This Is One Incredible CEO

The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out CEO gaffes and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's my previous selection.

This week, we'll turn our attention to the retail marketplace and I'll show you why eBay (NASDAQ: EBAY  ) CEO John Donahoe is truly at the head of the class among his peers.

Kudos to you, Mr. Donahoe
You might be under the impression that online marketplace providers like eBay have a free and clear path to success, but you'd be dead mistaken. Sure, the Internet offers consumers a convenient way to browse through merchandise on their own time and have it delivered to their front door, but that doesn't mean online retailing doesn't have its fair set of challenges.

To begin with, online retailers like Amazon.com (NASDAQ: AMZN  ) and eBay are under pressure from Congress to begin collecting sales tax from customers. The Marketplace Fairness Act, also known as the Internet tax bill, passed with flying colors in the Senate and could require these online retailers to collect tax from all customers -- not just the states in which it has offices or distribution centers. If it passes, these e-tailers could lose their primary competitive advantage over brick-and-mortar stores.

Call me crazy, but the ability to touch and feel a product before buying it is another major deterrent. There are quite a few personalized items that just fail to find the type of purchasing carryover online that e-tailers would like to see.

Then there's pricing, which has becoming an issue for traditional and online retailers because of higher payroll taxes and delayed tax refunds. Wal-Mart (NYSE: WMT  ) , for instance, issued weak guidance for the upcoming quarter in February because of the effect of higher taxes and delayed refunds. Wal-Mart's income demographic is among the biggest beneficiaries of tax refunds, so it's pushed sales for the company out into the next quarter potentially.


Source: Steven Arnold, Commons.wikimedia.org. 

Despite these concerns eBay and Donahoe have persevered; not only surviving but thriving. In eBay's first-quarter results last month we saw a double-digit increase in both revenue and profits as it gained an additional 2.8 million customers.

eBay's success has come about for a number of reasons. First, it's embracing a trend toward mobile shopping. By focusing its efforts on mobile usability, it's driving sustainable double-digit growth in active users. Second, eBay's payment-processing division PayPal is still looked upon as the industry standard in electronic payments, tacking on 5 million new customers and processing 21% more net total payment volume than in the year-ago period. Not to mention that eBay's PayPal also struck a mobile partnership with Discover Financial Services last summer, giving both companies global payment solutions growth potential and one-upping its rival Square, which had struck a deal with Starbucks just weeks earlier. Finally, improvements in eBay's marketplace architecture are making it easier for consumers to navigate the site and faster for businesses to pay and get paid.

A step above his peers
However, eBay's success and the scope of its incredible CEO extends far beyond just the steady growth of its underlying business. eBay has rewarded shareholders with impressive gains, its employees with excellent benefits, and the communities it operates in with much-welcomed grants.

Shareholders have certainly had an impressive ride since the recession ended, with shares up more than 400% from their March 2009 lows. Although eBay isn't paying a dividend -- which is understandable as it wants to reinvest operating cash flow into improving its infrastructure and expanding mobile payment solution opportunities -- it does have a hefty share repurchase program that it added $2 billion to last July.

If you think that's fantastic, wait until you get a load of some of the employee benefits. eBay employees, on top of standard health and wellness and financial security packages, are privy to on-site oil changes and free dry cleaning pickup where applicable. Employees in its two San Jose, Calif., offices can relax in meditation and prayer rooms designed to relieve stress.

eBay also believes in giving back to the communities in which it operates. This is why it developed the Grantmaking and Inspiring Volunteerism Everywhere, or GIVE, team to help support nonprofit organizations throughout the world. Employees recommend a charity or nonprofit organization in a local community that could use assistance, and the GIVE team (also made up of eBay employees) decides whether or not to make the grant. It's a good way of getting employees involved in their local community and a great way of helping out those who are less fortunate.

Two thumbs up
It appears pretty undeniable that John Donahoe has eBay on the right path for continued success. eBay's ongoing development of its PayPal business should be able to fuel double-digit growth for the foreseeable future while its marketplace business utilizes mobile's ease-of-use to expand its customer base. eBay's employee benefits, volunteerism, and big shareholder buybacks are merely the icing on the cake that make Donahoe a great leader worthy of two thumbs up.

Is the Internet sales tax bill bad news for Amazon?
Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.


Read/Post Comments (2) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On May 08, 2013, at 7:52 PM, NobodysFool2013 wrote:

    You've got to be joking? John Donahoe is one of the most hated CEO's on the planet. Ask any eBay seller and you will not hear a single word of praise about Donahoe's supposed "turnaround" of eBay.

    The guy has increased selling fees by over 300% in the last four years. eBay's success is coming from bleeding merchants dry.

    Mobile customers? Hey, get a clue, these aren't new customers, it's the same people who have just shifted their internet usage from desktops to mobile devices. It's not new people using the internet for the first time.

    Great that eBay employees get free oil changes and free dry cleaning. Where does this money come from? From fees charged to sellers of course.

    I wasn't sure if this article was comedy but sadly, the author is for real. What a joke.

  • Report this Comment On May 09, 2013, at 6:01 AM, joefooling1962 wrote:

    I could agree with @nobodysFool2013 more!

    I used to buy and sell on ebay during the good ole Whitman days. After Donahoe's one-sided feedback policy I stopped selling and buying. The mom and pop garage sale hobbyists are gone. All that are left are the large volume dealers that ebay only wants. I just throw my crap out now and buy new from amazon. I am surprised the ebay is still around.

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