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Automatic Data Processing (ADP): “Spoiled Brat” Bill Ackman Threatened Company With Damaging Media Coverage

New details emerged this week regarding the intense spat between Bill Ackman and Automatic Data Processing (NASDAQ:ADP). ADP CEO Carlos Rodriguez told CNBC earlier this month that the billionaire manager of hedge fund Pershing Square reminded him of a “spoiled brat”.

Ackman reportedly pushed for an extension to the company’s deadline for the nomination of candidates to its board, citing his pending vacation as a reason why he couldn’t meet the deadline. In new details revealed in a proxy filing issued by ADP this week, Ackman was asked by Rodriguez if he seriously expected a Fortune 500 company to change its published deadline for the sake of not interfering with Ackman’s vacation plans, to which he replied that he was “dead serious”.

Ackman reportedly sought an extension to avoid the appearance of being in a “war” with the company, while also claiming that he needed the leverage of a possible proxy contest to get his way. Furthermore, he reportedly stated that if an extension was not granted, he would file his nominations together with a 13D on the following Monday, at which point he would be committed to a proxy fight, threatening to use his ability to generate media coverage in a way that could be damaging to the company, its shareholders, and its clients if that came to pass.

Pershing Square told CNBC in a statement that at least some of that alleged correspondence was “totally false”. Pershing Square owns an 8.3% stake in Automatic Data Processing (NASDAQ:ADP), consisting of 36.8 million shares. It began amassing the position in the second-quarter, reporting a new position of 1.75 million shares as of June 30 in its latest 13F.

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Pershing Square issued a 210-minute long, 167-slide presentation on Automatic Data Processing (NASDAQ:ADP) on August 17, detailing the company’s underperformance in relation to peers and the steps it could take to overcome it, suggesting the company could double in value by implementing Pershing Square’s transformation plans.

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The payroll processing company’s shares have gained 16% over the past year and 79% over the past five years, and Rodriguez took issue with the assertion that it had underperformed, stating that shareholders have enjoyed total returns of over 200% during his six-year tenure as CEO, 74 percentage points greater than the S&P 500’s total return and 173% better than Pershing Square investors’ total return (cue thug life shades).

In a press release issued on August 21, the hedge fund took umbrage with the fact that the company issued a press release of its own just two hours after Pershing Square’s presentation was released, summarily dismissing it in its entirety as being nothing which the company and its board had not already analyzed. The company’s Nominating/Corporate Governance Committee unanimously voted to reject Pershing Square’s three nominees, one of which was Ackman himself, stating that they would not bring any additive skills or experience to ADP’s board.

“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, and what it takes to successfully execute on our ‘All in on HCM’ strategy,” the company’s Non-Executive Chairman of the Board John P. Jones was quoted in the press release.

Animosity aside, the two sides are slated to have a meeting in early-September.

Disclosure: None

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