Ceridian fires executive over leak
Ceridian Corp. said Monday that it had fired a top executive for disclosing confidential information to Pershing Square Capital Management, the hedge fund trying to oust the company’s board.
Gary Krow, who headed Ceridian’s Comdata division, will be replaced by President Jim Burns on an interim basis, the company said in a statement.
Ceridian, a provider of payroll and human resources services, said it learned of Krow’s violations through testimony in a lawsuit with Pershing. In a separate statement, Pershing said Krow’s termination was “wrongful.”
Activist investor William Ackman, Pershing’s founder, said at an April hearing that Krow had told him about the contents of letters criticizing the performance of former Chief Executive Ronald Turner. A court ruled last week that Ackman had no right to the letters and determined Pershing had improperly obtained information from Krow.
“Gary Krow’s actions showed a serious lack of judgment and terminating his employment was the right thing to do for Comdata and Ceridian,” a company spokesman said.
Ceridian will make a decision on its strategy this quarter, the company said. It began exploring options in February after Pershing pressed for a spinoff of Comdata.
Shares of Minneapolis-based Ceridian shed 13 cents to $34.10. They have gained 39% in the last year.
Krow didn’t comment when reached by phone.
Ackman sued Ceridian to make two letters public that Krow and former Chief Financial Officer Douglas Neve had written faulting Turner for mismanagement and misuse of corporate assets. The Delaware Chancery Court ruled against Ackman on Friday, saying the letters contained “non-public business, strategy and personnel matters.”
Pershing, which is Ceridian’s largest shareholder with a 14.5% stake, had planned to use the letters, which also criticized the board for a lack of oversight, in its campaign to remove company directors.
The hedge fund has nominated eight candidates to Ceridian’s board, saying that the company is undervalued and that it disagrees with new CEO Kathryn Marinello’s strategy of pursuing acquisitions rather than spinning off the Comdata unit. Pershing also said in a letter to the board in January that it thought Krow would leave the company, hurting Comdata’s performance.
“Mr. Krow’s departure from Comdata may substantially reduce the value of Comdata and thereby Ceridian,” Pershing said at that time. “The prospect of losing Comdata’s president and other senior operating management poses an unacceptable risk to our investment.”
