Glass Lewis recommends ADP investors vote for Ackman's
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 [October 24, 2017]
By Svea Herbst-Bayliss
BOSTON (Reuters) - Proxy advisory firm
Glass Lewis recommended on Monday that Automatic Data Processing Inc
shareholders vote for all three dissident directors proposed by activist
investor Bill Ackman.
Glass Lewis, whose clients are large institutional investors, is the
first advisory firm to issue its findings before the Nov. 7 vote, where
shareholders will decide among candidates from the human resource
software company and Ackman's hedge fund, Pershing Square Capital
Management.
Ackman is pushing ADP to become more efficient and expand its margins,
something the company says is possible only if it eliminates thousands
of jobs. The hedge fund manager has said he and two other directors can
bring a fresh perspective to the 10-member board, but the company has
said the three nominees have not suggested anything it has not already
looked at.
"We strongly disagree with Glass Lewis’ recommendation, which does not
take into account the significant business risk inherent in Pershing
Square's margin expansion target nor the negative impact it would have
on client retention and ADP’s overall business," the company said in a
statement.
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Bill Ackman said in a statement that he was "extremely pleased to
receive such a strong endorsement from Glass Lewis."
Glass Lewis wrote that recent returns and operational performance were
not as strong as ADP claims.
"We believe the Company's supposed rebuttals of the substance of
Pershing Square's case either miss the point or actually result in
further validating the Dissident's argument," the firm's report said.
Glass Lewis also said the company had lost business to competitors that
can "generate superior profit margins and returns at the expense of ADP
and its shareholders" as a result.
"The board’s stated operational and financial plan strikes us as being
inadequate and underwhelming given the substantial opportunity
thoroughly detailed by Pershing Square," Glass Lewis said in the report.
Institutional shareholders do not necessarily act on a proxy advisory
firm's recommendations, but Glass Lewis' support should help Ackman as
he visits large investors to lay out his case.
Pershing Square has an 8.3 percent stake, but less than a quarter of
that is in common shares, the only stock it can vote.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Von Ahn)
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