Ceridian Corporation
(NYSE:CEN) shares moved down marginally today after the company said it
fired Comdata executive Gary Krow for disclosing confidential
information to activist hedge fund Pershing Square. Ceridian said it
learned about the violation through testimony in the company's lawsuit
with the hedge fund, but Pershing Square continues to insist that it
did not receive any confidential information concerning the company or
its affiliates.
Gary Krow wasn't the only executive fired either
- just a few months earlier the company terminated CFO Doug Neve.
Interestingly, both of these executives hand delivered written letters
to the company's board criticizing senior management. Shortly after
these letters were received, Chairman and CEO Ronald Turner announced
his resignation. Meanwhile, almost all of these key positions were
filled with ex-GE employees - a troubling trend among management and
the board.
This mysterious series of events prompted Pershing
Square to sue the company in an effort to obtain these letters to
management. The letters could not only provide very material
information that shareholders deserve, but also information that could
be used in a potential proxy solicitation if the hedge fund decides to
try and replace the board. Unfortunately, the courts ruled on Friday in
favor of Ceridian. Apparently, owners do not have the right to view
management conversations...
Pershing Square was initially just
seeking a spin-off to unlock value in the company's Comdata division
and prevent an acquisition-based strategy, but their involvement has
since brought to light an apparent host of other problems with the
company's board and management. The secretive letters not only prompted
the resignation of the company's CEO, but also spawned a probe by the
SEC into the company's ethics policies.
Finally, to compound the
problems at Ceridian, the company failed yet again to set a record or
meeting date for the annual shareholders meeting, which makes it
impossible for shareholders to express their views and make changes to
the company they own. When the date is finally set, the company will be
in for a fight. Pershing Square reportedly obtained documents from Krow
outlining lists of shareholders that would support him and his goals to
spin-off Comdata. Combined, these factors make CEN a stock
worth watching!
For more information on the lawsuit and ethical issues, see
Nashville Post's article on the subject.
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