The e-commerce giant announced Thursday that it will-at Icahn's urging-appoint business executive David Dorman as an independent director. In exchange, Icahn said he'll withdraw his campaign to get eBay to separate its PayPal unit, and pull his two nominees to the company's board of directors.
Programming note: eBay CEO John Donahoe will talk about this agreement with Icahn on CNBC's "Squawk Box" at 8:30 a.m. ET.
In an eBay press release, Icahn is quoted as saying: "We are happy to have reached this détente with eBay and believe that Dave Dorman will be a great addition to the company's board of directors."
The 60-year-old Dorman is a founding partner of investment firm Centerview Capital Technology. He's currently chairman at CVS Caremark, and serves on the board of Yum Brands. Dorman's resume also includes a run on the board of Motorola and a stretch as chairman and CEO at AT&T.
As part of the settlement, Icahn also has signed a confidentiality agreement with eBay, which agreed not to prevent or discourage directors and certain company officers from speaking with the billionaire.
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"I am optimistic that this arrangement with eBay will enhance our ability to discuss large issues affecting the company with greater intelligence and will help to enhance shareholder value," Icahn said.
"However, I continue to believe that eBay would benefit from the separation of PayPal at some point in the near future and intend to continue to press my case through confidential discussions with the company," he added.
Last month, Icahn asked eBay to sell 20 percent of the PayPal unit in an initial public offering-a change from his previous call for a complete spin off.
Muddying the waters, Icahn had also accused eBay board member Marc Andreessen of having conflicts of interest with the Internet pioneer's venture capital business.
-By CNBC anchor and New York Times reporter Andrew Ross Sorkin and CNBC's Matthew J. Belvedere. Reuters contributed to this report.