There are a few different playbooks when it comes to hedge fund activism. At one extreme there's the Paul Singer method: cold, calculating, uncompromising – like one of those slow-moving horror villains who are frightening only for the fact that they will not stop until their target has been eliminated. At the other end of the spectrum there's Jeff Ubben, the kind of “white hat” investor whose preferred form of engagement is big sloppy smooches for his activist targets, however unreceptive they may seem.
Good luck trying to figure out where Bill Ackman's ADP campaign fits into that schema. Whatever foot Ackman wanted the campaign to start off on, it's been the wrong one. Though Ackman has said he approached the company in a spirit of cooperation (threats of negative media attention notwithstanding), ADP immediately called him stupid (along with everyone else) and dug in. Ackman proposed a slate of board nominees, but when asked to present it he demanded an extension. ADP claimed Ackman refused to meet in advance of the launching a proxy fight. Ackman filed a brief with the SEC describing emails ADP accidentally sent Pershing Square, in which ADP admits Ackman offered to meet in good faith, but that no one took him seriously because he was Bill Ackman. And so on.
If you're confused, don't worry: The Ack Man is here to clear it all up for you:
Corporate boards of directors fear people like Bill Ackman, the billionaire hedge fund manager behind Pershing Square Capital Management. But they shouldn’t, Ackman said Tuesday at the Wall Street Journal’s D.Live conference in Laguna Beach, Calif. “What activism does is sort of a replacement for the founders,” he said. “We can help make decisions like a major owner.”
Ackman is not an existential threat – he's just another helpful decision-maker in the room. He's not the “very dangerous” activist that P&G described (re Nelson Peltz), but a sort of chaperone who's there in everyone's best interest:
“It is dangerous to not have opposing viewpoints in the boardroom,” he said, adding that most of the directors on P&G’s board are working CEOs at other companies who don’t have the time to spend on P&G. “The companies that fight the most to not have activists on the board are most in need of activism.”
But don't go thinking that ADP should expect a nicer, kinder Ackman:
“There’s no ownership culture in the board room,” Mr. Ackman said....He said the company’s culture was too focused on “making its numbers” and added, “They spend more than the entire industry does on developing products and software and much smaller competitors …have better products than ADP.”
That probably sounds a bit less collegial than Ackman intends. Or he doesn't intend for it to sound collegial at all. Who knows. The problem is, if Ackman wanted this thing to proceed as a marriage of common interests, he wouldn't go blabbing to the media every chance he gets. If he wanted it to be straightforwardly adversarial, he could do so without all the overtures to helping others.
The fact is, Ackman is trying to get himself and two others on the board in order to make fundamental changes to a strategy the company thinks is perfectly fine. He may like to imagine the situation as a congenial bull session between equals, but from ADP's perspective it looks more like an airplane passenger barging into the cockpit saying he's got some interesting ideas about how to fly this thing and hey, just gimme a swing at the controls for a minute, actually you know what? we're putting this thing to vote, here hand me the intercom.
ADP investors vote November 7.