eBay Says Starboard’s Actions Are Unwarranted, Unreasonable and Detrimental to the Company

eBay Says Starboard's Actions Are Unwarranted, Unreasonable and Detrimental to the Company

Highlights eBay’s Record of Decisive Value Creating Actions and Significant Engagement Efforts with Starboard

eBay Inc., a global commerce leader that connects millions of buyers and sellers around the world, 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.

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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 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 our view, Starboard’s have 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.

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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 is delivering results. We are transforming our business and strengthening our foundation for growth. Highlights of our value enhancing actions include:

  • 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.

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

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