New York - EBay Inc. reached a deal with activist investor Carl Icahn to stop his proxy fight by agreeing to add another independent director, ending weeks of acrimony and keeping the e-commerce company intact.
Icahn, who took a stake in EBay in January and began campaigning to split off the PayPal payments unit, agreed to withdraw his proposal and his two board nominees ahead of the company’s annual meeting, according to a statement today.
EBay said it will appoint David Dorman, chairman of CVS Caremark, as an independent director, bringing the number of independent members to 10 on the 12-person board.
The deal caps weeks of verbal sparring between Icahn and the largest online marketplace.
Icahn had called a spinoff of PayPal a “no brainer” and also criticised EBay board members for conflicts of interest before proposing an initial public offering for 20 percent of the payments business.
EBay chief executive John Donahoe has repeatedly said PayPal belongs with the company’s e-commerce business.
Icahn said today in the statement that he continues to believe in the benefit of a separation of PayPal “at some point in the near future” and will continue to make his case through private discussions with the company.
Icahn said that while Donahoe has made no commitments regarding a separation, the two have agreed to meet regularly to discuss strategic alternatives.
On Twitter, Icahn said he was “extremely pleased” about the agreement and that it was a “win-win” for shareholders.
In an interview on Bloomberg Television, Donahoe said Icahn has “seen the potential and opportunity in our company” and “I think he’s really becoming a long-term shareholder in our company.”
EBay fell 1.5 percent to $55.05 at 9:34 a.m. in New York.
EBay is just one of the technology companies that has faced activist pressure in recent years.
Apple, Microsoft, Juniper Networks, Yahoo! and others have also been targeted by investors including Icahn and ValueAct Holdings.
Some of the companies have responded with bigger dividends, a board seat or restructurings.
Few of those activist-company interactions have been as publicly contentious as the one between EBay and Icahn.
Over the course of the clash, Icahn attacked EBay’s corporate governance by broadening his criticism of EBay to Donahoe and the board.
In particular, Icahn said EBay directors Marc Andreessen and Intuit co-founder Scott Cook were unfit to be board members due to conflicts of interest.
EBay defended itself by issuing near-daily press releases, with former PayPal executive and LinkedIn founder Reid Hoffman and EBay Chairman Pierre Omidyar jumping into the fray.
Andreessen also took to Twitter to argue that the allegations of conflicts of interest were untrue.
The dispute began simmering down with help from Jimmy Lee, JPMorgan Chase’s vice chairman, Donahoe said in the Bloomberg Television interview.
Lee encouraged Icahn and Donahoe to settle, the chief executive said.
Over the last week, Icahn and Donahoe had a number of conversations, Icahn said in the statement.
In the interview on Bloomberg Television today, Donahoe also said Dorman is a “highly respected” addition to the board.
The 60-year-old Dorman is a former chief executive of AT&T.
He’s also on the boards of Yum! Brands and Motorola Solutions. - Bloomberg News