Icahn Sharpens Attack On Two eBay Directors

NEW YORK (The Deal) -- Carl Icahn on Wednesday escalated his criticism of eBay (EBAY) directors, calling the group "dysfunctional" and urging shareholders to instead support a competing slate the investor plans to offer for election.

Icahn, who is pushing for eBay to spin off its PayPal unit, on Tuesday wrote a letter to shareholders accusing eBay directors Marc Andreessen and Scott Cook of putting their personal financial interests ahead of shareholders. The investor, owner of 2% of eBay shares, also said that eBay CEO John Donahoe is "completely asleep" or "either naive or willingly blind to lapses by the board."

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."

At issue is Cook's ties to Intuit Inc., a company he founded and remains a major shareholder, but which Icahn says is a "fierce competitor" of PayPal. Andreessen meanwhile is under fire for his role in eBay's $1.9 billion sale of Skype Technologies SA to a consortium including Andreessen's venture firm Andreessen Horowitz. The consortium 18 months later sold the unit to Microsoft Corp. for $8.5 billion.

Icahn in his Wednesday response agreed that Andreessen and Cook are accomplished, but said he believes the directors "appear to be value-driven for themselves," personally profiting at the expense of eBay. The investor repeated his questions about why the two remain on the eBay board.

"Corporate governance failures do not have a shelf-life," Icahn wrote, dismissing eBay's response that the Skype deal was in the past as irrelevant. As to Cook, Icahn noted that eBay's $800 million deal to acquire Braintree Payment Solutions LLC announced in September pushes it into more direct competition with Intuit's payment processing operation.

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