This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Calpers Opposes eBay's Options Plan

Updated from 1:10 p.m. EDT

Opposition is mounting to eBay's (EBAY) plan to expand its pool of stock options, with the nation's largest public pension fund deciding to vote against the proposal.

Calling it "excessive," the California Public Employees' Retirement System, or Calpers, said it will vote its shares against the plan. Calpers owns 213,000 shares in eBay, worth about $21.6 million in recent trading.

eBay did not return calls seeking comment.

Not only do options dilute shareholder value, but corporate governance critics have linked them to the scandals at Enron and WorldCom, charging that their use tends to encourage short-term -- and sometimes illegal -- actions to boost stock prices.

While not among the very largest institutional holders of eBay's stock, Calpers, with its $138 billion investment portfolio, is among the most influential. And it is taking a reformist bent in some of its votes.

They Object

The options plan is not the only issue on which Calpers plans to vote against. The pension fund also plans to vote against the board's selection of PricewaterhouseCoopers as the company's auditor. Calpers opposes this choice because PricewaterhouseCoopers, which has served as eBay's auditor since 1996, has also performed consulting work for the online auctioneer.

Last year, for instance, PricewaterhouseCoopers charged eBay $1.2 million in audit fees and $747,000 more in audit-related fees, which includes due diligence reviews of acquisitions and divestitures. Meanwhile, PricewaterhouseCoopers billed eBay $19,000 for consulting work regarding tax planning and advice, and another $91,000 for legal and other services.

"The Audit Committee has determined that the rendering of non-audit services by PwC was compatible with maintaining their independence," eBay said in its proxy statement.

But Calpers disagrees. For companies in which it invests, the pension fund has decided it will vote against their choice of auditors if the auditor is doing consulting work as well, said Brad Pacheco, a spokesman for agency.

"It doesn't matter the degree of consulting work. We still think there's a conflict there when they're taking on those dual roles," Pacheco said.

Calpers is taking this opposition to auditors doing consulting work a step further. The agency is voting against company directors who as members of an audit committee approve their auditors' dual role.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EBAY $24.43 0.00%
INTC $30.28 0.00%
YHOO $36.60 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs