An activist at work: Ackman goes retail to win board seat

After announcing a 2.3bln stake in ADP, Bill Ackman’s Pershing Square was given the cold shoulder by ADP’s management and board. In response, the activist investor has set out to convince the investment community of the opportunity for transformational change at ADP to achieve drastic margin improvement. Taking shareholder activism into a new realm, Ackman has started a very public campaign, also targeting ADP’s large retail shareholder base, to get board representation for himself as well as two independent directors picked by Pershing Square. The vote will take place on November 7th.

After disclosing the stake on August 4th and expressing disappointment with ADP’s decision not to extend the nomination deadline for Pershing’s board nominees, Pershing released a press release announcing that it proposed three directors for election to the board of ADP. In the same release it announced a public webcast on August 17th on which it would describe the results on its 6 month research on ADP. On the 3.5 hour webcast ‘ADP, The Time is Now’ (listening requires registration) ) Bill Ackman presented Pershing Squares detailed research on the company, spending the last half hour on answering questions. ADP responded to the presentation only two hours later dismissing Ackman’s plan to address the company’s shortcomings and to maximize value for all stakeholders.

On September 5th representatives of Pershing Square met with the ADP Board to present Pershing Square’s views (see executive summary here) and on September 12the ADP filed an investor presentation defending its strategy and objecting against Pershing Square’s plan and board nominees. This was followed the next day by a response of Pershing Square which regarded ADP’s presentation as additional evidence that ADP’s Board and management are perfectly comfortable with the status quo.

The back and forth has continued with Ackman detailing his views on CNBC and in various letters and presentations to shareholders. On October 10th Ackman held another live webcast, this time addressing ADP’s large retail shareholders base followed by another detailed presentation on October 11th.

Pershing Square has launched a dedicated website which contains all the materials relating to its ADP campaign which can be found here: www.adpascending.com.

The vote will take place at the annual meeting of shareholders on November 7th. So far investors have profited with the share price gaining 10% since word came out about Pershing’s involvement.