Automatic Data Processing Inc. (ADP) has rejected a request from Bill Ackman's Pershing Square Capital Management to extend him a director nomination while calling out the fund's poor performance in recent years -- a sound decision given the company's total shareholder return under its current chief executive officer is about seven times the hedge fund's.
The activist investor is seeking to take control of the ADP board and replace CEO Carlos Rodriguez, ADP said on Friday. Pershing Square wants to install five dissident director candidates, including Ackman, onto ADP's 10-member board. The deadline to nominate directors is Aug. 10 but Ackman is looking to extend the deadline by 30 to 45 days, ADP said. Pershing Square owns an 8% stake, largely in derivatives.
Shares of ADP initially jumped 3% in premarket trading but the stock fell 0.3% to $111.42 at around 12:30 p.m. during the trading session on Friday.
In ADP's rejection of Ackman's request, the human resource company highlighted Pershing Square's poor performance, particularly compared to Rodriguez's performance as CEO.
"Since Carlos Rodriguez became CEO nearly six years ago, ADP's total shareholder return [TSR] of 202% is well in excess of the S&P 500 TSR of 128% -- and is many multiples of Pershing's TSR of 29%," ADP said in a statement.
Since 2012, Pershing's investments have had mixed results. Notably, the fund exited its position in Valeant Pharmaceuticals International Inc. (VRX) in March, which cost its investors more than $3 billion. Ackman called the Valeant investment a "huge mistake" in his annual letter to Pershing Square shareholders.
Ackman's Valeant exits mirrored an earlier loss in retailer J.C. Penney Company Inc. (JCP) , which he exited in May 2012 and lost nearly $500 million. He has also amassed a loss through his $1 billion short position in Herbalife Ltd. (HLF) .
Still, Ackman has seen some success. Last year, Pershing Square exited its investment in Canadian Pacific Railway Ltd. (CP) , earning some $2.6 billion.
Currently, Pershing Square's largest holdings by market value are Restaurant Brands International Inc. (QSR) , Chipotle Mexican Grill Inc. (CMG) and Mondelez International Inc. (MDLZ) , according to FactSet. Although, Ackman reportedly sold off about a quarter of its stake in Restaurant Brands on July 12, according to Bloomberg. The fund also owns positions in industrial gas distributor Air Products & Chemicals Inc. (APD) , real estate development company Howard Hughes Corp. (HHC) , Nomad Foods Ltd. (NOMD) and chemical maker Platform Specialty Products Corp. (PAH) , according to its most recent 13-F filing with the U.S. Securities and Exchange Commission.
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