eBay, Carl Icahn end war
The activist investor will drop his proposal to split off PayPal, while eBay will appoint one of Icahn's nominees to its board.
eBay and Carl Icahn have called a truce in their ongoing proxy battle, at least for now.
After months of arguing over board nominees and the future of PayPal, the two sides have hammered out an agreement ahead of eBay's annual meeting on May 13.
Icahn will withdraw his proposal that the board spin off eBay's PayPal business and that the board appoint two of his nominees to the board of directors, eBay said Thursday. In return, eBay will appoint Icahn's suggested choice of David Dorman as an independent director to its board.
Further, eBay has agreed not to adopt a policy preventing board members or certain officers of the company from sharing non-public information with Icahn. But Icahn has signed a confidentiality agreement promising not to reveal any such information shared with him.
Icahn had publicly condemned eBay for not considering a spinoff of its PayPal business and had pressured the company to appoint two of his nominees to the board. The activist investor had even sent a proxy card to eBay investors urging them to vote for his proposal.
Icahn also publicly charged eBay board members Marc Andreessen and Scott Cook with conflicts of interest and CEO John Donahoe with a lack of awareness about the board's activities.
In response, eBay defended Andreessen and Cook and told shareholders to simply ignore Icahn's proxy card. The back-and-forth war of words led to strong accusations. But eBay's announcement of the agreement tried to paint an all-is-forgiven picture.
"As a result of our conversations, it became clear that Carl and I strongly agree on the potential of PayPal and our company," Donahoe said in a statement. "I respect Carl's willingness to work together to drive sustainable shareholder value today and into the future. His record shows that he has done this with many other companies in the past."
Icahn also took the opportunity to applaud the deal and tout Dorman's credentials.
"We are happy to have reached this detente with eBay and believe that Dave Dorman will be a great addition to the company's board of directors," Icahn said in a statement. "As chairman of Motorola, Mr. Dorman, working in tandem with our board nominees, guided the company through the successful separation of its mobile device and home businesses, which greatly enhanced shareholder value."
Still, Icahn won't give up so easily on his notion that PayPal should be a separate company.
"Over the last week I have had a number of conversations with John [Donahue]," Icahn said in his statement. "We both strongly believe in the great potential of eBay and PayPal, and I have found a number of his ideas to be extremely compelling. However, I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and intend to continue to press my case through confidential discussions with the company."
eBay will hold a conference call for its first-quarter earnings at 2 p.m. PT on April 29, followed by its annual meeting at 8 a.m. PT on May 13.
In pre-market activity on Thursday, eBay shares were trading at $55.25, down 64 cents, or 1.15 percent.