Ceridian Sacks Division Chief

Human resources outsourcer Ceridian (CEN) fired Gary Krow, president of its Comdata payment processing business division, for allegedly holding unauthorized discussions with a hedge fund that is pushing management to sell the unit.

Ceridian said Jim Burns, president of Ceridian International, has been named interim president of Comdata, effective immediately.

The move follows a decision in a related lawsuit that denied Pershing Square Capital access to internal communications between Ceridian executives, including Krow, and the company's board. Judge William D. Chandler of the Delaware Chancery ruled that forcing Ceridian to provide access to letters that exposed confidential information could hinder communications between board directors and executives.

But Chandler did hold that Krow violated the company's code of conduct by describing the internal communications to William A. Ackman, Pershing's portfolio manager.

Sacking Krow is the latest salvo in an escalating battle between Pershing and Ceridian's management over the fate of Comdata -- and of Ceridian itself. Pershing, which holds about 14.5% of Ceridian stock, is preparing to lobby other shareholders to elect its own slate of board nominees, a likely first step in pushing for a breakup of the company by selling Comdata, the company's largest division.

In February, Ceridian announced that it retained Greenhill & Co. to explore "strategic alternatives," which analysts saw as an eventual spinoff of Comdata. Since then, the stock has risen about 12%, but it has risen almost 50% since First Data spun off Western Union(WU) in October.