New eBay EBAY shareholder Carl Icahn has cherry-picked old news clips and anecdotes
out of context to attack the integrity of two of the most respected,
accomplished and value-driven technology leaders in Silicon Valley. Marc
Andreessen and Scott Cook bring extraordinary insight, expertise and
leadership to eBay's board, which is scrupulous in its governance practices
and fully transparent with regard to its directors' other affiliations and
businesses. And eBay Inc. President and CEO John Donahoe is widely respected
for his turnaround of eBay and leadership of the company over the past six
years.
As we are sure our other shareholders would agree, we prefer to engage in more
constructive and substantive discussions of why, in our view, PayPal and eBay
are better together. Instead, Mr. Icahn unfortunately has resorted to
mudslinging attacks against two impeccably qualified directors.
Mr. Icahn has nominated two of his employees to eBay's board. As we have said,
the board's nominating committee will review the nominations of his employees
in due course. Even if our board does not support the nominations, ultimately
shareholders will decide whether they believe Mr. Icahn's employees are better
qualified than directors such as Mr. Cook (Mr. Andreessen is not up for
re-election this year) to sit on the board of a leading technology company.
The board has been clear in its view that shareholders are best served by
keeping PayPal part of eBay. The board regularly assesses all strategic
options for the company; should circumstances change the board is entirely
capable of evaluating alternatives for optimizing shareholder value.
In response to Mr. Icahn's specific claims, the facts are:
1) Skype: Skype was a great stand-alone business but had limited synergies
with eBay's global commerce and payments businesses. Consistent with its
practice of regularly reviewing all of eBay's operations, the Board determined
that because of these limited synergies, it would be in the best longer term
interest of stockholders to explore a divestiture of Skype. The company
explored all options for divesting Skype, including an IPO and sale to a
strategic buyer, and pursued the option that offered the highest return at the
time, which was the sale of a controlling stake. We retained a 30% stake upon
the sale to a private equity group led by Silver Lake Partners. That stake
meant that the company earned a total of $1.4 billion when Microsoft acquired
Skype. Because Mr. Andreessen's fund had a small stake in the acquiring group,
Mr. Andreessen was recused from all decision making. This recusal was dictated
by eBay's published Board Governance Guidelines and Code of Business Conduct,
and Mr. Andreessen fully supported his recusal. Separating Skype enabled eBay
to invest in its core growth engines of e-commerce and online payments, while
allowing for potential upside if Skype's potential was fully realized.
2) Marc Andreessen: Andreessen Horowitz is one of the most successful venture
capital firms in the world, and Mr. Andreessen's track record of creating
value and driving innovation makes him an extraordinary asset on eBay's board.
Regarding other investments Mr. Andreessen and his firm have made, this sort
of potential conflict exists whenever venture capitalists serve on a Board of
Directors. This is true for many public companies which have found experienced
venture capital investors to be extraordinarily valuable directors, especially
in high tech. The eBay Board has guidelines to minimize the impact of any such
conflicts. Also, in regards to Kynetic, any benefits from the terms of eBay's
purchase of GSI Commerce accruing to Kynetic would have been built into the
price at which Andreessen Horowitz purchased their shares; as such, any
relationship with eBay was irrelevant. eBay subsequently disposed of its note
and equity interests in Kynetic and related Rubin enterprises at a profit.
3) Scott Cook: As founder of Intuit and chairman of the company's executive
committee, Mr. Cook also has an exceptional track record of creating value and
driving innovation. He has been an enormous asset to eBay's board for many
years. The overlap between Intuit and eBay is small, fully disclosed and
within the SEC safe harbor for interlocking directorates. Regarding hiring,
this is old news, any restrictions ended years ago, and Intuit historically
had not been a source of talent for eBay Inc.
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