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ADP is in proxy fight after the payroll services company, refusing this week to nominate three candidates for the board of directors submitted by Pershing Square Capital Management. The board unanimously rejected the group's candidates saying the rivals do not bring additional skill or experience to the board.

Pershing, led by activist investor William Ackman, had also asked ADP to extend the nomination process so it could name two additional candidates.

In a recent conference call, Ackman pointed to what he said were problems with Employer Services, ADP's payroll operations. "This is two-thirds of the profit of the business. It is materially underperforming its competitors in its potential," Ackman said.

Ackman went through an extensive discussion of the problems he sees with ADP. In particular, he noted, "We think ADP's back-end infrastructure remains quite disjointed, dated, and inefficient which somewhat limits the product capabilities, frankly, and makes it hard for the company to really provide world-class products."
He also faulted ADP for the way it integrates acquisitions.

John P. Jones, the company's non-executive chairman, said Pershing's choices would not represent an improvement.

"Unlike Mr. Ackman's nominees, ADP's directors have a deep understanding and appreciation of the current state of ADP's business and its clients, and what it takes to successfully execute on our 'All in on HCM' strategy," Jones said in a prepared statement.

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