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EBay Tells Shareholders to Reject Icahn Slate

Stocks in this article: EBAY

NEW YORK (The Deal) -- Internet commerce company eBay (EBAY) on Tuesday filed its proxy statement ahead of its May 13 annual meeting, urging shareholders to reject a slate of directors nominated by Carl Icahn and again rejecting Icahn's plan to separate PayPal.

San Jose, Calif.-based eBay, in a letter to shareholders accompanying the filing, repeated its arguments that PayPal's association with the company has accelerated the payment service's growth and provided it with the resources it needs to expand.

"We continue to believe today that PayPal and eBay together is the best path to creating sustainable shareholder value in the future," eBay founder and chairman Pierre Omidyar, CEO John Donahoe and lead independent director Thomas Tierney wrote. "In today's competitive environment, the advantages of PayPal and eBay together are more important than ever."

The filing came a day after Icahn in a television appearance reiterated his criticism of eBay management and its board, calling Donahoe "a nice guy" who "has not done a good job." Icahn also urged shareholders to put him on the board. The investor has also been critical of directors Marc L. Andreessen and Scott Cook, accusing them of staying on the board despite conflicts.

EBay in its letter said that the company, over the past five years, with PayPal has generated a 441% increase in share price, "significantly outpacing" both the Nasdaq and S&P 500. The company said it believes that the rise of mobile computing is pushing a convergence between payments and commerce, saying that eBay, thanks to its PayPal ownership, "is a leader in this evolving competitive environment."

The company criticized what it called Icahn's "aggressive media campaign to attack the management and directors of eBay," noting that the investor has backed away from his initial proposal to spin out PayPal in favor of instead selling a stake in PayPal to the public.

"The bottom line is that Mr. Icahn is wrong about the quality of our board and he's wrong about the best course today for PayPal," the board wrote. "We oppose his unqualified board nominees, and we recommend that shareholders vote against his nonbinding proposal to separate PayPal from eBay."

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