Activist investor Carl Icahn, who last month proposed that eBay Inc. spin off its PayPal unit and nominated two employees to the board, criticized the online marketplace for "lapses" in corporate governance and asked shareholders to vote in favor of the split.

In a letter to investors posted online today, Icahn singled out two directors, Marc Andreessen and Intuit Inc. co-founder Scott Cook, for competing with San Jose, Calif.-based eBay. The company disputed his criticism, saying Cook and Andreessen, who isn't up for re-election this year, bring valuable technology expertise to the board.

Icahn reiterated his call for a non-binding vote on the separation of online-payments unit PayPal after Chief Executive Officer John Donahoe said the company should stay together, citing how a unified entity helps fund PayPal's expansion into areas such as mobile. PayPal, run by David Marcus, has been a growth engine since eBay acquired the business in 2002 for $1.5 billion, and accounts for about 40% of eBay's revenue.

Venture capitalist Andreessen, 42, has made investments in and advised direct competitors of eBay, including Boku, Coinbase and Fab, Icahn said. The investor added that Cook still owns about $1 billion in shares of Intuit, which competes with PayPal in payment processing with its GoPayment business.

"After diligently researching this company we have discovered multiple lapses in corporate governance," said Icahn, who last month disclosed a 0.82% stake in eBay. "These include certain material conflicts of interest, which we believe could put the future of our company in peril."

In its statement today, eBay repeated its view that keeping PayPal is best for shareholders, who will ultimately decide whether to elect Icahn's candidates to the board.

EBay "is scrupulous in its governance practices and fully transparent with regard to its directors' other affiliations and businesses," the company said. "Mr. Icahn unfortunately has resorted to mudslinging attacks against two impeccably qualified directors."

EBay shares rose 2.8% to $56.13 at 11:14 a.m. in New York. The stock has climbed about 2% in the past year, compared with a 22% gain in the Standard & Poor's 500 Index.

Icahn nominated Jonathan Christodoro and Daniel Ninivaggi, both employees of entities he controls, for the board.

Last month, eBay had tried to pre-empt a public lashing from Icahn by disclosing his proposal to spin off its PayPal unit before the investor did. With today's letter, Icahn is hitting directly at eBay CEO Donahue and director Andreessen. His investment in eBay follows several actions by activists taking on Silicon Valley technology firms, especially as some of the companies' rapid growth rates slow.

Icahn, 78, has invested in Apple Inc., while Microsoft Corp., Hewlett-Packard Co., Juniper Networks Inc. and Riverbed Technology Inc. have also faced activist pressure.

Andreessen, best known as the co-founder of Netscape Communications Corp., has faced challenges to his board seats before. Last year shareholder-advisory firm Glass Lewis & Co. recommended voting against the venture capitalist's re-election to the board of Hewlett-Packard, faulting him and some other directors for the $8.8 billion writedown of Autonomy Corp. Andreessen was re-elected in March with about 70% of the vote, and said he will stay on that board as long as he can be useful.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry