EBay, PayPal seek to maintain synergy, independence

San Jose, Calif. – EBay and PayPal are clarifying how they will operate the first five years after their planed split into two public companies in the second half of 2015. PayPal Holdings filed an updated Form 10 with the Securities and Exchange Commission (SEC) laying out an operating agreement that maintains ties between the two companies while also ensuring they remain independent.



Key elements of the operating agreement, which will remain in effect for five years and have a one-year transition period, include the right for PayPal to work with all commerce/marketplace companies and eBay to offer its customers alternative payment providers.



However, eBay will still be incentivized to increase PayPal penetration rates through referral services and penetration rate payments, with the goal of maintaining a penetration rate of approximately 80%. During the term of the agreement, PayPal cannot create its own marketplace for physical goods, while eBay cannot create its own payments system on the core eBay platform.



In addition, the product development agreement means that PayPal will devote resources to develop new products for eBay. Other parts of the agreement that will maintain ties between the companies include continued data sharing in key areas for customer service and security, as well as service level agreements to help ensure a seamless transition for customers.



EBay is also providing additional information about the post-separation leadership of both companies. Current eBay board director Tom Tierney has been named chair of the new eBay board. EBay founder and current board chair Pierre Omidyar will serve on both the EBay and PayPal boards in a non-chair capacity, and current eBay CFO Bob Swan will join the new eBay board.



In addition, current eBay president and CEO John Donahoe will serve as chair of PayPal’s board. Further corporate governance details, including information about eBay’s and PayPal’s full boards of directors, and executive appointments, will be disclosed in the coming months. As previously shared, eBay CEO designee Devin Wenig and PayPal CEO designee Dan Schulman will serve as directors on their respective company’s boards.