Pershing Square's Ackman Defeated In ADP Proxy Battle

Nov 8 2017 | 12:00am ET

Bill Ackman’s bruising proxy battle with Automatic Data Processing ended in defeat Tuesday as the activist investor’s bid to gain three board seats at the company was soundly rejected by ADP shareholders. 

Ackman Pershing Square’s launched its activist campaign against ADP in early August. The hedge fund owns some 8.3% of ADP’s stock and had ratcheted up the rhetoric since late summer. In a conference call defending his positions on the company, Ackman said he thought ADP’s stock could double in five years if the company adopted a range of measures including cost cuts, better business unit integration, investments in technology and monetization of real estate. 

For its part, ADP has chided Ackman’s recommendations, saying many of his suggestions are already underway at the company and that it has perfomed very well in both absolute and relative terms. The battle became heated at times, with ADP CEO Carlos Rodriguez saying on CNBC that Ackman reminded him of a “spoiled brat.” Last week, ADP said it would be filing a complaint with the SEC regarding Pershing Square statements made in correspondence with proxy firm ISS.

Ackman’s board nominees reportedly received votes from less than 20% of shares outstanding and less than 25% of the shares voted at the meeting, according to CNBC citing preliminary vote counts. Two of ADP’s biggest shareholders, Vanguard and State Street, are said to have voted for ADP's nominees, while BlackRock sided for Ackman’s picks. All of ADP’s ten directors were re-elected. It was, as ADP CEO Carlos Rodriquez described it, an “ass-whooping.”

ADP’s stock price closed Tuesday up 1.2% at $112.75, up nearly 9% for the year to date and likely handing Ackman a sizeable profit regardless of the proxy outcome.

Nonetheless, the vote was a public rebuke of the high-profile activist, who has been looking for a win since a $4 billion bloodbath with Canadian pharmaceuticals giant Valeant and Ackman’s long-suffering short position on Herbalife. He reportedly raised $500 million for the ADP stake, and Reuters reported Tuesday that prior to the vote, several of Ackman’s investors said the outcome would “affect their confidence in his investment ability.”

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