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Ackman's ADP proxy battle nears climax with investor vote tally

[November 07, 2017] By Trevor Hunnicutt and Svea Herbst-Bayliss

ROSELAND, N.J. (Reuters) - The fierce proxy battle between activist hedge fund manager William Ackman and the leadership of Automatic Data Processing Inc <ADP.O> will come to a close on Tuesday when an official vote tally is announced at the payroll processor's annual shareholder meeting.

For three months, Ackman and ADP have traded increasingly bitter barbs through securities filings, television appearances, conference calls, webcasts and private meetings with investors.

Ackman contends that management complacency has turned ADP into an inefficient corporate slugabed pushing outmoded products that even a top sales force could not sell. ADP has countered that Ackman brings no new ideas to the table, risks disrupting the company's steady path to growth and behaves like a "spoiled brat."

The 51-year-old billionaire is asking ADP shareholders to approve his proposal to seat three new directors, including himself, and oust three others, including Chairman John Jones. He has also suggested Chief Executive Carlos Rodriguez is the wrong person for the job, and called for the departure of ADP's technology chief, Stuart Sackman.

Ackman has been trying to sell his message to institutional stockholders as well as retail investors, and got a lift from major proxy solicitors, which all support at least him joining the board. Ackman has said he expects to win, but the outcome to be close.

Large funds managed by firms like The Vanguard Group Inc and BlackRock Inc <BLK.N> typically cast votes ahead of annual meetings. The final tally will be announced during the event at ADP's headquarters in Roseland, New Jersey, which Ackman said he plans to attend.

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William 'Bill' Ackman, CEO and Portfolio Manager of Pershing Square Capital Management, speaks during the Sohn Investment Conference in New York City, U.S., May 8, 2017. REUTERS/Brendan McDermid

Ackman's Pershing Square owns almost 2 percent of ADP's common shares, making it the seventh-largest voting shareholder, according to Thomson Reuters data. When counting unexercised options, the value of the stake is roughly $2.3 billion.

Ackman launched the ADP proxy contest as an underdog, taking aim at a company engaged in the unglamorous business of providing human resources technology and largely backed by Wall Street. ADP's share price has more than doubled under Rodriguez's tenure, and the company has posted relatively solid earnings growth.

The stock has risen 5 percent since the first reports of Ackman's stake on July 27, suggesting that investors see further upside to his involvement. The stock fell 0.8 percent on Monday to close at $111.33, below the all-time high of $121.77 it hit on July 31.

Ackman has come under pressure from some of his own investors after a string of disappointing performance and a sour outcome with some of his high-profile bets lately.

However, he said as recently as Monday that he will not exit the ADP investment if the shareholder vote goes against him. Instead, he has said he plans to agitate for change loudly and publicly from the outside.

(Reporting by Trevor Hunnicutt in Roseland, New Jersey and Svea Herbst in Boston; Additional reporting by Ross Kerber; Writing by Lauren Tara LaCapra; Editing by Bill Rigby)

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