eBay Inc. operates an Internet-based community in which buyers and sellers are brought together to buy and sell almost anything. The eBay online service permits sellers to list items for sale, buyers to bid on items of interest, and all eBay users to browse through listed items in a fully automated, topically arranged service that is available online seven days a week. Through the PayPal service, the company enables any business or consumer with e-mail in 38 countries to send and receive online payments. For the year ending December 31, 2004, eBay reported sales of almost $3.3 billion and net income of $778 million. For corporations such as eBay, maintaining a strong control environment is an everyday challenge. One method of maintaining a strong control envi- ronment is to have a strong Board of Directors that is actively engaged in overseeing the business. Using the Internet, access the eBay December 30, 2004 10-K filing with the Securities and Exchange Commission. You can use the PricewaterhouseCoopers Web site, https://edgarscan.pwcglobal.com, to search for company filings by name. Based upon the 10-K filing, answer the following questions:
1. List the members of the Board of Directors of eBay, their age, and their title.
2. Based upon your answer to (1), what percentage of the Board is not part of eBay's management team? Round to one decimal place.
3. Based upon your answer to (1), what is the average age of a Board member of eBay?
4. Based upon your answer to (3), do you think the average age of a Board member of eBay is higher or lower than the average age of a Board member of American Express?
5. What are the purpose and policy of the Audit Committee of eBay? Hint: You can find this information by going to eBay's Web site at https://investor.ebay.com/governance/home.cfm and clicking on the Charter of the Audit Committee.
6. List the members of the Board of Directors who belong to the Audit Committee.
7. Are any members of the Audit Committee also members of eBay's management team?
8. Search eBay's 10-K for the certifications required by the Sarbanes-Oxley Act of 2002. Read the certifications. Who signed the Sarbanes-Oxley certifications for eBay?
9. Based upon your answers to (1) through (8), do you believe that eBay has a sound control environment?