UPDATE 1-Ackman's Pershing Square nominates three ADP board directors

(Adds statement from Pershing Square, background)

Aug 7 (Reuters) - Pershing Square Capital Management LP proposed three nominees on Monday, including its CEO William Ackman, to serve on the board of Automatic Data Processing Inc , setting the stage for a proxy contest with the human resources outsourcing company.

Ackman's decision to invest in ADP, which has a market value of about $50 billion, comes as he looks for a big win following money-losing investments in debt-laden drugmaker Valeant Pharmaceuticals International Inc and restaurant chain Chipotle Mexican Grill Inc.

Pershing Square, which has accumulated an 8 percent stake in ADP, said it would put forward Ackman, 51, former Bechtel Group Chief Financial Officer V. Paul Unruh, 68, and former Polymer Group Inc Chief Executive Officer Veronica Hagen, 71, as board directors.

"We are pleased to nominate such superb independent directors to the board of ADP who will bring relevant skills, expertise and judgment to assist the board in achieving ADP's maximum potential," Ackman said in a statement.

Pershing Square's nominations represent a big bet by the activist hedge fund that it can muster enough ADP shareholder support to secure board representation, and that it can boost the company's performance significantly so that its shares in the company will become more valuable.

ADP offered no comment.

Reuters first reported on the nominations earlier on Monday based on a source familiar with the matter, who also said that Pershing Square would not call for the ouster of ADP's CEO Carlos Rodriguez, but would indicate it is happy to work with the company's management as long as it was open to significant changes at ADP.

ADP suggested last week that Pershing Square wanted to assume effective control of the company by seeking five board directors. The three-director slate would give Pershing Square significant influence at the company, but not control.

Ackman was facing an Aug. 10 deadline to put forward board directors after ADP denied his request to extend it by as much as 45 days.

Pershing Square said last week it believed ADP can improve its operating performance by accelerating growth, improving the quality of its software and service offerings, slashing operating costs and increasing efficiency, Pershing Square said in its statement. (Reporting by Greg Roumeliotis in New York; editing by Andrew Hay and Diane Craft)