Bill Ackman's credibility has sunk to a new low.

The billionaire's investment firm lost $4 billion on a drugcompany. Its stake in a burrito maker went south. J.C. Penney Co.has been a disappointment, and Ackman was forced to shift strategyon Herbalife, which hasn't tanked as he said it would.

The latest fail is Automatic Data Processing Inc. Shareholdersrejected the three board candidates put forth by Ackman's PershingSquare Capital Management, including Ackman, the company said.Instead, they handed victories to CEO Carlos Rodriguez, who duringthe proxy campaign called Ackman “a spoiled brat” and accused himof negotiating like “a used-car salesman.”

ADP said Pershing's candidates each received support from lessthan 20% of outstanding shares and less than 25% of the sharesvoted at the Roseland, N.J., company's annual general meetingTuesday. Ten candidates favored by management won.

“That's really shocking,” said Kai Liekefett, partner and headof shareholder activism at Vinson & Elkins. “That might spellthe end of Pershing Square and Bill Ackman as we know it. He hashad a really difficult run over the last couple of years.”

Ackman was looking for some good news after the crushing loss onValeant Pharmaceuticals and the Chipotle Mexican Grill setback.While insisting he remains confident about his bet againstHerbalife, Ackman said this month that he's changed his investmentfrom shorting the stock to put options to head off further lossesif the shares keep rising.

“The proxy fight at ADP is an unmitigated disaster for him,”Liekefett said, adding that Ackman's three-hour presentationsfocusing on the minutiae of the proxy fight are starting to workagainst him. “He gets so much into the weeds that he is apparentlyincapable of dumbing down his message to a couple of points.”

Shares of ADP fell less than 1% in New York trading Tuesday to$110.95 as of 10:31 a.m.

Ackman has said he intends to be a long-term holder of ADPregardless of the final outcome, and that he would be willing towage another proxy fight next year if the company doesn'tdramatically improve its operations over the next 12 months.

“Here's to hoping that the company delivers and we don't need torun for election next year,” Ackman said at the shareholder meetingTuesday. “Nothing could make me happier than seeing Carlos and theboard succeed in meeting and exceeding their commitments. We intendto be a supportive shareholder who is not shy about sharing ourideas with the company. The bottom line is we will do everything wecan to help.”

Blames System

Ackman also took the opportunity to blame the U.S. proxy system,in part, for the loss.

“We were greatly disadvantaged in this contest because ADP didnot permit the use of a universal proxy card where each shareholdercould choose which directors it wanted to represent them on oneproxy card,” he said. “This likely cost us the election.”

ADP came out swinging against Ackman from the start, attackinghis less-than-stellar investment record at companiesincluding drugmaker Valeant and J.C. Penney.

Rodriguez, whom Ackman threatened to oust unless he worked withhim, said Tuesday in an interview with CNBC he hoped Ackman got themessage.

“I hope he moves on,” Rodriguez said. “I think that it was aclearly very resounding victory for the board and our company. Ithink it's the largest margin of victory of any large cap proxycontest ever. I think that would hopefully be a message that it'stime to move.”

Earlier, Rodriguez called the defeat of the Ackman slate an“ass-whooping.”

Proxy Battles

Pershing Square's defeat follows on the heels of a high-profileproxy battle by Trian Fund Management's Nelson Peltz at Procter& Gamble in which the consumer-goods giant fended off theinvestor's push for a board seat last month.

Pershing Square, which disclosed an 8.3% stake in ADP in stocksand options in August, was seeking three seats on the board,including one for Ackman. Ackman argued the company was losingground to smaller competitors because of what he called a bloatedand insular culture. He also claimed ADP was riddled withinefficiencies and a lack of innovation that he blamed on its “buynot build” strategy.

Ackman's slate of nominees garnered the support of two prominentshareholder advisory firms, Glass Lewis & Co. and Egan-JonesProxy Services. A third advisory firm, Institutional ShareholderServices, urged investors to withhold support for one of ADP'snominees, Eric Fast, in order to make room for Ackman on theboard.

ADP resisted Ackman's push for change, saying the proxy fightwas a distraction for the company and was based on inaccurateinformation. It said the pace and magnitude of the changes Ackmanwas proposing were risky to the business and could potentiallyalienate its clients.

From: Bloomberg News

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