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Pershing Square Releases Third Question For ADP

Pershing Square Capital released the following press release on October 5th with regards to its continuing efforts to secure nominations to the company's board. The release reads as follows:

'Since our first presentation on August 17, 2017, ADP has yet to respond to the issues we have identified or the questions we have raised. Today, Pershing Square released the following question:

Question:
Why is ADP’s labor productivity ~28% below its competitors’, particularly in light of its enormous scale advantage?

We have previously released two questions which the company has not answered. Those questions are:

Question 1 – September 20, 2017:
What are ADP’s margins in Employer Services by sub-segment (Small-Business (“SMB”), Mid-market, Enterprise, and International), excluding float and allocating corporate expenses?

  • Is ADP earning comparable margins to Paychex (~41%) in its SMB business? If so, that would imply 12% margins for the rest of Employer Services.

Question 2 – September 28, 2017:
When ADP owned Dealer Services, it aimed to produce just ~50bps of annual margin improvement. When Dealer Services was spun-off as CDK Global (NASDAQ: CDK) (“CDK”), it promptly identified an opportunity to double margins without negative consequence to CDK’s customers, shareholders or other stakeholders. Why was ADP not able to realize this opportunity when it owned CDK?

  • CDK achieved this improvement by engaging constructively with shareholders, hiring an outside consultant to evaluate its potential, and announcing a transformation plan – why won’t ADP do the same?

We ask that ADP respond to all three of these questions so shareholders can better understand ADP’s potential.

Review all of Pershing Square’s weekly questions to shareholders here: https://adpascending.com/questions/

For additional information, visit our website: www.ADPascending.com. Follow ADPascending on FacebookTwitter and YouTube.

To vote for Pershing Square’s Nominees for ADP’s Transformation, please vote the GOLD Proxy Card or GOLD Voting Instruction Form.

You can vote by Internet, telephone or by signing and dating the GOLD Proxy Card or Voting Instruction Form and mailing it in the postage paid envelope provided. We urge you NOT to vote using any white proxy card or voting instruction form you receive from ADP. Please discard the white proxy card.

If you have any questions about how to vote your shares, please contact our proxy solicitor, D.F. King & Co., Inc., at (866) 342-1635.'