...but could be relevant to the lives of those who frequent online transactions and are affected by the way these two companies operate. Also, I have noticed that PP's reach has expanded astonishingly fast - I recently paid for travel with PayPal on major travel sites. Also humorously written but I actually agree with the man, especially the part about it being like if Target owned Visa. (found on http://blogs.wsj.com/moneybeat/2014...plete-disregard-for-accountability/tab/print/)
February 24, 2014, 9:28 AM ET
Carl Icahn Charges eBays Board With Complete Disregard for Accountability
By
Maureen Farrell
Reuters
Carl Icahn appears to be officially waging war against eBay.
The activist investor announced a stake of nearly 2% in eBay last month and has been calling for the company to spin-off its PayPal unit. This morning he stepped up the fight by launching a diatribe against eBays directors on his website Shareholders Square Table.
Heres a copy of the letter:
OPEN LETTER TO EBAY STOCKHOLDERS
February 24, 2014
by Carl Icahn
FOR IMMEDIATE RELEASE
CARL C. ICAHN ISSUES OPEN LETTER TO
EBAY STOCKHOLDERS
New York, New York, February 24, 2014 Today Carl C. Icahn released the following open letter to stockholders of eBay Inc.
Dear Fellow eBay Stockholders,
We have recently accumulated a significant position in eBays common stock because we believe there is great long-term value in the business. However, after diligently researching this company we have discovered multiple lapses in corporate governance. These include certain material conflicts of interest, which we believe could put the future of our company in peril. We have found ourselves in many troubling situations over the years, but the complete disregard for accountability at eBay is the most blatant we have ever seen. Indeed, for the first time in our long history, we have encountered a situation where we believe we should not even have to run a proxy fight to change the board composition. Rather, we believe that in any sane business environment these directors would simply resign immediately from the eBay Board, either out of pure decency or sheer embarrassment at the public exposure of the extent of their self-serving activities.
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?
The Boards Transgressions and CEO Mr. John Donahoes Ineptitude in Addressing Them
Mr. Marc Andreessen Independent Director
Since Mr. Andreessen has been an eBay insider, he has engaged in several transactions that lead us to question his loyalty to eBay. During Mr. Andreessens time on the eBay Board he has purchased large stakes in two former eBay subsidiaries, reaping significant personal riches. In September 2009, an investor group that included Mr. Andreessen, preempted a planned Skype IPO (in which stockholders would have ended up making multiple billions of dollars) and bought 70% of Skype for less than what eBay had paid to acquire it(1). Mr. Andreessen basked in the purchase, saying that Skype is the archetypal phenomenon: a breakthrough technology(2). His partner was even more excited, stating that Skype is on its way to becoming one of the most important companies in the world(2). One cannot help but wonder what happened to Mr. Andreessens fiduciary responsibility to share his feelings with Mr. Donahoe and the board rather than preempt the planned IPO to further his own interests. A mere 18 months later, Mr. Andreessens investor group flipped Skype to Microsoft for $8.5 billion, a value three times what they paid for it(3), netting approximately $4 billion(3) at the expense of eBay stockholders. After the sale to Microsoft, Mr. Andreessen, a sitting eBay Board member and fiduciary to stockholders, stated: one reason we were enthusiastic about buying Skype was that even though we thought it would be a tremendous standalone business, we also knew that for Microsoft and a number of other companies Skype would be an obvious thing to buy. We knew wed always have the fall-back of selling to strategic buyers(4). Did Mr. Andreessen share this strong view with Mr. Donahoe? Was Mr. Donahoe completely asleep, or even worse, so naive and deferential to his world-class board(5) that he allowed a sitting board member and several private equity firms to walk away with over $4 billion in what was essentially stockholders money after a sale to a strategic that he obviously should have orchestrated himself? Many others have been vocally critical of the Skype transaction(2,6), but, until now, none have taken on the task of standing up to Mr. Donahoe and this board.
Mr. Andreessens next eBay sourced grand slam was his investment in Kynetic. In March 2011, as part of eBays $2.4 billion acquisition of GSI Commerce, the eBay Board decided they no longer wanted the Kynetic portion of GSI Commerce and sold it back to the companys founder for just $31 million in cash and a $467 million sellers note at below market interest.(7,8) In June 2012, Mr. Andreessen pounced, making a $150 million investment in Kynetic at a $1.5 billion valuation, leveraging the low sale price and below market financing which the eBay Board had recently approved.(9) Just a year later, Kynetic was valued at $3.1 billion, giving Mr. Andreessen a paper gain of more than 100%.(10)
Additionally, during Mr. Andreessens time on the eBay Board a time when he has been privy to nonpublic eBay Board information he has made investments in and actively advised, no less than five direct competitors of eBay (four of which are competitors of PayPal), including Boku (mobile payments platform), Coinbase (Bitcoin wallet), Dwolla (secure online money management), Jumio (online and mobile credit card payments) and Fab (design e-commerce)(11). How can Mr. Donahoe and the eBay Board allow Mr. Andreessen to advise these competitors while he simultaneously possesses not only nonpublic eBay Board information but also intimate proprietary information about PayPals operations? But perhaps more importantly, how can Mr. Andreessen be trusted to objectively advise Mr. Donahoe and the eBay Board about the strategic direction of PayPal when he has vested interest in so many of its competitors? Regarding Square, another powerful PayPal competitor, Mr. Andreessen publicly lamented his regret in passing on the opportunity to invest in that company as well.(12)
February 24, 2014, 9:28 AM ET
Carl Icahn Charges eBays Board With Complete Disregard for Accountability
By
Maureen Farrell
Reuters
Carl Icahn appears to be officially waging war against eBay.
The activist investor announced a stake of nearly 2% in eBay last month and has been calling for the company to spin-off its PayPal unit. This morning he stepped up the fight by launching a diatribe against eBays directors on his website Shareholders Square Table.
Heres a copy of the letter:
OPEN LETTER TO EBAY STOCKHOLDERS
February 24, 2014
by Carl Icahn
FOR IMMEDIATE RELEASE
CARL C. ICAHN ISSUES OPEN LETTER TO
EBAY STOCKHOLDERS
New York, New York, February 24, 2014 Today Carl C. Icahn released the following open letter to stockholders of eBay Inc.
Dear Fellow eBay Stockholders,
We have recently accumulated a significant position in eBays common stock because we believe there is great long-term value in the business. However, after diligently researching this company we have discovered multiple lapses in corporate governance. These include certain material conflicts of interest, which we believe could put the future of our company in peril. We have found ourselves in many troubling situations over the years, but the complete disregard for accountability at eBay is the most blatant we have ever seen. Indeed, for the first time in our long history, we have encountered a situation where we believe we should not even have to run a proxy fight to change the board composition. Rather, we believe that in any sane business environment these directors would simply resign immediately from the eBay Board, either out of pure decency or sheer embarrassment at the public exposure of the extent of their self-serving activities.
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?
The Boards Transgressions and CEO Mr. John Donahoes Ineptitude in Addressing Them
Mr. Marc Andreessen Independent Director
Since Mr. Andreessen has been an eBay insider, he has engaged in several transactions that lead us to question his loyalty to eBay. During Mr. Andreessens time on the eBay Board he has purchased large stakes in two former eBay subsidiaries, reaping significant personal riches. In September 2009, an investor group that included Mr. Andreessen, preempted a planned Skype IPO (in which stockholders would have ended up making multiple billions of dollars) and bought 70% of Skype for less than what eBay had paid to acquire it(1). Mr. Andreessen basked in the purchase, saying that Skype is the archetypal phenomenon: a breakthrough technology(2). His partner was even more excited, stating that Skype is on its way to becoming one of the most important companies in the world(2). One cannot help but wonder what happened to Mr. Andreessens fiduciary responsibility to share his feelings with Mr. Donahoe and the board rather than preempt the planned IPO to further his own interests. A mere 18 months later, Mr. Andreessens investor group flipped Skype to Microsoft for $8.5 billion, a value three times what they paid for it(3), netting approximately $4 billion(3) at the expense of eBay stockholders. After the sale to Microsoft, Mr. Andreessen, a sitting eBay Board member and fiduciary to stockholders, stated: one reason we were enthusiastic about buying Skype was that even though we thought it would be a tremendous standalone business, we also knew that for Microsoft and a number of other companies Skype would be an obvious thing to buy. We knew wed always have the fall-back of selling to strategic buyers(4). Did Mr. Andreessen share this strong view with Mr. Donahoe? Was Mr. Donahoe completely asleep, or even worse, so naive and deferential to his world-class board(5) that he allowed a sitting board member and several private equity firms to walk away with over $4 billion in what was essentially stockholders money after a sale to a strategic that he obviously should have orchestrated himself? Many others have been vocally critical of the Skype transaction(2,6), but, until now, none have taken on the task of standing up to Mr. Donahoe and this board.
Mr. Andreessens next eBay sourced grand slam was his investment in Kynetic. In March 2011, as part of eBays $2.4 billion acquisition of GSI Commerce, the eBay Board decided they no longer wanted the Kynetic portion of GSI Commerce and sold it back to the companys founder for just $31 million in cash and a $467 million sellers note at below market interest.(7,8) In June 2012, Mr. Andreessen pounced, making a $150 million investment in Kynetic at a $1.5 billion valuation, leveraging the low sale price and below market financing which the eBay Board had recently approved.(9) Just a year later, Kynetic was valued at $3.1 billion, giving Mr. Andreessen a paper gain of more than 100%.(10)
Additionally, during Mr. Andreessens time on the eBay Board a time when he has been privy to nonpublic eBay Board information he has made investments in and actively advised, no less than five direct competitors of eBay (four of which are competitors of PayPal), including Boku (mobile payments platform), Coinbase (Bitcoin wallet), Dwolla (secure online money management), Jumio (online and mobile credit card payments) and Fab (design e-commerce)(11). How can Mr. Donahoe and the eBay Board allow Mr. Andreessen to advise these competitors while he simultaneously possesses not only nonpublic eBay Board information but also intimate proprietary information about PayPals operations? But perhaps more importantly, how can Mr. Andreessen be trusted to objectively advise Mr. Donahoe and the eBay Board about the strategic direction of PayPal when he has vested interest in so many of its competitors? Regarding Square, another powerful PayPal competitor, Mr. Andreessen publicly lamented his regret in passing on the opportunity to invest in that company as well.(12)