Icahn Calls For ‘Strong And Independent’ eBay Board

Mar 13 2014 | 11:26am ET

Carl Icahn yesterday continued to hammer away at eBay Inc., summarizing his allegations against the company in an open letter to its shareholders.

Icahn has pushed eBay to spin-off its PayPal unit—a suggestion that eBay has rejected—and threatened a proxy fight for two board seats—eBay has called his candidates unqualified. And he has blasted the company’s sale of Skype and taken aim at two of its most prominent board members, alleging that they are rife with conflicts of interest.

In his latest missive, Icahn said the 2009 sale of Skype to a consortium including eBay director Marc Andreessen’s venture-capital firm “represents a complete and utter breakdown in the system of checks and balances,” and warns that “without a strong and independent board… eBay stockholders may again suffer a travesty even worse than what was visited upon them when Skype was sold prematurely and $4 billion of upside was lost.”

Icahn again took aim at eBay CEO John Donahoe, saying a recent interview with the executive has him lamenting “the fact that he had stockholders to answer to.”

Using all capital letters and frequently peppering his words with boldface and underlines, Icahn warns that “these types of shenanigans may fly in countries where decisions affecting millions of people’s lives are made in secret Politburo meetings.” But, he continues, in the United States, “nothing stays buried for long.”

Rushing to the defense of his director candidates, both employees of Icahn Enterprises, Icahn turns up the sarcasm.

“What makes one qualified in their opinion? Being a large stockholder of a direct competitor and interfering, as alleged by the Department of Justice, with eBay’s hiring practices on behalf of said direct competitor (current board nominee, Scott Cook)? Participating in a consortium that buys assets from the company and flips them for a quick and massive profit (current board member, Marc Andreessen)? Failing, as alleged by the SEC, to take steps to ensure that the accounting for stock options was proper and agreeing to disgorgement and civil penalties amounting to over $3.5 million (current board nominee, Fred Anderson)?”

And, unlike with Skype, time is of the essence in spinning out PayPal, Icahn concluded.

“eBay does not have years to wait. PayPal is a great company, but it is going to war against strong adversaries.”

“PayPal must be separated now so that great management can be attracted—management that can make the right decision and know when to sell at the right time, not the worst time.”

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