Flaccid attack

17 August 2017 By Robert Cyran Follow @rob_cyran

Activists succeed by pursuing clear, deliverable goals, such as ditching non-core units or removing failing executives. Urging the employer-services firm to become an agile software company is nothing of the sort. Investors are giving the Pershing Square boss a deserved raspberry.

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On Aug. 17, activist hedge-fund manager Bill Ackman outlined his case for strategic change at payroll outsourcer Automatic Data Processing. The investor, whose Pershing Square Capital Management has an 8 percent stake in ADP, is seeking board seats for himself and two allies. He also said the company should redesign executive-compensation schemes, better integrate and streamline its business operations, and emphasize software development.

Ackman claims his strategy could increase operating margins in ADP’s core employer services division by 17 percentage points, boost earnings per share to $8.70 in 2022 from $3.85 in the financial year ended June 30, and cause the stock to double.

The company’s stock was down more than 3 percent in late morning trading at $107.14.

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