eBay Stock Declines Following Revelation of Outgoing CEO's $23 Million Golden Parachute

NEW YORK (TheStreet) -- eBay (EBAY) shares are down 0.7% to $57.13 in trading on Friday after an SEC filing revealed that the online retailer was paying outgoing CEO John Donahoe a $23 million package not to leave the company before it's planned spin off of PayPal.

Four of the company's other top executives will also leave the company once the spin off is complete, with a total compensation package for all of the executives reaching as much as $35 million.

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"John's transition package is closely tied to the performance of the company during the separation period and the company's stock price at the time of separation," spokeswoman Amanda Miller said in a statement.

Also, the company announced that it severing its partnership with ALEC, a conservative political group that has come under fire recently for its stance on climate change.

"After our annual review of eBay Inc's memberships in trade associations and third party organizations we've decided not to renew our membership with American Legislative Exchange Council (ALEC)," the company said in a statement.

eBay joins Microsoft (MSFT) , Yahoo (YHOO) , Facebook (FB) and Yelp  (YELP) as companies who have severed ties with the group this year, according to the San Jose Mercury News.

TheStreet Ratings team rates EBAY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate EBAY INC (EBAY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, revenue growth, growth in earnings per share, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • EBAY's revenue growth trails the industry average of 28.6%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EBAY INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, EBAY INC increased its bottom line by earning $2.18 versus $1.99 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $2.18).
  • Net operating cash flow has slightly increased to $1,368.00 million or 2.54% when compared to the same quarter last year. Despite an increase in cash flow, EBAY INC's cash flow growth rate is still lower than the industry average growth rate of 26.28%.
  • The gross profit margin for EBAY INC is currently very high, coming in at 75.14%. Regardless of EBAY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.46% trails the industry average.
  • You can view the full analysis from the report here: EBAY Ratings Report
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