eBay Board and Starboard Blue LP Exchange Angry Letters


While the world is battling the COVID-19 Pandemic, eBay and Starboard Blue LP (Starboard), which holds more than 1% of eBay’s shares, are engaged in a battle regarding the company’s future and direction.

This morning Starboard fired off another letter to eBay’s Board. Here a few highlights from the document detailing Starboard’s grievances:

  • “We have consistently expressed that our focus is on driving operational improvements in the core Marketplace business while pursuing a separation of StubHub and eBay Classifieds Group (“Classifieds”). While eBay has made progress on some of these initiatives, much work remains to be done and business trends in the core Marketplace business have continued on a downward trajectory.”
  • “During our time as shareholders of eBay, it has become increasingly clear that the current Board has had difficulty making the critical decisions that the Company has needed, as evidenced by the delay in making a CEO change that seemed inevitable after sustained underperformance, acceptance of a subpar operating plan following an eight-month-long Operating Review, as well as the delay in the Strategic Review of eBay’s non-core businesses.”
  • “We are primarily focused on the CEO search process and the development of an improved operating plan. In our view, the CEO search process and the development of an improved operating plan are directly and inextricably linked.”
  • “We strongly believe that eBay should be focused on identifying qualified external candidates in order to hire a new CEO that will bring a fresh perspective and energy to the Company after its prolonged underperformance.  The new CEO must be capable of making sustainable improvements to the core Marketplace business that can drive profitable growth by focusing on eBay’s strengths and competitive advantages.”

eBay Response

This afternoon, eBay issued the following statement in response to the letter from Starboard Value LP (“Starboard”) announcing that it has nominated four candidates to stand for election to the Company’s Board of Directors at eBay’s 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”).

  • “After extensive private discussions and engagement with Starboard’s representatives, eBay’s Board believes Starboard’s nominations are unwarranted and unreasonable, particularly in light of the decisive actions eBay has taken, and is taking, including a CEO search process that includes external and internal candidates. eBay’s efforts have been positively received by our investors and market analysts.”
  • “Starboard’s “campaign platform” is constantly changing and does not include useful suggestions or meaningful content. The Board currently includes a principal of a major activist investor (Elliott Management) and a director jointly nominated and agreed upon with Starboard one year ago. These new directors have been integrated into the board and their perspectives and contributions are valued.”
  • “It is unclear what Starboard is hoping to accomplish through the appointment of four more candidates, other than to create unnecessary distraction and, as a relatively small minority investor, to obtain an outsized role on the Board.”
  • “Moreover, we are disappointed that Starboard has decided to announce its previously provided nominations amidst the global COVID-19 pandemic while the Board and management are trying to focus on the business, employee health and safety, and the important CEO search and portfolio review that are underway.”

eBay Claims It Has Made Genuine Efforts to Engage with Starboard’s Requests

eBay has maintained a frequent and substantive dialogue with Starboard over the last 18 months. eBay’s efforts have been a genuine attempt to engage constructively; in its view, Starboard has not.

  • “In the first three months of 2020 alone, members of eBay’s Board and management team have had several discussions with Starboard representatives to hear its views and to answer questions about the Company’s revitalized strategy, our plan for Classifieds, and the Board’s CEO search.”
  • “As part of our engagement, eBay twice offered to enter into a non-disclosure agreement in order to share more detailed information on the Classifieds review process and CEO search. Our purpose was to enable Starboard to understand the care, skill and motivation of the Board and management in making decisions and taking actions to serve the best interests of all eBay shareholders. However, Starboard refused both offers.”
  • “To help the eBay Board better understand and substantiate Starboard’s recommendations, eBay requested, on multiple occasions, that Starboard provide analyses supporting its ideas, particularly relating to operating margins. Starboard never responded to these requests.”

eBay Believes Starboard is Overreaching

  • “Starboard’s thesis for eBay is ever-evolving. It seems that Starboard is searching for a “campaign platform” to support its desire for an outsized role on the Board. The Company’s Board and management are already acting on every topic that Starboard claims needs attention.”
  • “Our Board has engaged in an extensive search process to identify the next CEO for eBay. The Board is considering external and internal candidates, and its priority is finding the best possible person to lead eBay.”
  • “eBay recently completed the sale of StubHub for $4.05 billion in cash, representing more than 25 times EBITDA.”
  • “We are pursuing a process to unlock value for eBay’s Classifieds business, and will provide an update to our shareholders by mid-year. We are in active discussions with multiple parties.”
  • “Starboard appears to agree with the substance of our actions with its primary concern being their timing. However, all of the actions the Board and management are taking are progressing at speed to maximize, not compromise, value.”

eBay Says It is Delivering Results

  • “Significantly improved margins. We delivered 2 points of margin improvement in 2019 enabling 1 point of reinvestment in Payments and Advertising, which are delivering incremental revenue growth. We have announced a plan that delivers at least 2 additional points of operating margin by 2022, further extending our margin rate well above peers.”
  • “Increased focus on Marketplace volume growth with a reorganization of the executive leadership team and a re-prioritized customer-focused plan that includes improved vertical buyer experiences, more data and tools for sellers, and increased platform conversion leveraging an expanded structured data foundation.”
  • “Scaled Managed Payments in the U.S. and Germany. By 2022, Payments is expected to generate an incremental $2 billion of revenue and $0.5 billion of operating income.”
  • “Executed $5.0 billion in share buybacks in 2019 and recently announced expansion of 2020 share buyback plan from $1.5 billion to $4.5 billion; deployed $3.0 billion into an ASR (Accelerated Share Repurchase) from StubHub proceeds immediately following deal closure.”
  • “Implemented eBay’s first ever dividend in 2019 and is committed to a 14% increase in 2020.”

eBay’s Board and management say they are highly confident in its strategy and the company will continue to take actions to drive value and serve the best interests of eBay shareholders.

About eBay’s Board of Directors

eBay’s Board is composed of 14 independent, highly qualified directors, including an independent Chairman, who together have the experience and expertise necessary to oversee the strategic and operational direction of the Company and management’s execution.

These directors have proven track records as public company executives, Board members and global business leaders, as well as significant experience in the areas of technology, media, consumer marketing, policy, large-scale operations and corporate governance.

eBay is committed to fostering an environment that embraces diversity and differing perspectives, including at the Board level.

Of the Company’s current directors, 11 new directors were added since 2015, including two shareholder representatives added last year.

eBay’s directors have an average tenure of approximately seven years and a median tenure of approximately four years.

One of eBay’s goals in board refreshment is enhancing the diversity of the Board, and to that end, three women have joined the Board since 2015.

eBay’s Board will present the Board’s recommended slate of director nominees in the Company’s definitive proxy statement and other materials, to be filed with the U.S. Securities and Exchange Commission and mailed to all shareholders eligible to vote at the 2020 Annual Meeting.

What do you think? Is eBay doing everything it can as it says or does Starboard have a point?

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eBay Again Put Under Pressure to Sell Classifieds Group – Focus on Core Marketplace

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