FILE PHOTO: Bill Ackman, CEO of Pershing Square Capital, speaks at the Wall Street Journal Digital Conference in Laguna Beach, California, U.S., October 17, 2017. REUTERS/Mike Blake/File Photo
October 25, 2017
By Svea Herbst-Bayliss
BOSTON (Reuters) – Proxy advisory firm ISS on Wednesday threw its weight behind the board of Automatic Data Processing Inc, recommending that shareholders largely vote for management’s directors instead of the slate proposed by activist hedge fund manager William Ackman.
ISS is the third influential proxy firm to release its report this week on the vote and broke with Glass Lewis and Egan-Jones which both recommended electing Ackman and his recommended two dissident directors.
“ADP does not seem to be a company in need of major course correction,” ISS analysts wrote in their report, noting however that Ackman, the billionaire investor, has skills that would be useful on the board.
“The dissident has made the case that additional shareholder oversight on the board would be beneficial. However, the dissident case is not sufficiently compelling to justify replacing three directors,” the report said.
However, ISS recommended that shareholders withhold their votes for incumbent ADP director Eric Fast, who chairs the audit committee, blaming him for some of the company’s “opaque” disclosures. By not voting for Fast, room could be made for Ackman on the board.
Since August the human-resources software company has been embroiled in a bitter fight with Ackman’s Pershing Square Capital Management over the company’s future potential. Ackman has criticized it for being inefficient while the company has said it is already working on improvements and that Ackman’s ideas are too late.
Shareholders vote on November 7 and both sides are criss-crossing the country to line up support from large institutional investors and small retail owners alike.
While ISS said Ackman failed to make the case to replace three directors, it was complimentary about the skills he would bring to the boardroom.
“Given his broad experience as a director, his large exposure to ADP stock, and the fact that as only one of 10 directors he would be forced to bring others to his camp through persuasion rather than force,” ISS wrote.
Ackman’s firm has an 8.3 percent economic stake of which 2.0 percent are in common shares. He can vote only the common shares.
(Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)