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ADP has issued a press release to confirm that all three of Pershing Squares candidates were unanimously rejected by ADP’s Board Nominating/Corporate Governance Committee. This means that the candidates will not be put forward for nomination at the Annual shareholder meeting. This may be a blow, but probably not unexpected to Williams Ackman. Those three were Ackman himself, Veronica Hagen and Paul Unruh. It is also a sharp rejection of the Pershing Square analysis of the state of ADP.

The unanimous vote gives an indication that Ackman has not managed to convince existing committee members that change is warranted. At least not with outside interference. What will be interesting is whether, as the last time Ackman made noises, ADP will subtly change some of its strategy to address those issues it sees as genuinely valid.

Status Quo maintained

This means that ADP will nominate the existing board members for re-election at the 2017 annual meeting. The existing members are: Peter Bisson, Richard T. Clark, Eric C. Fast, Linda R. Gooden, Michael P. Gregoire, R. Glenn Hubbard, John P. Jones, William J. Ready, Carlos Rodriguez, and Sandra S. Wijnberg.

ADP argued, in the release, that the average tenure of these directors is less (6.8 years) that of the S&P 500 average (8.3 years). John P. Jones, Non-Executive Chairman of the Board commented: “The ADP Board has been regularly focused on director refreshment and adding important skills and experience to our Board. However, we have determined that adding Mr. Ackman’s nominees would not be an improvement. ADP’s independent Board includes the right balance of leadership continuity and fresh perspectives, as well as technology, operational and financial expertise, to continue our strong track record of shareholder value creation.

“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. ADP has taken a number of important steps to thoughtfully and prudently transform our organization and culture to drive global growth in the evolving Human Capital Management market, while delivering for our clients and generating outsized returns for shareholders.”

What does this mean

In theory ADP should have spoken to other key shareholders to gauge their concern. As at the last filing (before Pershing Square invested) the top three shareholders were Vanguard Group In, BlackRock, Inc and STATE STREET CORP. If it has then it should be forewarned about any rebellion that might happen at the next meeting. One assumes that in rejecting these candidates ADP feels in a strong position going into that board meeting. The question is, what will Pershing Square do next. Having unveiled the analysis about the company for competitors to see, will Ackman weaken ADP any further, does he have anything further to reveal? It will be interesting to see what happens next.

As of writing this article there was no formal response from Pershing Square, either on their website or on



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