Automatic Data Processing Inc. has rejected calls from Bill Ackman’s Pershing Square Capital Management, which is seeking “effective” board control and is lobbying to oust the outsourcing company’s chief executive officer.
Pershing Square is seeking five seats on ADP’s 10-member board at its annual meeting this year, ADP said in a statement on Friday. Ackman has also said that CEO Carlos Rodriguez should be replaced, the Roseland, New Jersey-based company said. The statement comes after Bloomberg reported last week that Ackman had built a stake in the firm.
Ackman first contacted ADP on Aug. 1 and said his firm owned an 8 percent stake, largely in derivatives, according to the statement. The billionaire activist has also asked ADP to extend the Aug. 10 deadline for director nominations by 30 to 45 days, which the company’s board has rejected.
“We believe our current board has an effective balance of leadership continuity and fresh perspectives that will help us to continue this strong track record of delivering value to shareholders,” ADP said. The company also defended Rodriguez and said investors have been rewarded with a total return of 202 percent -- assuming they reinvested dividends and held on to shares of a unit that was spun off -- during his nearly six years at the helm.
A representative for Pershing Square declined to comment.
Ackman met with ADP’s leadership this week and said he had a new CEO in mind, people familiar with the matter said. The talks focused on how to make ADP more nimble and quicker to adopt new technology, helping them compete with smaller competitors, the people said, asking not to be identified because the matter is private. The investor is also planning to push for margin improvements, and didn’t mention plans for a major financial overhaul, they said.
ADP shares rose 1.3 percent to $113.23 in New York trading at 9:45 a.m. The shares have gained about 9.7 percent this year, valuing the company at $50.5 billion. ADP manages services including payroll, human resources and taxation for corporate clients. It also provides monthly U.S. employment data through its research institute.
Previous Holding
The company said last month that it’s anticipating revenue growth of 5 percent to 6 percent in 2018 and adjusted earnings per share to rise 2 percent to 4 percent. That compares to 6 percent sales growth for the fiscal year ended in June when the company reported $12.4 billion in sales.
It’s not the first time Pershing Square has pushed for changes at the company. Ackman previously owned shares in ADP from 2009 to 2011, according to data compiled by Bloomberg. The last time Ackman invested in ADP he agitated for changes including spinning off non-core assets and rationalizing the balance sheet.