Icahn Accuses EBay Board of Conflicts of Interest
By DEALBOOK
New York Times
February 24, 2014, 9:38 am
Carl C. Icahn has accused the eBay board of “certain material conflicts of interest, which we believe could put the future of our company in peril.”
The activist investor, who owns 0.82 percent of eBay as Jan. 22, also reiterated an earlier call for eBay to spin off its PayPal business. Last month, he nominated two of his associates for the board of eBay.
In an open letter to shareholders published on Monday on his web site Shareholders’ Square Table, Mr. Icahn took aim at two members of the eBay board, the venture capitalist Marc Andreessen and Scott Cook, the founder of Intuit.
“How is it possible for the current board to engage in any meaningful discussions about long-term stockholder value.” Mr. Icahn wrote
while: (1) at least two board members are directly competing with eBay, (2) one board member is demanding eBay cease hiring the most talented employees, (3) another board member is routinely funding competitors while buying companies from eBay and reaping significant personal riches, (4) at least two board members appear to have put their own financial gain in ongoing conflict with their fiduciary responsibilities to stockholders and (5) the C.E.O. seems to be completely asleep or, even worse, either naive or willfully blind to these grave lapses of accountability and stockholder value destruction?
In response, eBay accused Mr. Icahn of “mudslinging attacks.” It said:
New eBay shareholder Carl Icahn has cherry-picked old news clips and anecdotes out of context to attack the integrity of two of the most respected, accomplished and value-driven technology leaders in Silicon Valley. Marc Andreessen and Scott Cook bring extraordinary insight, expertise and leadership to eBay’s board, which is scrupulous in its governance practices and fully transparent with regard to its directors’ other affiliations and businesses. And eBay Inc. President and C.E.O. John Donahoe is widely respected for his turnaround of eBay and leadership of the company over the past six years.
As we are sure our other shareholders would agree, we prefer to engage in more constructive and substantive discussions of why, in our view, PayPal and eBay are better together. Instead, Mr. Icahn unfortunately has resorted to mudslinging attacks against two impeccably qualified directors.
Mr. Icahn takes issues with Mr. Andreessen’s investments in two former eBay subsidiaries, Skype and Kynetic. EBay said that Mr. Andreessen was recused from all decision-making involving Skype. It added that the board has guidelines to minimize the impact of any potential conflicts involving venture capitalists.
In the case of Kynetic, “any benefits from the terms of eBay’s purchase of GSI Commerce accruing to Kynetic would have been built into the price at which Andreessen Horowitz purchased their shares; as such, any relationship with eBay was irrelevant.”
Mr. Icahn’s criticism of Mr. Cook, meanwhile, is based on his large stake in Intuit, which Mr. Icahn refers to as a direct competitor to PayPayl, while eBay contends that the overlap between the two companies is small.
Ebay has said that said that its board had considered a spinoff of PayPall but “concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value.”
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