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 Icahn, who also disclosed a 2.15 percent stake in the e-commerce
giant on Monday, said in a letter to shareholders that two long-time
board members, Marc Andreessen and Scott Cook, had business
interests that directly competed with eBay.
The activist investor said he had found "multiple lapses in
corporate governance" and called on both Andreessen and Scott to
resign from eBay's board. Icahn also urged investors to vote for his
two board nominees.
EBay in turn accused Icahn of "mudslinging" and said in a statement
that he was attacking two "impeccably qualified directors."
Representatives for Scott Cook and Marc Andreessen were not
immediately available for comment.
Shares of eBay were up 3.5 percent at $56.49 in afternoon trading on
the Nasdaq on Monday.
"If he's increasing his stake, and being more aggressive, it
increases probability that he actually gets something done," Robert
W. Baird & Co analyst Colin Sebastian said of Icahn.
Icahn's latest attack on eBay follows a major payday from his
investment in Forest Laboratories Inc, where he was also pressing
for a change in strategy and leadership. Forest announced last week
that it would be bought by Generic drugmaker Actavis Plc for about
$25 billion.
Andreessen is one of Silicon Valley's most prominent venture
capitalists, while Scott is founder, former CEO and current board
member of Intuit Inc, the maker of TurboTax and other business and
personal financial software.
Icahn said Andreessen, who also sits on the board of Facebook Inc,
had invested in and actively advised five direct competitors of eBay — Boku, Coinbase, Dwolla, Jumio and Fab. Four of these, Icahn said,
were direct rivals to PayPal.
Icahn also took issue with the sale of Skype in September 2009 to an
investor group that included Andreessen at a price that was 70
percent less than what eBay had paid. (http://link.reuters.com/zad27v)
The investor group sold Skype to Microsoft Corp for $8.5 billion
about 18 months later, netting about $4 billion, Icahn said,
questioning of Andreessen's loyalty.
Others have also been critical of the deal, Icahn said, "but, until
now, none have taken on the task of standing up to Mr Donahoe and
this board."
"How is it possible to engage in meaningful discussions about
long-term stockholder value while ... the CEO seems to be completely
asleep or, even worse, either naive or willfully blind to these
grave lapses of accountability and stockholder value destruction?"
Icahn said in the letter to shareholders.(http://www.shareholderssquaretable.com/open-letter-to-ebay-stockholders/)
EBay refuted the accusation by saying Andreessen had recused himself
from decision making related to the Skype deal. It also said Donahoe
was a "widely respected" CEO.
PAYPAL COMPETITORS
Andreessen, who is not up for re-election this year, has been on
eBay's board since 2008, while Cook has been a director since 1998.
[to top of second column] |
Icahn also took issue with Andreessen's investment in online
shopping platform Kynetic, which eBay had sold back to its founders
at a "low sale price" in 2011. Andreessen later invested $150
million in the company, for a paper gain of more than 100 percent a
year later, Icahn said.
EBay said it had sold its stake in Kynetic at a profit.
Icahn also raised concerns about eBay's board having input from Cook
when Intuit's Go-Payment service and PayPal were "direct
competitors" in online payments processing.
Icahn noted that according to a Department of Justice complaint,
eBay has agreed not to hire Intuit employees to placate Cook who had
complained about eBay's hiring practices.
"Is Mr Cook wary of how a standalone PayPal could impact the company
he founded? Is he worried that it would diminish the value of his $1
billion in Intuit stock?" Icahn asked.
EBay said the overlap with Intuit was small.
EBay bought PayPal for $1.5 billion in 2002 and has considered
hiving off the multibillion-dollar division. But the company said
last month that it had determined that PayPal would lose synergies
with eBay's overall e-commerce business if it was independent.
On Monday, eBay reiterated that shareholders were better off if the
PayPal remained part of the company.
Donahoe has been CEO of eBay since March 31, 2008. EBay's shares,
which closed at $54.59 on the Nasdaq on Friday, have nearly doubled
over that period, outperforming the 85 percent rise in the Nasdaq
composite index.
The eBay board also includes Ford Motor Co Executive Chairman
William Ford Jr and eBay founder Pierre Omidyar.
Soon after it was revealed last month that Icahn had taken a stake
in eBay, Andreessen and Omidyar tweeted that they fully supported
keeping the company intact.
"If he's right, then attacking the integrity of the (eBay) board is
a tactic that will help him achieve his ends," said Paul Hodgson, an
independent corporate governance analyst, referring to Icahn's
accusations.
(Additional reporting by Chris Peters in
Bangalore; editing by Ted Kerr and Tiffany Wu)
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