EBay CEO sees Icahn getting louder, tells employees not to listen

SAN FRANCISCO, March 13 (Reuters) - Carl Icahn's campaign to convince eBay Inc to spin off its PayPal payments service will intensify in the run-up to eBay's shareholders' meeting in May, eBay's chief executive said on Thursday, warning employees to ignore the "noise."

EBay CEO John Donahoe and directors of the Internet retailer have traded barbs with Icahn on a near-daily basis since the activist investor first expressed his view that spinning off PayPal would create shareholder value.

EBay has said that the fast-growing payments service works best when integrated with the company's core retail business.

"The noise is going to get louder over the next four to six to eight weeks," Donahue said in a video addressed to employees. "Don't pay attention to the noise. Stay focused, and don't be distracted.

"The thing to keep in mind is that we have more insight around our own company than anyone on the outside can," he said. "It's easy to say when you're sitting on the outside, 'Oh, simplistically separate, and we'll do some short-term financial maneuvering to drive the share price up.'"

Icahn, who owns just over 2 percent of eBay, has sparred with eBay management via open letters and press releases since January, when the pugnacious billionaire made an unsolicited proposal for eBay to spin off PayPal.

Icahn has also repeatedly accused eBay of poor corporate governance, which the company has denied.

On Wednesday, Smead Capital, which owns less than 1 percent of eBay, spoke out in support of management's view that PayPal should be kept within the fold of eBay.