Updated from 5:03 p.m. ET to clarify Icahn holdings and eBay response to PayPal proposal.

NEW YORK (TheStreet) - Activist investor Carl Icahn has taken a large stake in eBay (EBAY) - Get Report and is calling for the company to spin off its highly successful payments division, PayPal.

EBay said in a fourth-quarter earnings release that Icahn has nominated two of his employees to the company's board of directors and submitted a non-binding proposal for the spinoff, which would seek to split PayPal off from eBay's online marketplace businesses, which also include ticket re-seller StubHub and fulfillment specialist GSI Commerce.

San Jose-based eBay said Icahn's appointments would be passed onto a nominating committee of the company's board of directors. EBay also disclosed that it has already explored a spinoff or separation of PayPal in an "in depth" manner. Those assessments, however, led the company to believe it was in the best interest of shareholders to keep PayPal intertwined with the larger company.

"Regarding Mr. Icahn's separation proposal, eBay's Board of Directors routinely assesses the company's strategic direction and has explored in depth a spinoff or separation of PayPal," the company said.

"eBay's Board of Directors has concluded that the company and its shareholders are best served by the current strategic direction of the company and does not believe that breaking up the company is the best way to maximize shareholder value. As part of eBay Inc., PayPal is able to leverage the company's technology capabilities, commerce platforms and relationships with retailers, brands and large merchants worldwide," the company added.

Despite previously deciding against a split of PayPal, eBay said it "welcomes the opportunity to listen to the perspective of all of its shareholders, including Mr. Icahn."

According to eBay, Icahn holds an interest in the company's shares of approximately 0.82% through common stock and derivative holdings. Without knowing the mix of shares versus swaps or options that Icahn has purchased it is hard to know Icahn's direct holding of eBay shares. Icahn Enterprises, the holding company majority-owned by Carl Icahn, didn't make any public filings on Wednesday disclosing the size of its eBay investment.

EBay's Savvy Bet on PayPal 

PayPal is a bit of a legend in Silicon Valley and has acted as a springboard for the careers of luminaries like Peter Thiel of Accel Partners and Elon Musk, the current CEO of Tesla (TSLA) - Get Report, SolarCity (SCTY) and Space-X. The company went public in February 2002, and was acquired by eBay later that year for $1.5 billion.

In recent years, PayPal has been ballast for eBay's earnings as the company's online marketplace business has struggled. Total revenue for PayPal came in at over $1.8 billion in the fourth quarter and in excess of $6 billion for the full year.

EBay, while often criticized for its slow-changing online marketplace, has spent recent years seeking to replicate smart acquisitions like PayPal. The company has made what appear to be savvy bets on the sports and entertainment market through its acquisition of StubHub and on the logistics that are needed to run a competitive online retail operation through GSI Commerce.

Increasingly, eBay's online marketplace appears to be trying to compete against Amazon (AMZN) - Get Report in offering same day delivery in some major metropolitan areas. 

In fourth-quarter earnings released on Wednesday, eBay reported revenue of $4.53 billion and adjusted earnings per share of 81 cents.

EBay shares have under-performed the S&P 500 in the past 12-months, gaining less than 1% versus an over 20% gain by the broader index. Shares in eBay surged as much as 10% in after-market trading on the company's disclosure of Icahn's proxy campaign.

Icahn Sets his Gaze on Technology

Icahn, for his part, has been an active activist investor in the past year. On Wednesday alone, Icahn continued to tangle with iPhone maker Apple (AAPL) - Get Report, disclosing that he has increased his holding in the company's shares to roughly $3 billion and will continue to pursue a more aggressive buyback strategy.

"We feel $APPL board is doing great disservice to shareholders by not having markedly increased its buyback. In-depth letter to follow soon," Icahn said on Twitter on Wednesday.

Icahn Enterprises, the holding company that Mr. Icahn controls, has been an active issuer of stock and debt in the past three months, possibly as a means to throttle up his investment in operating subsidiaries and his activist investments in publicly traded companies such as eBay and Apple.

Increasingly, it appears Icahn, 77, is gaining comfort in taking on the biggest names in the tech sector. Icahn played a pivotal role in trying to block Dell's leveraged buyout by Michael Dell and Silver Lake Partners. Prior to that, the activist played a crucial role in the breakup of Motorola and the sale of its handset unit, Motorola Mobility, to Google (GOOG) - Get Report.

-- Written by Antoine Gara in New York