Automatic Data Processing Inc. rejected activist investor Bill Ackman's nominees for the board of directors, saying his candidates are no improvement on the current board and setting the stage for a proxy battle at the payroll and human resources outsourcing provider.
ADP will instead nominate its 10 existing directors for re-election at the annual meeting later this year, the company said in a statement Monday. In spurning Ackman's candidates, the board voted unanimously to follow the recommendation of its nominating and corporate governance committee, according to the statement.
“We have determined that adding Mr. Ackman's nominees would not be an improvement,” ADP Chairman John Jones said in the statement. “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.”
Ackman's Pershing Square Capital Management this month unveiled an 8.3% stake in ADP and began a campaign to shake up the outsourcing giant. He has proposed himself, Veronica Hagen and Paul Unruh for the board. A representative for the New York hedge fund wasn't immediately available for comment.
Ackman said in a 3 1/2-hour webcast Thursday that his push for change at ADP has been met by hostility from management and skepticism from analysts. The billionaire investor's criticisms centered on the inefficiencies and lack of innovation at the company as a result of its “buy not build” strategy for expanding its offerings, a lack of integration of those acquisitions, and what he claimed was a bloated and insular corporate structure.
Ackman said he believed changes at ADP could drive the share price to as much as $255, more than double its current level, by June 2021, and that the company would likely need a new CEO.
ADP has repeatedly rejected Ackman's claims about the company and stood behind CEO Carlos Rodriguez, noting that under his near six-year tenure, the company has returned 202% to shareholders. The company said Monday it was committed to best-in-class corporate governance and that its board, which includes four directors who have joined since 2014, possesses a broad spectrum of relevant leadership skills and experience.
The company's shares have declined about 6% to $104.41 since their close in New York trading on Wednesday, before Ackman's presentation.
Bloomberg News
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