UPDATE 2-Proxy firm ISS largely supports ADP management but recommends Ackman election to board

election to board@ (Adds Ackman's statement)

BOSTON, Oct 25 (Reuters) - Proxy advisory firm ISS on Wednesday recommended that shareholders largely vote for directors recommended by the board of Automatic Data Processing Inc, but also supported the election of hedge fund manager William Ackman.

While ISS said Ackman failed to make the case to replace three directors, it was complimentary about the skills Ackman would bring to the boardroom and suggested electing him by withholding votes for ADP incumbent director Eric Fast.

ISS is the third influential proxy firm to release its report this week on the vote and ISS broke with Glass Lewis and Egan-Jones which both supported all three of Ackman's proposed directors.

"ADP does not seem to be a company in need of major course correction," ISS analysts wrote in their report, noting however that Ackman, the billionaire manager of Pershing Capital, has skills that would be useful on the board.

"Dissident nominee Ackman would bring a strong understanding of the company, with the resources and analytical ability that his firm has demonstrated while digging deeply into ADP's business, asking valid questions, presenting detailed data, and proposing solutions," the report said.

ISS recommended that shareholders withhold their votes for incumbent ADP director Eric Fast, who chairs the audit committee, blaming him for some of the company's "opaque" disclosures. By not voting for Fast, room could be made for Ackman on the board.

"We are pleased that ISS recognizes the serious issues and significant opportunities for improvement at ADP and recommends shareholders support my election to the board," Ackman said in a statement.

Since August the human-resources software company has been embroiled in a fight with Ackman's Pershing Square Capital Management over the company's future potential. Ackman has criticized it for being inefficient while the company has said it is already working on improvements and that Ackman's ideas are too late.

Shareholders vote on November 7 and both sides are crisscrossing the country to line up support from large institutional investors and small retail owners alike.

Ackman's firm has an 8.3 percent economic stake of which 2.0 percent are in common shares. He can vote only the common shares. (Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler)