Investor Carl Icahn has ripped into the eBay board of directors and called for the company to spin off its PayPal unit in a colorful letter to eBay stockholders released Monday.
Icahn, a long-time activist investor in tech companies. accused two eBay board members, Marc Andreessen and Scott Cook, of directly competing with the company, and said that CEO John Donahoe was "completely asleep or, even worse, either naive or willfully blind to these grave lapses of accountability and stockholder value destruction." Icahn called on eBay's board members to resign.
EBay should spin off PayPal because the online payments provider is "shrouded by a conglomerate discount the market has afforded eBay," according to his letter. A separate PayPal would allow the two "independent management teams to most effectively build two very different business platforms, make economic decisions independent of each other and, most importantly, foster innovation," he wrote.
The online payments industry is evolving quickly, and PayPal is at a critical point where it could be left behind, Icahn added. Icahn has nominated two allies for slots on eBay's board.
Icahn, who reportedly owns about 2 percent of eBay's stock, questioned Andreessen's commitment to eBay, saying the entrepreneur purchased "large stakes" in two former eBay subsidiaries, Skype and Kynetic. Andreessen has also advised several competitors to PayPal, Icahn wrote.
Cook is founder, former CEO and a current board member of Intuit, which has a Go-Payment service that is a "direct competitor" of PayPal, Icahn added. "How can the board have a conversation about the strategy or performance of PayPal when a representative of a direct competitor who has so much at stake is in the room?" Icahn wrote.
EBay responded by saying 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."
The company is "fully transparent" about its board members' other affiliations, the company said in its statement. The company called Andreessen and Cook valuable assets to the company's board.
EBay's board sees significant advantages in keeping PayPal and eBay together, the statement added. "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," the statement said.
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