ADP said in a statement Tuesday it "strongly rejects" statements made by Mr. Ackman, founder of Pershing Square Capital Management, referring to an 18-page letter he sent to proxy adviser Institutional Shareholder Services on Monday.

His chief claim was that ADP provided ISS "non-public, inaccurate and misleading information, claims and arguments" that prompted the adviser to primarily support ADP's nominees for its board. Mr. Ackman is fighting for board seats for himself and two other nominees in an election scheduled Nov. 7.

In a report last week, ISS recommended shareholders support two of ADP's three board candidates for those seats, which would leave an opening for Mr. Ackman but not each of his nominees.

Mr. Ackman said ISS's recommendation referenced ADP's coming release of a new large client platform, which he said hadn't been made public and must have been shared by ADP during discussions with ISS. He also accused ADP of providing misleading information on items such as its labor productivity and operating margin.

ADP rejected his claims Tuesday, saying information it shared during discussions with ISS was based entirely on an investor presentation filed with the SEC last month and other publicly available materials. The investor presentation, for example, referenced a platform it expects to launch in 2018 but didn't include its name, the company said.

"Mr. Ackman's reckless and unfounded assertions continue to undermine his credibility and are inconsistent with the temperament of a reputable Board member," ADP said in a statement.

A spokesman for Pershing Square declined to comment.

ISS said in a statement it has a long-standing policy to not elicit, receive or use non-public information in its research. That process was followed with respect to the pending ADP proxy contest, ISS said, and the company stands by its report.

Mr. Ackman took a roughly $4 billion stake in ADP in August. He has argued the company has focused too much on meeting revenue guidance and not enough on developing new technology. With his help, he believes ADP could double its stock value by building up its software capabilities.

ADP has resisted his efforts and rejected his bid for a board seat in August.

Two other proxy advisers, Glass Lewis and Egan-Jones, recommended all of Mr. Ackman's picks last week. Mr. Ackman nominated Veronica Hagen, chief executive of Polymer Group Inc., and V. Paul Unruh, a Symantec Corp. director and chair of its audit committee.

ADP shares, up 13% this year, were down 0.7% in afternoon trading Tuesday.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

October 31, 2017 14:53 ET (18:53 GMT)