eBay Inc (NASDAQ:EBAY) CEO John Donahoe spoke with Bloomberg Television’s Erik Schatzker today about the company’s settlement with Carl Icahn. On how it came about, Donahoe said, “Jimmy Lee, who’s the Vice Chairman of JPMorgan, called me last week. He happened to be meeting with Carl on an unrelated topic. He said, look John I think you and Carl should spend more time together. And we did over the weekend. And we talked repeatedly on the phone…”
On what eBay is giving Icahn that other shareholders don’t get, Donahoe said, “Well it’s something we would offer to any large shareholder. It’s relatively straightforward. Which is the directors and I are free to share any confidential information with Carl and if and when we do so, it makes him an insider. So it actually bounds him by the restrictions that any insider would have.
EBay CEO Donahoe: Dorman a `Good Addition’ to Board
SCHATZKER: As you know, Carl Icahn wanted a PayPal spin off. He wanted two seats on your board. He’s getting no spin off and one seat on the board. No doubt John you want to characterize this and you will as a victory for eBay shareholders. But here’s what they’re all wondering, why give Carl Icahn anything at all?
eBay CEO John Donahoe: Well I think what Carl Icahn has done is seen the potential in opportunity in our company. And so he’s really becoming a long-term shareholder which I think is a win-win. And to be clear, Dave Dorman is coming on as an independent director. And an independent director I respect and an independent director Carl respects.
eBay CEO John Donahoe: And so I think that’s a good addition to our board and it’s one that I think will allow us to continue to execute on the enormous opportunities in front of us.
SCHATZKER: John why didn’t you hold out until the annual meeting and give shareholders a chance to decide for themselves?
DONAHOE: Well what shareholders want is, shareholders don’t want some distracting proxy battle. Shareholders want me and our leadership team focused on executing in the market. And this is what we now can do. And so this was, I think a clear win-win for shareholders. And so it’s a clear win for our company.
SCHATZKER: Just let me clarify one point, were you unable to execute with the distraction of the proxy battle with Carl Icahn?
eBay CEO John Donahoe: No we were executing just fine. But what this does is it allows us to quite all the distracting noise and focus on the opportunities in front of us so relatively straightforward opportunity to do this. And it’s a clear win. I think it’s what our investors want. And it’s what we as a company want. And now we move ahead focusing on the enormous opportunity PayPal has to capitalize on mobile payments and digital payments.
The enormous opportunity eBay has to capitalize on the commerce, global commerce opportunity in front of us. So we’ve been driving strong growth and now we will continue to focus strong growth with another strong long-term shareholder in Carl.
SCHATZKER: John tell me more please about the confidentiality agreement. What are you giving to Carl Icahn that other shareholders don’t get?
DONAHOE: Well it’s something we would offer to any large shareholder. It’s relatively straightforward. Which is the directors and I are free to share any confidential information with Carl and if and when we do so, it makes him an insider. So it actually bounds him by the restrictions that any insider would have. Which means he’s going to be longer term in his orientation.
And so it’s relatively straightforward. I’ll periodically get together with Carl and listen to him as I would any large shareholder.
eBay CEO John Donahoe: So I think it’s going to be a win-win.
SCHATZKER: So if any of your other large shareholders, BlackRock for example, Invesco, T Rowe, Wellington, Fidelity, came to you with the same request, you’d give it to them?
eBay CEO John Donahoe: Absolutely. I mean it’s, they’re our shareholders so if they want to get confidential information and bide by the restrictions that come with that, then we’d be happy to provide it. But in this case that’s what Carl wants to do and so that’s what we’ve done.
SCHATZKER: You know that many people see Carl Icahn as a bully. To those folks who still feel that way, explain to them what’s the value of letting the fox in the henhouse?
eBay CEO John Donahoe: Oh I don’t think it’s the fox in the henhouse. Look from the beginning I’ve had direct conversation with Carl, throughout this process. And in all those conversations he’s been respectful; he’s been thoughtful in our one-on-one conversations.
SCHATZKER: So respectful, thoughtful, one-on-one but nasty and accusatory in public? I have not negotiated with Carl Icahn so I don’t know if that’s the way he rolls.
eBay CEO John Donahoe: You know, all I know is in my direct conversation he’s been thoughtful. And what’s happened in this case is Jimmy Lee who’s the Vice Chairman of JPMorgan called me last week. He happened to be meeting with Carl on an unrelated topic. He said, look John I think you and Carl should spend more time together.
And we did over the weekend. And we talked repeatedly on the phone and we focused on not separation or not separation, we focused on the fundamentals of PayPal’s business of eBay’s business. We focused on the enormous opportunities that are in front of our company. And once we did that we had strong common ground and we’ll continue that dialogue going forward.
SCHATZKER: Did Jimmy Lee, was he part of those discussions? Or was that just you and Carl Icahn one on one?
eBay CEO John Donahoe: Well Jimmy just started them and he’s a trusted advisor to both Carl and to me. And he encouraged us to spend more time directly together. Which is what we did.
SCHATZKER: John here’s, this is an issue I want to raise with you because people are looking at this agreement that you have reached with Carl Icahn and they might look at it this way, all an investor needs now to get a seat or at least an independent board seat and confidential assess at one of America’s most respected companies; and I don’t think that you could deny that eBay is one of America’s most respected companies, with a market cap of $70 billion; is a loud mouth, a Twitter fed, a website and less than 1% of the outstanding shares.
eBay CEO John Donahoe: Well first of all it’s 2% of the outstanding shares. So Carl is a large and important investor.
SCHATZKER: Well he started with only .82%.
eBay CEO John Donahoe: Yeah so look. What we’ve done here is we’ve added a highly respected independent director. One who meets the criteria of our board. Dave was a Chief Executive of AT&T where he helped drive AT&T Inc. (NYSE:T)’s turnaround. He’s widely respected for his integrity, for his independence. So he’s an independent board member whose qualifications match all of our board. And we welcome Dave to our boardroom. He’ll be part