Dear Associates:
In my note to you on July 27, I said I would update you if we learned anything about rumors that Pershing Square, an activist hedge fund, was building a position in ADP shares. It is in that spirit that I wanted to inform you of some new developments.
We heard from Pershing Square for the first time on August 1. Pershing’s CEO William Ackman informed me that his fund beneficially owns 8% of ADP, largely in the form of derivatives rather than common shares. He requested that ADP extend the August 10 deadline for nomination of directors to serve on the ADP Board by 30 to 45 days and said he planned to nominate five directors, including himself, to our 10-member Board. The Board subsequently rejected his request to extend this deadline based on its belief that this would not be in the best interests of ADP and our other shareholders.
Our Board of Directors takes this matter very seriously and, in response, issued the press release you can see at this link.
ADP takes great pride in maintaining an ongoing dialogue with our shareholders and is always open to their constructive input. Our Board and the executive committee are committed to acting in the best interests of our shareholders, clients and associates.
As noted in the press release, Mr. Ackman also challenged my leadership of ADP. These criticisms are typical of activist hedge funds looking to get media attention and investor support for director nominations, and I urge you not to be distracted by them. We expect Pershing Square to continue to attack ADP and to nominate directors in the coming days, which will result in substantial media coverage. It is vitally important that we all stay engaged in our day-to-day responsibilities and 100% focused on the execution of our strategic plan. We must continue to “Win as One,” working relentlessly to simplify, innovate and grow our business.
As I said before, we are entering fiscal 2018 with high confidence in our long-term strategy and planned investments in our products, services, and sales to capture market opportunities and deliver value for our customers. We are fortunate that ADP has a strong competitive position in our industry. The executive committee and our Board of Directors remain confident that the future is bright for ADP.
Thank you for your ongoing commitment to ADP and to our clients. This situation is likely to play out over many months and, as before, I commit to keep you updated as significant developments occur.
Best regards,
Carlos