Automatic Data Processing Inc. rejected activist investor BillAckman's nominees for the board of directors, saying his candidatesare no improvement on the current board and setting the stage for aproxy battle at the payroll and human resources outsourcingprovider.

ADP will instead nominate its 10 existing directors forre-election at the annual meeting later this year, the company saidin a statement Monday. In spurning Ackman's candidates, the boardvoted unanimously to follow the recommendation of its nominatingand corporate governance committee, according to the statement.

“We have determined that adding Mr. Ackman's nominees would notbe an improvement,” ADP Chairman John Jones said in the statement.“Unlike Mr. Ackman's nominees, ADP's directors have a deepunderstanding and appreciation of the current state of ADP'sbusiness and its clients.”

Ackman's Pershing Square Capital Management this month unveiledan 8.3% stake in ADP and began a campaign to shake up theoutsourcing giant. He has proposed himself, Veronica Hagen and PaulUnruh for the board. A representative for the New York hedge fundwasn't immediately available for comment.

Ackman said in a 3 1/2-hour webcast Thursday that his push forchange at ADP has been met by hostility from management andskepticism from analysts. The billionaire investor's criticismscentered on the inefficiencies and lack of innovation at thecompany as a result of its “buy not build” strategy for expandingits offerings, a lack of integration of those acquisitions, andwhat he claimed was a bloated and insular corporate structure.

Ackman said he believed changes at ADP could drive the shareprice to as much as $255, more than double its current level, byJune 2021, and that the company would likely need a new CEO.

ADP has repeatedly rejected Ackman's claims about the companyand stood behind CEO Carlos Rodriguez, noting that under his nearsix-year tenure, the company has returned 202% to shareholders. Thecompany said Monday it was committed to best-in-class corporategovernance and that its board, which includes four directors whohave joined since 2014, possesses a broad spectrum of relevantleadership skills and experience.

The company's shares have declined about 6% to $104.41 sincetheir close in New York trading on Wednesday, before Ackman'spresentation.

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