Ebay shareholder Carl Icahn is continuing to pressure the online commerce site to spin off its highly profitable PayPal segment.
In an extremely long and detailed open letter to eBay shareholders today Icahn trashed several members of the company's board of directors and CEO John Donahoe. Icahn owns just under a 1 percent share in eBay, according to the company, but he has been extremely vocal with his demand that the company spin off PayPal. PayPal was purchased by eBay in 2002 for $1.5 billion, but is now eBay's most profitable segment.
In the letter Icahn pointed out what he called conflicts of interest amongst several board members, whom he insisted resign, and stated Donahoe was either naive or willfully blind concerning these issues.
"How is it possible for the current board to engage in any meaningful discussions about long-term stockholder value while: (1) at least two board members are directly competing with eBay, (2) one board member is demanding eBay cease hiring the most talented employees, (3) another board member is routinely funding competitors while buying companies from eBay and reaping significant personal riches, (4) at least two board members appear to have put their own financial gain in ongoing conflict with their fiduciary responsibilities to stockholders and (5) 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 his letter.
EBay responded the letter by stating it believes the company is best served by keeping PayPal under the eBay umbrella.
EBay responded to the attack with a written release of its own that defends its board members, CEO and how it conducts its business.
"New 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."
The company went on to say it did not wish to enter into a mudslinging campaign with Icahn, but instead discuss in a constuctive manner why PayPal should remain apart of the company.
