SECURITIES AND EXCHANGE COMMISSION
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Proxy Statement Pursuant to Section 14(a) of the
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Automatic Data Processing, Inc.
(Name of Registrant as Specified In Its Charter)
William A. Ackman
Veronica M. Hagen
V. Paul Unruh
Pershing Square Capital Management, L.P.
PS Management GP, LLC
Pershing Square, L.P.
Pershing Square II, L.P.
Pershing Square International, Ltd.
Pershing Square Holdings, Ltd.
Pershing Square VI Master, L.P.
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On September 25, 2017, Pershing Square Capital Management, L.P. and certain affiliates issued the following press release:
Pershing Square Releases Detailed Response to ADPs September 12, 2017 Presentation
ADP Overstates the Total Shareholder Return During CEO Carlos Rodriguezs Tenure
by 62 Percentage Points; Actual Returns Are 24 Percentage Points Lower Than Peers
New York, NY September 25, 2017 //- Pershing Square Capital Management, L.P. (Pershing Square) today published a detailed response to ADPs (NASDAQ: ADP) September 12, 2017 presentation.
ADPs presentation, replete with misleading statements and intellectually dishonest conclusions, demonstrates a lack of recognition for the substantial value-creation opportunity that exists at ADP. ADPs presentation and its other proxy materials attempt to deflect and distract attention away from the key question Is ADP achieving its full potential?
Among the misleading statements, ADPs September 12th presentation and its other shareholder materials attempt to portray the company as outperforming its peers. To make that point, ADP has largely relied on an inflated total shareholder return (TSR) calculation over CEO Carlos Rodriguezs tenure, and a misleading peer group comparison.
ADP claims its TSR over Mr. Rodriguezs tenure is 203%; however, the purported TSR is calculated using three misleading data points:
|||ADP uses the wrong start date for Mr. Rodriguez. Mr. Rodriguez became CEO on November 8, 2011, which was announced pre-market on November 9th. The proper starting date for the calculation would therefore be ADPs closing price on November 8, 2011. The company incorrectly uses ADPs closing price on November 9, 2011, which does not include the 3.9% stock price drop on Mr. Rodriguezs first day as CEO.|
|||ADP uses an intraday 12pm price of $111.65 on July 25, 2017 as the end point for the TSR calculation. This intraday price reflected a spike in the stock price due to market rumors and large open market purchases by Pershing Squares counterparty that day. A proper TSR calculation should use the market price as unaffected by Pershing Square of $97 per share.|
|||ADP includes the performance of CDK after its spinoff in its purported 203% TSR calculation, a different approach from its previously filed SEC filings where ADP correctly treats the CDK spinoff as a dividend and immediately reinvests the proceeds of the sale of CDK on the first day of trading back into ADP shares. By including CDK in its proxy contest TSR calculation, ADP is taking credit for value created by CDK that ADP itself was unable to create when it owned the company.|
Adjusting for these factors, ADP has generated a 141% TSR during Mr. Rodriguezs tenure, 62 percentage points lower than ADPs stated TSR of 203%, and substantially lower than ADPs peers.
ADP claims that it has delivered superior total shareholder returns against a broad range of comparable company groups, but it has relied on its inflated TSR calculation in this determination. ADP also benchmarks itself against a peer group that is not representative of its peers. Notably, IBM, Oracle Microsoft, and SAP receive a 91% weighting in ADPs calculation, with Paychex receiving only a 2% weighting. Comparing ADPs actual TSR of 141% to its actual HCM peer performance of 165% reveals that ADP has substantially underperformed its competitors during Mr. Rodriguezs tenure.
By using an overstated TSR benchmarked against a non-comparable set of companies, ADP is attempting to mislead investors about the performance of the company and argue in favor of the status quo. In reality, ADP has underperformed its competitors by more than 24 percentage points during current managements tenure.
Pershing Squares detailed response can be accessed at: https://adpascending.com/presentations/.
For additional information, visit our website: www.ADPascending.com. Follow ADPascending on Facebook, Twitter and YouTube.
About Pershing Square Capital Management, L.P.
Pershing Square Capital Management, L.P., based in New York City, is a SEC-registered investment advisor to investment funds.
212 909 2455, McGill@persq.com
Pershing Square Capital Management, L.P. (Pershing Square) and certain of its affiliated funds have filed with the Securities and Exchange Commission (the SEC) a definitive proxy statement and accompanying GOLD proxy card to be used to solicit proxies in connection with the upcoming annual meeting of stockholders (the Annual Meeting) of Automatic Data Processing, Inc. (the Company) and the election of a slate of director nominees at the Annual Meeting (the Solicitation). Stockholders are advised to read the proxy statement and any other documents related to the Solicitation because they contain important information, including information relating to the participants in the Solicitation. These materials and other materials filed by Pershing Square with the SEC in connection with the Solicitation are available at no charge on the SECs website at http://www.sec.gov. The definitive proxy statement and other relevant documents filed by Pershing Square with the SEC are also available, without charge, by directing a request to Pershing Squares proxy solicitor, D.F. King & Co., Inc., 48 Wall Street, 22nd Floor, New York, New York 10005 (Call Collect: (212) 269-5550; Call Toll Free: (866) 342-1635) or email: ADP@dfking.com.
William A. Ackman, Veronica M. Hagen, V. Paul Unruh, Pershing Square, PS Management GP, LLC (PS Management), Pershing Square, L.P., Pershing Square II, L.P., Pershing Square International, Ltd., Pershing Square Holdings, Ltd. and Pershing Square VI Master, L.P. may be deemed participants under SEC rules in the Solicitation. William A. Ackman, Pershing Square and PS Management may be deemed to beneficially own the equity securities of the Company described in Pershing Squares statement on Schedule 13D initially filed with the SEC on August 7, 2017 (the Schedule 13D), as it may be amended from time to time. Except as described in the Schedule 13D, none of the individuals listed above has a direct or indirect interest, by security holdings or otherwise, in the Company or the matters to be acted upon, if any, in connection with the Annual Meeting.