eBay Board Changes: Tierney & Anderson out, Paul Pressler new Chair

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eBay have announced eBay Board changes with Chair of the Board Tom Tierney and Audit Committee Chair Fred Anderson to retire from the Board effective immediately after the annual meeting on the 29th of June 2020. eBay Board member Compensation Committee Chair Paul Pressler (pictured above) will assume the role of Chair of the Board. In line with the Board’s long-standing commitment to refreshment, eBay expect to recruit at least one additional independent director in the coming months.

eBay Board Changes and new CEO

“As Paul Pressler succeeds me as Chair of the Board, I see the foundation for the next-generation eBay that will champion small business and bring value to our customers, employees and stockholders for the next 25 years.”
– Thomas Tierney, Chair of the Board, eBay

The news of eBay Board Changes comes just after Jamie Iannone joined eBay to become CEO and should put an end to a period of uncertainty since the eBay Board fell out with Devin Wenig resulting in his sudden resignation as eBay CEO and Scott Schenkel acting as Interim CEO.

Where is Scott Schenkel?

Incidentally, no one seems to know what’s happened to Scott Schenkel – he’s been removed from the eBay “Our Leaders” page entirely and his LinkedIn profile suggests that he quietly left eBay in April 2020. That’s no surprise, acting as Interim CEO was likely viewed by him as a stepping stone to position him to become full CEO in his own right at a different business.

What is the future for eBay?

The question is, what does the shake up mean for eBay in the longer term? eBay are still saying that their aim is to maximize value for shareholders:

“We are extremely optimistic that our Marketplaces strategies will drive GMV growth. We are focused on defending our core business through better vertical experiences for buyers and more tools and capabilities for sellers. In addition, we expect Managed Payments and promoted listings to expand revenues while improving customer experiences. We believe these initiatives will position eBay for long-term growth and maximize value for you.”
– eBay

How does eBay’s business work financially?

If we look prosaically at eBay’s business, they have relatively few employees putting strategies in place which generally involve doing nothing but enabling millions of merchants to carry out activities which generate massive margins for eBay and turn in a couple of billion profit a year. Their latest initiatives fit this pattern – both eBay Payments and eBay Promoted Listings are programs where eBay don’t have to actually do any work but can sit back and watch the cash pour in.

That is of course a superficial way of looking at eBay’s business and the reality is they have about 14,000 employees who do an absolute ton of work. But, in the grand scheme of things, those thousands of employees do little other than build new features and manage them and eBay’s business is that once the processes are in place eBay don’t have to do any of the grunt work – they leave that to eBay sellers and third party companies.

Why are eBay not involved in logistics?

This could be one of the reasons eBay have never really dived into the dirty world of logistics. Even with their Global Shipping Programme, they pass the actual ‘doing the work’ to third parties such as Pitney Bowes and it’s another example of a few people at eBay putting a plan in place where they sit back and do nothing but watch the money roll in from increased global sales… it’s just not in eBay’s DNA to do labour intensive work

This isn’t a criticism of eBay – it’s actually very smart to oversee a few initiatives that see billions of dollars roll into the eBay coffers. But it does explain why there’s never been a ‘Fulfilment by eBay’ program roll out and has enabled Amazon with FBA to storm ahead. FBA involves hundreds of thousands of employees doing real work in warehouses, not to mention the costs of the warehouses themselves, and Amazon Logistics similarly involves real employees doing real work with more physical premises plus the costs of a load of vehicles from pump trucks and forklifts, delivery vans and HGVs and even a fleet of 70 cargo planes with associated pilots and ground staff costs. As soon as you have employees doing work, as opposed to running initiatives which are cash generating, your margins go down.

There’s a problem with margins going down and that’s shareholders. If eBay got heavily involved in warehousing and logistics their margins on this part of their business would be relatively low (maybe 20-25% if things went superbly) and this would drag down the overall margin of the entire eBay Inc operations.

Will the eBay Board Changes and new CEO oversee eBay marketplace sale?

However, in order for eBay to make significant changes to their marketplace and future fortunes, massive change has to happen. For the past decade eBay has been profitably rolling along, but growth has faltered, there’s more competition and Amazon is hoovering up sales that should in the past have gone to eBay (A side note, eBay appears to be doing fantastically well in the UK, but in the domestic US market the same can’t be said with contraction seen recently).

The only way truly massive change can take place is if eBay goes private or semi-private. It would take a brave board and CEO to sign off on an initiative which saw huge investment, lower margins and didn’t turn in the regular half billion dollars a quarter that currently happen like clockwork.

It might be that the board changes and new CEO’s most important roles will be to keep eBay on an even keel and grow current initiatives such as managed payments and promoted listings until a buyer comes along. Don’t upset things, accept that massive marketplace growth isn’t coming any time soon, and wait for a buyer to come along.

PayPal was spun off to pacify investors. StubHub has been sold off to pacify investors. eBay Advertising is likely to be announced as sold off soon to pacify investors. None of this was for the strength and diversity of eBay’s business but entirely aimed at maximising shareholder value – what could maximise shareholder value more than a final gigantic pay day with the eBay marketplace sold off?

Seeing eBay go private wouldn’t necessarily be bad for sellers. If an innovative buyer for eBay were to be found who took the decision to waive the half billion dollars a quarter profit, accept lower margins for the overall business, but with a credible five year plan to totally revamp and revitalise the marketplace for the next 25 years, that might work out well for sellers.

A new eBay might even return to the stock market with shareholders falling over themselves to buy back in, but it’s questionable if massive change can take place without removing shareholders for a number of years and so the new board and CEO might find themselves overseeing the sale of eBay and the marketplace itself going private.

2 Responses

  1. Chris, as a financial analyst covering EBAY for years – and for any investor – the Board has been a total failure. They caved to Icahn, and sold Paypal – now worth $150bn. They got astonishingly lucky w/ timing of sale of StubHub. They have at every turn chose to hand back cash to placate shareholders rather than invest in fixing the problems that this site chronicles in all of the excellent comments. This is the sign of a weak Board.

    EBAY now has over 80% of business in four markets – US, UK, GER and SK – and if they sell Classified, they will lose a key source of traffic in 2 of these. If the pivot is to small businesses they run smack into Shopify, a seriously impressive company ($100bn market cap) and even Etsy ($9bn market cap, up 67% YTD vs EBAY up 17%).

    At some point, this clear underperformance has to get addressed. Sadly, more private equity guys on the Board are not the operational and cultural fix EBAY needs.


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