WHEN: Today, Thursday, April 10th
WHERE: CNBC's "Squawk Box"
Following is the unofficial transcript of a FIRST ON CNBC interview with eBay President & CEO John Donahoe. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000265932.
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: WE HAVE SOME BREAKING NEWS THIS MORNING ON EBAY. CARL ICAHN'S PROXY BATTLE, IT JUST ENDED. EBAY TODAY ANNOUNCING THAT IT REACHED AN AGREEMENT WITH INVESTOR CARL ICAHN ENDING THE PROXY CONTEST BEFORE THE COMPANY'S ANNUAL MEETING OF STOCKHOLDERS. THE DRAMA NOW OVER. MR. ICAHN WITHDRAWING BOTH OF HIS PROPOSALS TO SEPARATE THE COMPANY'S PAYPAL BUSINESS AND HIS TWO NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS. IN A STATEMENT, ICAHN SAID THE FOLLOWING. "I CONTINUE TO BELIEVE THAT EBAY WOULD BENEFIT FROM THE SEPARATEION OF PAYPAL AT SOME POINT IN THE NEAR FUTURE AND INTEND TO CONTINUE TO PRESS MY CASE THROUGH CONFIDENTIAL DISCUSSIONS WITH THE COMPANY." WE SHOULD NOTE THAT THERE IS A CONFIDENTIALITY AGREEMENT. WE WILL TALK ABOUT THAT IN A SECOND. "WHILE JOHN HAS MADE NO COMMITMENTS REGARDING SUCH A SEPARATION, HE AND I HAVE AGREED TO MEET REGULARLY WHEN HE IS IN NEW YORK TO DISCUSS STRATEGIC ALTERNATIVES." JOINING US NOW, FIRST ON CNBC, TO TALK ABOUT ALL OF THIS AND MORE, EBAY PRESIDENT AND CEO JOHN DONAHOE. GOOD MORNING TO YOU.
JOHN DONAHOE: GOOD MORNING, ANDREW.
SORKIN: SO, IT APPEARS THAT MR. ICAHN HAS CAPITULATED. IS THAT A CORRECT DESCRIPTION?
DONAHOE: OH I WOULDN'T PUT IT THAT WAY AT ALL, ANDREW. I THINK WE HAD A CHANCE TO TALK MORE ABOUT PAYPAL, MORE ABOUT EBAY, MORE ABOUT THE OPPORTUNITY OF THE COMPANY AND I THINK CARL NOW SEES THE POTENTIAL OF OUR COMPANY AND IS NOW BECOMING, I THINK, A LONG-TERM SHAREHOLDER. SO I THINK THIS IS A REAL WIN-WIN FOR BOTH US AND FOR EBAY SHAREHOLDERS.
SORKIN: THIS IS A MAN WHO CALLED YOU CLUELESS ABOUT CORPORATE GOVERNANCE AND EITHER INCOMPETENT OR NEGLIGENT. AND NOW EVERYBODY'S SINGING KUMBAYA. HOW DOES THAT HAPPEN?
DONAHOE: YOU KNOW, ANDREW, I HAVEN'T BEEN PAYING MUCH ATTENTION TO A LOT OF THE BACK AND FORTH OVER THE LAST SEVERAL WEEKS. MY FOCUS HAS BEEN ON GROWING OUR COMPANY AND NOW WHAT REALLY HAS CHANGED HERE IS OUR CONVERSATION GOT TO THE FUNDAMENTALS OF THE BUSINESS AND THE FUNDAMENTALS OF THE OPPORTUNITY IN FRONT OF US FOR BOTH EBAY AND PAYPAL AND THAT IS WHAT WE ARE ALIGNED ON. THAT IS WHERE WE FOUND COMMON GROUND AND THAT'S WHAT MY FOCUS AND OUR FOCUS WILL BE GOING FORWARD.
SORKIN: SO HE IS WITHDRAWING, YOU GUYS HAVE BOTH AGREED TO PUT DAVID DORMAN ON THE BOARD, HE HAD AN EXPERIENCE, OBVIOUSLY, WITH CARL ICAHN AT MOTOROLA. HOW DID THAT HAPPEN?
DONAHOE: WELL, WE WERE SEARCHING FOR A MUTUALLY AGREEABLE INDEPENDENT DIRECTOR AND I'VE KNOWN DAVE FOR NUMEROUS YEARS, AS YOU KNOW, HE IS A WORLD-CLASS EXECUTIVE. A WORLD-CLASS LEADER. SOMEONE WHOSE INTEGRITY AND INDEPENDENCE IS UNQUESTIONABLE AND I FEEL DELIGHTED TO BE ADDING DAVE TO OUR BOARD. OUR BOARD FEELS DELIGHTED AND I THINK CARL THINKS THAT IS A GOOD MOVE AS WELL. SO, AGAIN, THIS HAS NICE WIN-WIN CHARACTERISTICS.
SORKIN: IF YOU HADN'T DONE THIS, DID YOU THINK YOU WERE GOING TO LOSE OR WIN?
DONAHOE: OH, WE THOUGHT WE WERE GOING TO WIN THE VOTE. BUT, YOU KNOW, CARL HIMSELF SAID, LET'S MAKE PEACE NOT WAR. THIS PROXY BATTLE WAS NOT SOMETHING THAT WAS HELPING EBAY SHAREHOLDERS OR HELPING US INNOVATE AND EXECUTE MORE EFFECTIVELY. SO NOW THAT IS BEHIND US AND WE CAN FOCUS ON WHAT IS MOST IMPORTANT WHICH IS COMPETING IN THE MARKET AND DRIVING STRONG INNOVATION, WHICH WILL DRIVE STRONG GROWTH. WHICH IS THE ONLY REAL WAY TO DRIVE SUSTAINABLE SHAREHOLDER VALUE.
SORKIN: YOU SIGNED A CONFIDENTIALITY AGREEMENT WITH HIM, WHICH IS GOING TO GIVE HIM ACCESS TO YOU AND OTHERS AT THE COMPANY FOR HIM TO CONTINUE TO PRESS HIS CASE AROUND SEPARATING THE PAYPAL UNIT FROM EBAY. WHAT ARE THE CHANCES THAT THAT HAPPENS? LET'S SAY NOT TOMORROW OBVIOUSLY, BUT IN THE NEXT 12 OR 18 MONTHS?
DONAHOE: YOU KNOW, ANDREW, WHAT I'VE SAID ALL THE WAY ALONG IS THAT THE BOARD AND I LOOK AT OUR STRATEGIC ALTERNATIVES REGULARLY. WE'VE DONE THAT IN THE PAST AND WE WILL CONTINUE TO DO IT. AND FOR NOW, WE THINK EBAY AND PAYPAL ARE BETTER TOGETHER. AND THAT WHAT WE LOOK AT IS HOW DO WE GROWTH MOST EFFECTIVELY IN THE MARKETPLACE. HOW DOES PAYPAL GROW, HOW DOES EBAY GROW. AND TODAY, EBAY MAKES PAYPAL MORE SUCCESSFUL, BECAUSE OF THE STRONG SYNERGIES AND VICE VERSA. IF AND WHEN THAT CHANGES, WE WILL ACT RATIONALLY. BUT FOR NOW, EBAY AND PAYPAL ARE BETTER TOGETHER AND WE WILL CONTINUE TO EXECUTE IN THAT DIRECTION.
SORKIN: JOHN, ONE OF YOUR LARGE SHAREHOLDERS IS HERE, BILL MILLER. HE ACTUALLY PICKED UP SOME OF YOUR STOCK BEFORE CARL ICAHN DID. IS THAT RIGHT?
BILL MILLER: CORRECT.
SORKIN: WHAT IS YOUR TAKE ON WHAT HAS JUST HAPPENED HERE?
MILLER: WELL, WE HAVE BEEN IN AND OUT OF EBAY OVER THE YEARS. AND I HAVE A HIGH REGARD FOR JOHN AND THE TEAM AND WHAT THEY'VE DONE. WE BOUGHT THE STOCK BECAUSE WE THOUGHT IT WAS UNDERVALUED, SO WE AGREE WITH CARL ON THAT ONE. WE THINK IT IS WORTH IN THE MID-70S AND I THINK JOHN HAS DONE A GREAT JOB THERE. IF YOU GO BACK AND LOOK AT THIS THING, I THINK THIS WAS A REALLY CLOSE CALL IN THE SENSE OF – YOU HAD ELON MUSK ON ONE SIDE AND, I THINK, PETER THIEL ON THE OTHER SIDE WITH RESPECT TO SPLITTING OFF PAYPAL. WHEN EBAY BOUGHT PAYPAL, THEY PAID ABOUT 15 PERCENT OF THEIR MARKET CAP FOR PAYPAL AND PAYPAL IS PROBABLY WORTH, UNDER SOME ANALYSTS' ESTIMATES, 40 TO 50 PERCENT OF THEIR MARKET CAP. SO CLEARLY, THERE HAS BEEN A LOT OF VALUE CREATION WITH PAYPAL UNDER MEG AND JOHN'S LEADERSHIP. AND I WOULD TEND TO GO ALONG WITH WHAT JOHN SAID WHICH IS I THINK IT IS SOMETHING THAT SHOULD BE STUDIED OVER TIME. IT'S CERTAINLY NOT CLEAR RIGHT NOW THAT PAYPAL SHOULD BE SPLIT OFF.
SORKIN: RIGHT. JOHN, CAN YOU JUST EXPLAIN THIS TO US IN TERMS OF PERSONAL DYNAMICS? WHEN YOU HAVE SOMEBODY LIKE CARL ATTACK YOU PERSONALLY, ATTACK OTHERS LIKE MARC ANDREESSEN ON THE BOARD, AND JUST ABOUT THE ENTIRE COMPANY. YOU KNOW HAVE SIGNED A CONFIDENTIALITY AGREEMENT WHERE, SENSIBLY, YOU ARE GOING TO BE SEEING AND TALKING TO HIM REGULARLY. HOW IS THAT SUPPOSED TO HAPPEN?
DONAHOE: IT IS RELATIVELY STRAIGHT FORWARD, AS I WILL TALK WITH CARL AS I WOULD WITH ANY LONG-TERM SHAREHOLDER. AND LOOK, THERE HAS BEEN A LOT ON THE DYNAMICS IN THIS MARKET, OR OUT IN THE MEDIA AND PRESS. THE TRUTH IS I HAVE HAD CONVERSATIONS WITH CARL ALL THE WAY ALONG. CONFIDENTIAL CONVERSATIONS. AND A WEEK AGO, JIMMY LEE, WHO IS THE VICE CHAIR OF JPMORGAN, CALLED ME AND SAID HE HAD BEEN MEETING WITH CARL ON SOMETHING COMPLETELY UNRELATED, BUT HE SAW OPPORTUNITY FOR SOME SORT OF COMPROMISE. SO HE ENCOURAGED BOTH OF US TO SPEND MORE TIME TOGETHER. WHICH IS WHAT WE DID OVER THE WEEKEND AND WE HAD MULTIPLE CONVERSATIONS FOCUSING ON NOT SEPARATION OR NOT SEPARATION, NOT ANY OF THE THEATRICS, BUT FOCUSING ON REALLY UNDERSTANDING PAYPAL, UNDERSTANDING EBAY AND UNDERSTANDING THE ENORMOUS OPPORTUNITY WE HAD. AND ONCE WE HAD THOSE KINDS OF CONVERSATIONS AROUND THE SUBSTANCE OF THE BUSINESS, WE FOUND COMMON GROUND AND WE WERE ALIGNED. AND BY THE END OF THE WEEKEND IT WAS CLEAR THAT I THINK CARL BELIEVES IN THE FUTURE OF OUR BUSINESS AS DO I, AND WE FOUND A WAY TO MAKE THIS A WIN-WIN INSTEAD OF A ZERO-SUM GAME.
SORKIN: RIGHT. EXPLAIN THIS. YOU KNOW, FOR OTHER CEOS, WHO MAY IN THE FUTURE BE ATTACKED BY CARL ICAHN PUBLICLY, ARE THOSE ACCUSATIONS REAL? IS IT THEATER? HOW ARE YOU EVEN SUPPOSED TO THINK ABOUT SOME OF THESE THINGS? BECAUSE HE SAID SOME VERY DIFFICULT AND TOUGH THINGS ABOUT BOTH YOU PERSONALLY AND MEMBERS OF YOUR BOARD AND EXECUTIVE TEAM.
DONAHOE: YOU KNOW, ONE OF THE THINGS WHEN I REACHED OUT TO CEOS THAT HAD DEALT WITH CARL EARLY ON, THEY ENCOURAGED ME TO REACH OUT TO HIM DIRECTLY, WHICH I DID. AND SO, THROUGHOUT ALL OF THIS PROCESS, WE'D HAD DIRECT CONVERSATION, AND IN THOSE DIRECT CONVERSATIONS CARL WAS ALWAYS RESPECTFUL, ALWAYS THOUGHTFUL.
SORKIN: BUT THEN WHEN HE COMES OUT WITH A PRESS RELEASE PROBABLY 12 HOURS AFTER HE TALKS TO YOU ON THE PHONE, AREN'T YOU LIKE, WHAT GIVES?
DONAHOE: YOU KNOW, IN THIS WORLD TODAY, THERE'S A LOT OF OPINIONS AND A LOT OF DIFFERENT STYLES. WHAT I FOCUSED ON THROUGHOUT ALL THIS PROCESS, AS YOU KNOW ANDREW, IS JUST STAYING FOCUSED ON THE FUNDAMENTALS, THE FACTS AND HOW WE CAN ACHIEVE THE POTENTIAL OF OUR COMPANY AND THAT'S – THERE ARE A LOT OF PEOPLE THAT HAVE DIFFERENT PERSPECTIVES OR DIFFERENT THINGS INSIDE ANY LARGE GLOBAL COMPANY TODAY AND THE JOB OF THE CEO IS TO KEEP THE ORGANIZATION FOCUSED ON EXECUTING AND THAT IS WHAT I HAVE TRIED TO DO.
JOE KERNEN: YOU ARE TRYING TO STIR THINGS UP. YOU'RE STIRING THE – YOU'RE LIKE A BIG SOUP SPOON.
SORKIN: JOHN, DID YOU EVER TALK TO ELON MUSK AFTER HIS COMMENTS ABOUT SPLITING THIS THING OFF?
DONAHOE: SURE. ELON IS A VERY – YOU KNOW, ONE OF THE PAYPAL FOUNDERS, A VERY THOUGHTFUL GUY AND HE'S GOT GREAT PERSPECTIVES AROUND HOW PAYPAL CONTINUED TO ENHANCE ITS GROWTH.
SORKIN: HIS PERSPECTIVE, THOUGH, YOU'VE GOT TO SEPARATE IT OR THE COMPANY IS GOING TO TURN INTO AN ALSO-RAN IF I REMEMBER CORRECTLY.
DONAHOE: WELL, I THINK ELON, ONCE WE HAD DIALOGUE AROUND – WE ARE DOING MANY OF THE THINGS THAT ELON BELIEVES WE SHOULD BE DOING AND SO I THINK IT WAS A GOOD OPPORTUNITY FOR ME TO GET ELON'S PERSPECTIVES DIRECTLY AND WE WILL CONTINUE TO COLLECT HIS PERSPECTIVES AS WE GO FORWARD.
SORKIN: OK. WELL WE ARE GOING TO THANK JOHN. JOHN DONAHOE THIS MORNING. THE SOAP OPERA IS OVER AND WE APPRECIATE YOU COMING HERE FIRST ON CNBC.
DONAHOE: GREAT. THANK YOU.
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