According to Re/code, knowledgeable sources are saying that eBay Inc (NASDAQ:EBAY) CEO John Donahoe will probably leave eBay’s board of directors when the company spins off payment subsidiary PayPal next year. Donahoe has said he will join the BoD of PayPal instead, the sources noted. Of note, Donahoe has already publicly stated he is leaving as CEO, but would serve on one or both company boards after the spinoff.
Further details on Donahoe’s decision
The Re/code sources note that Donahoe’s decision is apparently being influenced by wanting to give soon-to-be eBay CEO Devin Wenig the freedom to run the company as he desires without having to look over his shoulder to his former boss.
In another tidbit, it seems that current eBay CFO Bob Swan is planning join eBay’s board if Donahoe decides to serve only on PayPal’s BoD.
eBay spokesman Alan Marks noted that decisions on board compositions will be made by the eBay board before the split is finalized.
eBay spinoff of PayPal
The auction giant announced a couple of months ago that it was planning to spin PayPal off into a separate public company. The decision came just a few months after Carl Icahn first urged the San Jose-based e-commerce firm to take that step. Ironically, when Icahn initiated his campaign for a split, Donahoe said the idea was fighting industry trends. “I’d say commerce and payments are converging, not diverging,” Donahoe told Re/code in January.
If he decides to move to PayPal, Donahoe will be moving to eBay Inc (NASDAQ:EBAY)’s fastest-growing business. PayPal’s revenues were up more than 20% year over year in the third quarter to nearly $2 billion. That’s not too much less than eBay’s Marketplaces revenue of $2.6 billion, which only expanded by 6% in the quarter. Given the current growth rates, PayPal is likely to move past eBay in revenue within a year or so.
Of note, the two businesses still need to finalize commercial agreements regarding their working relationship after the split. Analysts say the financial impact those agreements will have on the two businesses remains unclear at this point.