ADP Automatic Data Processing Inc

By Cara Lombardo and Maria Armental 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 13, 2018).

Automatic Data Processing Inc.'s finance chief plans to resign from his post, the payroll-processing company said Tuesday, a departure that comes as the firm faces scrutiny from a trio of activist investors.

Jan Siegmund will remain in the role while ADP looks for a replacement, Chief Executive Carlos Rodriguez said during a meeting with investors Tuesday. He said Mr. Siegmund had been planning to leave for a while, but the company had "successfully convinced him for some period of time now to stick around, because of all the exciting things we have going on."

Mr. Siegmund joined ADP in 1999 and was tapped as CFO in November 2012.

ADP executives on Tuesday outlined plans to increase margins and accelerate the rollout of their newest platforms. The company, which offers human-resources software that handles such tasks as payroll processing and timekeeping, said it expects to reach its target for adjusted earnings before interest and tax margin of between 21% and 22% a year ahead of schedule.

Shares closed up 4% at $139.30 Tuesday.

As it tries to jump-start growth, ADP has been facing increased pressure from activist investors including William Ackman.

Last year, the company defeated Mr. Ackman in a heated proxy fight. Mr. Ackman had accused ADP of falling behind technology-heavy startups, and said its margins were "vastly below their potential." At the heart of ADP's problems, he charged, was an "insular, bureaucratic and staid corporate culture."

Since then, Mr. Ackman has said he is encouraged by ADP's recent performance, including accelerated bookings and improved business retention. His Pershing Square Capital Management LP, which owns about 7.2% of ADP, including derivatives, hasn't called for Mr. Siegmund's departure.

Two other activist hedge funds, D.E. Shaw Group and Sachem Head Capital Management, have also built stakes in the firm. The Wall Street Journal reported in May that the investors hadn't decided whether to push for changes at the company, citing people familiar with the matter, but had separately met with ADP management.

Research firm Management CV last year criticized Mr. Ackman's proxy fight as misguided but noted it raised some valid points. It said ADP should change its CFO.

Mr. Siegmund, the research firm wrote, "is an ADP lifer (like CEO Rodriguez) and is unlikely to be able to exact the hard cost cuts and restructuring steps that would materially shrink ADP's cost base and improve operating margins."

Renny Ponvert, Management CV's research director, said Tuesday in an interview that Mr. Rodriguez needs a counterbalance to help him run the company, rather than someone who "just works for him as a clerical CFO."

ADP declined to comment on Management CV's criticism, but the company has repeatedly defended its executives.

--Bowdeya Tweh contributed to this article.

Write to Cara Lombardo at cara.lombardo@wsj.com and Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

June 13, 2018 02:47 ET (06:47 GMT)

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