(Adds details from report)
BOSTON, Oct 23 (Reuters) - Proxy advisory firm Glass Lewis recommended on Monday that Automatic Data Processing Inc shareholders vote for all three dissident directors proposed by activist investor Bill Ackman.
Glass Lewis, which advises large institutional investors, is the first advisory firm to issue its findings before the Nov. 7 vote, where shareholders will decide among candidates from the human resource software company and the activist hedge fund, Pershing Square Capital Management.
Ackman is pushing ADP to become more efficient and expand its margins, something the company says is possible only if it eliminates thousands of jobs. The hedge fund manager has said he and two other directors can bring a fresh perspective to the 10-member board, but the company has said the three nominees have not suggested anything it has not already looked at.
An ADP spokesman did not immediately respond to a request for comment.
"Glass Lewis finds validity in (Bill Ackman's firm) Pershing Square's overall thesis, and we have determined that a sufficient basis exists to support the Dissident's solicitation for minority representation on the ADP board," the firm said in its report.
Recent returns and operational performance are not as strong as ADP claims, Glass Lewis said.
The advisory firm also said the company had lost business to competitors that can "generate superior profit margins and returns at the expense of ADP and its shareholders" as a result.
Institutional shareholders do not necessarily act on a proxy advisory firm's recommendations, but Glass Lewis' support should help Ackman as he visits large investors to lay out his case.
The battle between ADP and Pershing Square has been among the most bitter of this year's proxy season, and the vote from Glass Lewis is seen as giving Ackman a boost, analysts said.
(Reporting by Svea Herbst-Bayliss; Editing by Lisa Von Ahn)