Billionaire activist investor Carl Icahn said yesterday that corporate governance at e-commerce giant eBay, in which he is a shareholder, was the worst he had ever seen.
"I've never seen worse corporate governance than eBay," Icahn told CNBC television. Icahn, who has a 2.15% stake in eBay, is known for taking large stakes in companies and pushing for management change.
Icahn also said eBay CEO John Donahoe should not have control over PayPal, the company's fast-growing payments business.
Icahn has called for the company to spin off PayPal. He has publicly feuded with eBay over its 2009 sale of a majority stake in online phone service Skype to private investors, including eBay board member Marc Andreessen's venture capital firm Andreessen Horowitz.
Icahn, who has criticised Andreessen for profiting from the subsequent sale of Skype to Microsoft for $8.5 billion in 2011, told CNBC that he "might blame Donahoe more than Andreessen for letting it happen".
Donahoe told Fox Business Network on Wednesday that eBay's corporate governance was on "very solid ground" and reiterated that eBay and PayPal benefit from being a single entity.
"We know this is sort of the antics that Carl uses and that's fine," Donahoe said, and noted "the synergies with eBay are the strongest synergies you'll find with PayPal in any other company".
Icahn, whose investment firm has a stake of more than $4 billion in Apple, reiterated on Wednesday that the company was undervalued and said CEO Tim Cook was "doing a good job".
Icahn, chairman of Icahn Enterprises, was not immediately available for comment.
eBay shareholders agree PayPal to stay put
Meanwhile, Donahoe said on Wednesday that several of the online retailer's most active shareholders have assured him they support his efforts to resist demands by activist investor Carl Icahn for a spin-off of the PayPal unit.
Donahoe told Reuters on Wednesday he has spoken with as many as 16 of the 20 most-active shareholders in eBay, and most favoured hanging on to the fast-growing PayPal payments unit.
He did not say what percentage of the company's shares was held by the investors who agreed with his resistance to Icahn.
"I met with 15, 16 of our top 20 active investors, have engaged back and forth in dialogue with them," Donahoe told Reuters in an interview.
"The majority of them understand that they're stronger together," he said. PayPal had become the preferred online payment method of the online marketplace's customers when eBay acquired it for $1.5 billion in 2002.
The top 20 shareholders hold a combined 42% of eBay shares, according to Thomson Reuters.
Its top shareholder, eBay founder Pierre Omidyar, holds 8.4% of the shares and has repeatedly expressed support for eBay's plan to stay intact.
Icahn owns just over 2% of eBay. Management has sparred relentlessly with him since January, when the company announced the pugnacious billionaire had made an unsolicited proposal that eBay hive off PayPal. Until now, neither side had addressed the question of how other investors viewed a prospective spinoff.
Earlier on Wednesday, he said corporate governance at eBay was the worst he had ever seen, the latest volley in a feud that has included several press releases by Icahn and television appearances.
Icahn has sent letters to shareholders accusing two eBay directors of conflicts of interest, and calling the board dysfunctional. He has proposed two new directors.
In the past, eBay has considered spinning off the multibillion-dollar payments service. But the company concluded that PayPal would lose synergies with the overall e-commerce business if it were an independent unit.
Donahoe suggested activist shareholders can play a constructive role, under some circumstances.
"If you were to look at a spectrum of activists, you see a different playbook, you see different approaches," Donahoe said.
A case in point, Donahoe said, is Ralph Whitworth, co-founder of activist investment fund Relational Investors, whom Donahoe praised for "not playing it out in the media" prior to winning a seat on Hewlett-Packard's board. Whitworth is currently chairman of HP.
Share