We had some advice to Bill Ackman the day the world learned that his latest activist play was a big stake in the human-resources company ADP: Sell ADP. For reasons we won't attempt to divine, the fact that Pershing Square had amassed an 8-percent chunk of the company caused ADP shares to go up. In one day the stock rose a healthy 10 percent, a gain anyone should be happy to book, damn the consequences.
Alas, Ackman did not heed our advice. Instead he's going about it the old-fashioned way: engaging in a bitter and public war of attrition over a few board seats, all proceeding according to the standard script. Ackman says the company needs massive overhaul. Company CEO calls Ackman a “spoiled brat.” Others pile on.
Now, Ackman has fired back in the best way he knows how: an SEC filing. In a proxy statement filed Monday, Pershing detailed a lengthy play-by-play of the interactions between the hedge fund and the payrolls giant, in part to rebut the idea that Ackman's request of a 45-day extension on naming board replacements amounted to not doing his homework. Instead,
the purpose of his asking for an extension was to avoid taking the adversarial step of launching a proxy contest to replace certain members of the Board before having had an opportunity to meet the Board and share Pershing Square’s analysis and ideas on how to create stockholder value.
ADP told Ackman it would take at least a month to assemble the whole board, so he filed an extension. And contrary to CEO Carlos Rodriguez's assertions that talking to Ackman was a “baffling and surreal experience” that left him unsure of whether Ackman wanted him out or in, Pershing said Ackman made clear that he could work with current management. Thus Ackman's surprise at receiving a certain “errant email” from Rodriguez a few days into the dispute:
On August 6, 2017, Mr. Rodriguez sent an email to Mr. Ackman in error, which was intended for the Company’s general counsel, Michael Bonarti. Mr. Rodriguez’s misdirected email forwarded Mr. Ackman’s email of August 3, in which Mr. Ackman expressed his openness to working with Mr. Rodriguez. In his email, intended for Mr. Bonarti, Mr. Rodriguez first stated that he did not find Mr. Ackman’s statement that he was willing to work with Mr. Rodriguez to be credible, and he noted to Mr. Bonarti that Mr. Ackman’s willingness to work with him was conditioned on his having the same view of the opportunity. Mr. Rodriguez explained that because he had already told Mr. Ackman that he did not share Mr. Ackman’s view, he disregarded the statement.
While Rodriguez's position is perfectly understandable, you have to have some sympathy for Ackman in this situation. After all his attempts at earnest jawboning, he finds himself in possession of a misfired email discussing him in the third person, which amounts to “this guy is full of bullshit.” For once it isn't Ackman who fucked up, yet he still ends up the victim.