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Wednesday, February 26, 2014
Icann Calls eBay Governance 'Dysfunctional'
Activist investor Carl Icahn escalated his attack on EBay Chief Executive Officer John Donahoe and the company's board, calling its governance "dysfunctional" and repeating that eBay and PayPal should be separated.
Last month Icahn proposed that eBay spin off its PayPal unit. Now he sent an open letter to eBay's shareholders, highlighting the competing interests of directors Marc Andreessen and Scott Cook.
"..eBay sold a controlling stake in Skype to a sitting board member (Mr. Andreessen) and Silver Lake, for about $1.9 billion. A mere 18 months later, that board member sold Skype to Microsoft for $8.5 billion, thereby netting a $4 billion gain for himself and Silver Lake that should have accrued to eBay stockholders," the letter reads.
He also questioned whether Mr. Cook should remain on the eBay board since Intuit (a company in which Mr. Cook owns nearly $1 billion in stock) and PayPal are fierce competitors.
"We believe that Mr. Cook's participation in strategic discussions on both sides of the table will continue to present challenges for eBay and will eventually, if it has not happened already, become a major strategic disadvantage for eBay," Icahn wrote.
He concluded saying that the corporate governance at eBay is "dysfunctional," urging eBay stockholders to vote in favor of his proposal in order to send a message to the eBay Board that "eBay and PayPal must be separated. "
The activist investor, who disclosed a 2.15 percent stake in the e-commerce giant on Monday, also promised to lay out a more detailed case for spinning off fast-growing PayPal in coming weeks.