eBay rejects board nominees; Icahn fumes

eBay rejects board nominees; Icahn fumes

Summary: In a preliminary proxy statement filed with the SEC, eBay urged shareholders to ignore the activist investor's handpicked nominees, claiming that Daniel Ninivaggi and Jonathan Christodoro are "not qualified" to replace any of the board's current members.

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eBay flatly rejected Carl Icahn's persistent pleas to replace directors Marc Andreessen and Scott Cook, urging shareholders to re-elect both as well as CEO John Donahoe and fellow director Fred Anderson in a preliminary proxy statement filed with the SEC on Monday.

Icahn, who had offered up Icahn Enterprises LP employees Daniel Ninivaggi and Jonathan Christodoro as his preferred replacements, didn't take the news so well, lashing out in yet another open letter to shareholders railing against the e-commerce giant's refusal to spin off its PayPal unit and what he considers the "premature" and undervalued sale of Skype for $1.9 billion in 2009 to group of investors including Andreessen's venture capital firm Andreessen Horowitz.

"I believe that all stockholders must consider whether Donahoe is either incompetent or negligent or, perhaps even worse, was simply taking the easy path of bowing to the wishes of a respected and powerful board member," he wrote in the open letter. "At any rate, this failure cost eBay stockholders over $4 billion."

Richard Schlosberg, an independent director and chairman of eBay's corporate governance and nominating committee, said that after "serious consideration" it became clear that Icahn's nominees weren't palatable for a couple of important reasons.

"After careful review, the board concluded that they are not qualified candidates based on the criteria that have consistently been applied by the committee, including in particular that neither nominee has relevant experience or expertise," Schlosberg said in the preliminary proxy statement. "In addition, neither nominee would comply with the board’s governance guidelines on overboarding – each is on four public company boards and Mr. Ninavaggi is co-CEO of Federal Mogul."

eBay has yet to set a date for its annual shareholder meeting, but it's expected to take place sometime in mid-April, leaving plenty of time for both sides to continue their ever-escalating war of words.

Donahoe has repeatedly stated that the company isn't going to spin off PayPal, but Icahn isn't budging.

"eBay and PayPal should immediately be separated," he wrote. "I believe that if it is left as a division of eBay, PayPal may well go the way of other former technology greats such as Blackberry, Dell, Eastman Kodak, Polaroid, Nintendo, Xerox, Sony, Palm, and AOL – the same way that Motorola Mobility may have gone had we not been able to convince Motorola’s board to bring in a new CEO and separate the companies – ultimately resulting in a sale to Google."

Topics: E-Commerce, CXO, Tech Industry

About

Larry Barrett is a freelance journalist and blogger who has covered the information technology and business sectors for more than 15 years.

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15 comments
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  • I'll take that as an indication...

    ...that eBay's shareholders will still be allowed to vote for or against Icahn's nominees as they may think proper, which would be as it should be.

    Personally, I'd be wary of any candidate for director nominated by a corporate raider.
    John L. Ries
    • Yup

      "Personally, I'd be wary of any candidate for director nominated by a corporate raider."


      Yup, kinda like choosing the doctor that your undertaker recommends.
      dsf3g
  • Is this the final standoff?

    Has it really been ebay to be the first company to stand up to an asset stripper, who cares nothing for the long-term good of a company, just the short term profit?

    Has ebay really been the first to say "you own less than 2%, stop trying to be the tail that wags the dog"?

    If so, I forgive them 7 of their 7 million transgressions.
    Heenan73
  • HA!

    Suck it, Icahn!
    dsf3g
    • I think Ichan flagged your post

      LOL
      Han Rasmussen
  • This guy can go screw himself

    What business does he have thinking he can tell a company how to run its business? If he doesn't like what they do he can take his money elsewhere. He's a customer, not an executive. It's not his company.

    Good on eBay for telling him to stick it.
    Han Rasmussen
    • Several hundred million dollars worth of "skin in the game."

      I'm not saying he's right, but it's not like he's just some sell-side analyst or tech blogger who says "eBay [or Apple or Microsoft] should…"

      I think it's good for US corporate governance to have activist shareholders, and it's equally good for Boards to push-back against those activists. People forget that before the 80s, it was extremely rare for a large company to have a Chairman/CEO. In publicly-traded companies, those two jobs were almost always held by different people.
      matthew_maurice
      • Reverse that

        In the old days, the Chairman was de facto CEO more often than not and the President was his principal deputy (or the two jobs were combined). Indeed, the title of "Chief Executive Officer" was coined so that outsiders would know who the top boss really was.

        But it was indeed rare for management nominees for director to be challenged, much less rejected; or for them to reject management proposals.

        And I don't really object to activist shareholders (quite the opposite), only to the self serving pseudo-populist rhetoric and claims that corporations exist solely to enrich investors (as if it were possible for businesses to thrive without loyal employees or satisfied customers).
        John L. Ries
  • I hate PAYPAL with a passion

    yet I would not want it to be split from eBay.
    Paypal became HUGE because of eBay so splitting it off and not requiring all eBay listings to accept Paypal would just diminish Paypal AND eBay. It is an anti-competitive practice that I hate as an eBay seller, but it works extremely well.
    warboat
    • EvilBay

      I stopped using both eBay and PayPal when the two merged. Being locked into the company store model is rapacious and leaves too many opportunities to do bad things with your money. You sell something with a clear disclaimer that no returns accepted for any reason, but a buyer whines to eBay who than snatches funds out of your bank without asking in order to refund in direct violation of your ad's terms... no kidding, this happens all the time. fugedaboudit.
      JoeFoerster
  • "undervalued sale of Skype for $1.9 billion in 2009"

    SRSLY? They were lucky to find a sucker for that POS. It's really "pushing it" to hope that you can an obscene amount of money for a terrible product as opposed to a simply grossly inappropriate amount.
    matthew_maurice
  • The definition of Jerk

    Icahn doesn't give a rip about the long term viability of a company. He is just in it for a profit. Pretty bold offering some of his buddies to be heading up the company he owns stock in. Then who do you think is going to be passing on 'recommendations'? Hey folks, Icahn is one of the folks that Romney talked about as a 'maker', but in reality he is a 'taker'.
    boomchuck1
    • When did Romney praise Icahn?

      Enquiring minds want to know!
      John L. Ries
  • eBay Stinks

    As much as I can't stand the jerk, my personal experience with eBay reflects what Ichan says. Their customer service is awful, and product selection poor. They are tainted with unethical sellers (and buyers).

    Until they clean up their act they're on the way down.

    Who needs them when one can buy from Amazon or WalMart.
    onefussyone
  • Icahn is and will forever be

    a business killer. Anyone that takes his "sound business advice" is setting up their company for failure.

    PayPal isn't going anywhere anytime soon. On the contrary, it's going to become an even larger part of our lives as the digital wallet takes hold. The only competition it will face are Google, and potentially Apple when we fully change over to paying for everything with our phones in about a decade.
    Champ_Kind