The war of words between Pershing Square Capital Management
founder and chief executive Bill Ackman and his latest activist
target heated up Monday, when the hedge fund firm refuted ADP
CEO Carlos Rodriguezs version of the recent interactions
between the two men.
In a Monday filing with the Securities and Exchange
Commission, Ackman came close to calling Rodriguez a liar in a
response to an e-mail the ADP chief executive inadvertently
sent to Ackman, instead of its intended recipient, ADP general
counsel Michael Bonarti. In that e-mail, Rodriguez said he
didnt believe Ackman was willing to work with him.
Pershing Square disclosed on August 4 that it had taken an 8.3
percent stake in ADP, a $50 billion market-cap global payroll
In response, the hedge fund activist told Rodriguez he had
unfairly characterized their interactions to date in an
effort to make Pershing Squares requests appear
unreasonable to the rest of the Board and the investing
Last week in a CNBC interview, Rodriguez lashed out at Ackman, calling him a spoiled
brat who doesnt understand the company. Earlier,
ADP said Ackman wanted to control ADP with five board seats and
the ouster of its CEO. But on several separate occasions, on
the phone, via e-mail and in person, Ackman had told the CEO he
was willing to work with him, the filing stated.
[II Deep Dive: Ackmans Pershing Square Gears Up for
Battle with ADP]
In the misdirected e-mail, the CEO said he did not find
Ackmans statement credible since it was
conditioned on his having the same view of the
opportunity for ADP as Ackman did, according to the
filing. But according to Ackman, Rodriguez told him days
earlier on a phone call that he understood the issues Mr.
Ackman had raised as well as the opportunity and
need for change at ADP. The activist investor has yet to
detail his vision or research to ADP executives, its board, or
the investing public.
After receiving the e-mail, Ackman wrote back and
assured Mr. Rodriguez of the genuineness and good faith
nature of his e-mail and other communications to date, [and]
expressed his disappointment in the Companys
response, the filing stated.
Just days earlier, Ackman had told ADP chairman John Paul
Jones that he believed the company needed to make
transformation changes to improve the
companys profitability and competitiveness, and that
based on his experience... a CEO recruited from outside
the Company may be necessary to accomplish such a
transformational change, but that Pershing Square was open to
working with existing management if it shared Pershing
Squares view of the opportunity and had the required
skills, according to the filing. Ackman says that he then
told Rodriguez the same thing.
The two CEOs met the next day, on August 3, as Ackman hoped
to avoid a proxy battle to obtain board seats. Pershing Square
asked for an extension on the deadline for nominations to allow
it to meet with the entire board and present its research
and conclusions... and engage in initial discussions without
having to nominate directors.
According to the filing, the ADP execs indicated it would be
hard to get the entire board together in August. Rodriguez,
however, has said Ackman needed the extension because he was
going on vacation.
In the August 3 meeting, Ackman said he was ready to
nominate directors if the deadline was not extended, and the
next day, the company made public its refusal of his extension.
At that time, ADP claimed Pershing Square wanted a 30- to
45-day extension on the deadline, when the hedge fund later
modified its request to one week, the filing
In addition to expressing a willingness to work with
Rodriguez, at no time did Pershing Square seek effective
control of the company, the filing stated. In previous
proxy battles, Ackman has typically proposed minority slates.
After ADP refused its request to extend the deadline for
nominations, last week Pershing Square nominated three
directors, including Ackman, to the ADP board.
Most activist battles have been settled without proxy fights
in recent years, including two of Pershing Squares recent
investments, Chipotle Mexican Grill and Air Products &
Chemicals. (Chipotle did not change its CEO, but Air Products
did.) Ackman said he later suggested Rodriguez contact other
CEOs he has worked with, including former Canadian Pacific CEO
Hunter Harrison, the filing stated. Ackman led a successful
proxy battle at Canadian Pacific, installing Harrison, leading
to a 150 percent increase in the stock price.
Pershing Square, which had a prior investment in ADP, first
began amassing its current stake, most of which has been done
with derivatives, on May 1 of this year. Ackman typically does
extensive research on his investments, often presenting
hundreds of power point slides outlining his thesis to
investors. A webcast detailing its research and proposals for
ADP is planned for Thursday morning.
Ackman is now slated to meet with the ADP board on September