Activist investor Bill Ackman, the CEO of $10 billion Pershing Square Capital Management, lost his three-month long proxy fight with Automatic Data Processing (ADP) on Tuesday.
Ackman, whose fund holds an 8.3% stake in ADP, had been waging a proxy contest against ADP management to get three new directors on the board, including himself. In his lengthy analysis, Ackman had characterized ADP as “one of the least efficient big companies and one that’s “vastly underperforming its potential.”
ADP had pushed back on Ackman and Pershing Square’s ideas. The company’s management had characterized the hedge fund manager’s views as “extreme and ever-changing” and said that they “would put the business at risk.” In an interview with CNBC early on in the fight, ADP CEO Carlos Rodriguez went as far as to call Ackman a “spoiled brat.”
“We were greatly disadvantaged”
At the company’s annual meeting on Tuesday, shareholders decided to re-elect all ten of ADP’s directors to the board. Pershing Square’s nominees garnered less than 20% of the votes from ADP’s outstanding shares and less than 25% of the votes at the meeting.
“We were greatly disadvantaged in this contest because ADP did not permit the use of a universal proxy card where each shareholder could choose which directors it wanted to represent them on one proxy card,” Ackman wrote in a statement shortly after.
Shareholders could vote a gold card to support Pershing Square or a white card to support ADP.
“As a result, while we received the support of all the proxy advisory firms, one chose to ‘facilitate’ my election by recommending a withhold vote for one director on the management proxy card. It did so in order to decrease the likelihood that our two other nominees would get elected. This likely cost us the election. Had there been a universal card, this firm would have simply recommended a vote for me and I would likely have been elected,” Ackman wrote. “It is incumbent upon all investors to insist that companies use a universal proxy card in each shareholder election to make sure that shareholders can easily select the directors they wish to represent them.”
This isn’t over
Ackman had previously told Yahoo Finance that even if the contest didn’t go in Pershing Square’s favor that they would remain a long-term shareholder.
“Over the last three months, we have helped ADP shareholders understand what the company’s associates already know very well. ADP needs to improve its technology, its enterprise product offerings, and its culture,” Ackman wrote on Tuesday. “A 90-day proxy contest is a wake up call for every management team, and our large investment of time and money in this contest has already benefited all ADP stakeholders not only because billions of dollars of shareholder value have been created.”