Billionaire activist investor Carl Icahn issued an open letter to shareholders of the global commerce company in which he excoriated eBay’s management and board for various alleged conflicts of interest and lapses in corporate governance

Carl Icahn’s eBay battle gets nasty

By Jesse Solomon  @JesseSolomonCNN February 24, 2014: 12:48 PM ET

Carl Icahn released a letter Monday criticizing eBay’s management and two of its board of directors. EBay is fighting back.

Carl Icahn and eBay are digging into the trenches.

On Monday, the activist investor issued an open letter to shareholders of the global commerce company in which he excoriated eBay’s (EBAYFortune 500) management and board for various alleged conflicts of interest and lapses in corporate governance.

And he didn’t tread lightly.

“The complete disregard for accountability at eBay is the most blatant we have ever seen,” Icahn said in the letter.

Icahn took square aim at Marc Andreesen and Scott Cook, two members of eBay’s board of directors. Icahn chastised the men for investing in and advising companies that Icahn claims are direct eBay competitors. For Andreesen, Icahn said such investments include mobile payments platform Boku and Bitcoin wallet Coinbase. In Cook’s case, Icahn attacked his board seat and financial stake in software firm Intuit (INTU).

He also had some harsh words for eBay CEO John Donahue.

Carl Icahn can’t lose

“It is very sad to us that Mr. Donahoe appears to lack awareness about what is going on around him on his board and in the marketplace,” Icahn said.

EBay hit back hard.

“New eBay shareholder Carl 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,” the company said in response. “Mr. Icahn unfortunately has resorted to mudslinging attacks against two impeccably qualified directors.”

Shares of eBay rose more than 3% on Monday.

Last month, Icahn revealed hat he had amassed a 0.82% stake in eBay and nominated two of his employees for seats on its board of directors. He also unveiled a proposalurging eBay to spin off PayPal into its own company.

Gary Hewitt of corporate governance research firm GMI said there’s sometimes a gray area when it comes to board members advising multiple companies who are direct competitors. While the situation on eBay’s board is not uncommon — especially in the technology industry — Icahn’s argument does have merit, Hewitt believes .

“Icahn has chosen to characterize it one way,” Hewitt said. “It can be difficult for the board to self-police on this basis.”

Related: Companies fight back against hedge funds

To be sure, there are benefits to having board members with experience in networking and deal-making in the field, according to Hewitt. But ultimately, it’s up to the shareholders to decide who they want on the board.

Monday’s letter also reaffirmed Icahn’s determination to separate PayPal from eBay, stating that two distinct companies would make economic sense and foster greater innovation.

The 77-year old Icahn is known to take sizable positions in companies and then aggressively advocate for change in the name of shareholder value.

While Icahn is known to be tough in his attempts to shake up companies, he knows when to stand down. Earlier this month, he backed off his proposal for a $150 stock buyback for Apple (AAPLFortune 500) after a shareholder advisory firm said it would not support his plan. 

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: