Pershing Square Capital Management, a New York-based hedge fund that manages $3 billion in assets and owns 11.3 percent of Ceridian stock worth $450 million, nominated on Tuesday, January 23, its own slate of candidates to take over as the board of directors of the Minneapolis-based company. The hedge fund’s principal, activist investor William Ackman, first voiced concerns in a January 18 filing that the company “had underperformed and failed to achieve its business potential for more than a decade.”

Among Pershing’s nominees is Robert Levenson, a former senior executive of Automatic Data Processing Inc. and former board member of First Data Corp. Levenson is a founder of venture capital firm Lenox Capital Group.

Pershing Square in the past week details how the fight for Ceridian has escalated from a war of words into a hostile battle between shareholders and management.

“Rather than participate in a ‘he said, she said’ dialogue about our previous meeting,” Ackman wrote in his January 23 letter, “we prefer to focus on the future of Ceridian under improved governance and better alignment with shareholders’ interests.”

Ackman was referring to a January 12 meeting with Ceridian CEO Kathryn Marinello. According to SEC filings, the meeting highlighted divergent business strategies regarding Ceridian’s future. Ackman had expressed concern that Comdata, its payment processing subsidiary, “represents the majority of Ceridian’s cash flow and equity value” and was poised to lose president Gary Krow and other top executives. Based on their meeting, Ackman concluded that Ceridian would not likely spin off Comdata, as he had wanted.

Ceridian, in its own filing, said Marinello sent a letter to Pershing to allay concerns regarding the future of the company and Comdata. But instead of taking it in stride, Ackman initiated a fight over control of the board of directors—a battle Ceridian said would be disruptive to its success.

“Despite these assurances, Pershing Square has apparently chosen to proceed with a full-blown proxy contest,” the company wrote, adding that Ackman mischaracterized Marinello’s positions.

The Pershing nominees will compete for spots on the Ceridian board during the company’s annual meeting this spring. Other Pershing nominees include Michael Porter, a Harvard Business School professor and a mentor of Ackman; and Alan Schwartz, a professor of law and management at Yale University.

—Jeremy Smerd