Coverage: Billionaire Ackman loses ADP proxy fight

Activist hedge fund manager William Ackman lost an acrimonious fight to win seats on Automatic Data Processing Inc.’s board via a proxy fight.

Trevor Hunnicutt of Reuters had the news:

It was the latest in a string of public defeats for Ackman, who raised $500 million from investors to take a stake in ADP. Some of Ackman’s backers have told Reuters they are considering pulling their money from his funds.

Fewer than 25 percent of votes were cast in favor of Ackman’s slate of three directors looking to shake up the company in the proxy contest, which became a three-month-long showdown between the billionaire investor and ADP CEO Carlos Rodriguez.

Ackman arrived at the company’s annual shareholder meeting at its Roseland, New Jersey, headquarters looking relaxed. He helped himself to a pastry, then took a seat in the fourth row with his associates, a few feet away from an anxious-looking Rodriguez, seated alone.

The mood changed after the vote tally was announced.

Reading from prepared remarks, Ackman faulted the proxy voting system but accepted defeat. “We came in peace,” he began, later shaking Rodriguez’s hand.

Antoine Gara of Forbes reported that ADP’s stock rose after the vote:

According to ADP, as a group Ackman and two director nominees of his hedge fund Pershing Square Capital Management failed to receive even 25% of support from shareholders at the company’s annual meeting in Roseland, New Jersey. Ackman pencils out a closer result, pointing out his own bid against director Eric Fast yielded 31% support and a further 14% of investors heeded proxy advisor recommendations to support the activist by voting to withhold. Regardless, the vote meant all ten of ADP’s directors were re-elected by big margins despite Ackman’s calls for change in an acrimonious proxy campaign that lasted about three months.

“I would like to thank our shareholders for the vote of confidence in our Board and management team, as well as our talented associates for their hard work and relentless focus over the last several months. We are more energized than ever about building on ADP’s strengths to anticipate and deliver on our clients’ Human Capital Management needs,” said ADP CEO Carlos Rodriguez just after the results of the vote filtered in.

The shareholder spat Rodriguez said, “has sharpened our focus on the importance of insightful, strategic engagement with our investors, which, over the past few months, has given us a greater appreciation of our owners’ perspectives on our business and growth plans.” Shares in ADP, which have risen over 9% year-to-date, gained $1.42 in Tuesday trading and closed at $112.75.

Scott Deveau of Bloomberg News reported that the defeat was shocking to Ackman:

“That’s really shocking,” said Kai Liekefett, partner and head of shareholder activism at Vinson & Elkins, who usually represents companies defending themselves against activist investors. “That might spell the end of Pershing Square and Bill Ackman as we know it. He has had a really difficult run over the last couple of years.”

Ackman was looking for some good news after the crushing loss on Valeant Pharmaceuticals International Inc. and the Chipotle Mexican Grill Inc. setback. While insisting he remains confident about his wager against Herbalife, Ackman said this month that he’s changed his investment from shorting the stock into put options to head off further losses if the shares keep rising.

Liekefett said that Ackman’s three-hour presentations focusing on the minutia of the proxy fight are starting to work against him.

“He gets so much into the weeds that he is apparently incapable of dumbing down his message to a couple of points,” he said.