By Tess Stynes
EBay Inc. announced a standstill agreement with Carl Icahn that
will give the activist investor a board seat and said it plans to
cut about 7% of its workforce, as the e-commerce giant prepares to
spin off its PayPal electronic-payments business later this
year.
The San Jose, Calif., company said the cuts will total about
2,400 jobs and occur across its eBay Marketplaces, PayPal and eBay
Enterprise businesses. In December, The Wall Street Journal
reported that the company was considering such a plan.
The company announced the agreement with Mr. Icahn and the job
cuts with its fourth-quarter report, in which earnings rose 10% on
continuing growth at its PayPal business.
EBay also said it would explore strategic options for eBay
Enterprise, including a sale or initial public offering. EBay's
enterprise business helps retailers with shipping from store
locations and order management, among other services.
"Enterprise is a strong business," the company said, but "it has
become clear that it has limited synergies with either business and
a separation will allow both to focus exclusively on their core
markets."
The company's agreement with Mr. Icahn, the company's largest
active shareholder, includes certain corporate governance
provisions to be adopted by PayPal as an independent company. The
agreement also appointed Icahn Capital executive Jonathan
Christodoro to eBay's current board.
Mr. Icahn, in a statement on his website, said the corporate
governance provisions includes limits on any so-called poison pills
and prevents a staggered board at PayPal. The provisions were aimed
at giving shareholders a greater ability to weigh in on any offers
made for the company.
"In the end, it should be the shareholders' decision. This
fundamental belief was the underlying philosophy of many of the
corporate governance principles for which we advocated at PayPal,"
Mr. Icahn said. "We applaud eBay's board for making this agreement
possible."
Mr. Icahn had repeatedly advocated for eBay to split well before
the company announced its plans in September. The company said
Wednesday that the split is still on track to occur in the second
half of 2015.
Separately, eBay also announced the appointment of Wall Street
executives Frank Yeary and Perry Traquina to its board. These
appointments bring the total number of directors to 15, 13 of whom
are independent.
Shares of eBay rose 3.5% in recent after-hours trading. Through
Wednesday's close, the stock has risen nearly 16% from a two-year
low in October.
With the breakup, eBay's traditional marketplace division will
lose its fastest-growing division, one that was on pace to become
the company's largest.
Write to Tess Stynes at tess.stynes@wsj.com
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