If successful in his proxy fight, Ackman will be able to name three members to ADP’s board, putting the current executive team and strategy in jeopardy. He went on CNBC yesterday to say Pershing Square needs those director seats because ADP is “very inefficient.”
ADP’s “margins are half of [rival firm] Paychex’s,” according to Ackman, blaming what he said is the company’s lagging technology.
The management team“strongly rejects the false and reckless claims made by Pershing Square throughout the proxy contest,” according a company statement. “ADP is continuing to execute on a technology-driven transformation.”
“Greed is good”
This all comes to a head next week at ADP’s annual shareholder meeting. Usually, these are formalities in which stockholders mail in ballots to reelect the current board members. But every now and then, you get a showdown right out of Gordon Gekko’s greed-is-good scene in the 1987 movie Wall Street. This is going to be one of those.
Who’s going to win depends on who’s going to count the votes. Shareholders mail those ballots to firms, called proxies, who represent their interests. Some proxies aligned with management and others with Pershing Square . By the way, there’s no law saying they have to vote for who they said they’re going to vote for. Ackman will very likely get to sit on the board himself. But it’s up to the proxies to determine whether his two allies get to pull up seats next to him.
