I thought it best to let the rhetoric die-down in the fight between noted activist investor Carl Icahn and Silicon Valley giant, eBay, before weighing in on the matter myself. At times last week, I wondered whether that would indeed happen. However, the situation has now cooled a bit so I want to take this opportunity to provide my own brief perspective.
In any volatile situation, especially one in which there are major personalities such as Icahn and EBay director Marc Andreessen, it is always helpful to take a step back and frame the dispute. In January, Icahn, who has a .82% stake in eBay, proposed that the company spin-off its PayPal electronic payment unit. Through a series of letters to eBay’s shareholders, Icahn also criticized the company’s corporate governance structure. Most notably, Icahn alleged a conflict of interest involving eBay board member Marc Andreessen. An extraordinarily successful venture capitalist (Andreessen Horowitz), Andreessen purchased Skype in 2009 for $4.5 billion as part of an investor group. The investor group then turned around eighteen months later and sold Skype to Microsoft for $8.5 billion.
Icahn claims that Andreessen pre-empted eBay’s planned IPO for Skype. Andreessen disputes that accusation and says that he did not violate any of his fiduciary duties to eBay’s shareholders. He claims that he recused himself from board discussions that could involve companies his firm is backing.
There are, of course, many layers to this mess – and Andreessen’s involvement in the Skype deal is not the only reason that Icahn states that eBay has the “worst corporate governance he’s ever seen.” The reality is that it is very difficult for any outside such as myself to effectively opine on a complicated matter such as this without having all the facts – and we seem to be quite a distance from having those. Nevertheless, on its surface Icahn certainly does give Ebay’s shareholders cause for concern. If I was an eBay shareholder I would demand an external audit of eBay’s corporate governance structure, including an examination as to whether with the Skype transaction Andreessen or any other eBay directors violated their fiduciary duties to the company and its shareholders. As U.S Supreme Court Justice Louis Brandeis once famously stated, “sunlight is the best disinfectant.”
Another issue raised by this dispute between Icahn and eBay, is the rather tight tech circle within Silicon Valley. Am I really to believe that when taking into consideration the potential conflicts of interest of an almost omnipresent tech VC in Silicon Valley, Marc Andreessen was the best candidate when he was appointed to eBay’s board of directors in September of 2008?
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