The operating agreement – which will remain in effect for five years and have a one-year transition period – is aimed at preserving the benefits of the existing relationship and ensuring that the separation is seamless for customers of both companies. Ebay said it offers flexible terms in order to preserve synergies, but will allow each company to pursue its own commercial strategy. For example, PayPal can work with all commerce/marketplace companies and eBay can offer its customers alternative payment providers.
Ebay will be incentivized to grow new users and increase PayPal penetration rates through referral services and penetration rate payments, with the goal of maintaining a penetration rate of approximately 80 percent. "Limited" non-compete agreements will still apply, such as PayPal cannot create its own marketplace for physical goods, and eBay cannot create its own payments system on the core eBay platform. A product development agreement means that PayPal will devote resources to develop new products for eBay, and eBay and PayPal will maintain service level agreements.
In addition, eBay board member Tom Tierney was named chair of the new eBay board, replacing eBay founder Pierre Omidyar. Omidyar will serve on both the eBay and PayPal boards in a non-chair capacity. In addition, current eBay CFO Bob Swan will join the new eBay board, while eBay CEO John Donahoe will serve as chair of PayPal’s board. The aim is for the spin-off to take place in the second half of 2015.
