This excerpt taken from the EBAY DEF 14A filed May 16, 2005.
Proposed Amendment to our Certificate of Incorporation
Our Board of Directors has adopted, subject to stockholder approval, an amendment and restatement of our Certificate of Incorporation attached as Appendix B to increase the authorized number of shares of common stock from 1,790,000,000 shares to 3,580,000,000 shares.
The additional shares of common stock would have rights identical to the currently outstanding common stock. Adoption of the proposed amendment and any issuance of the common stock would not affect the rights of the holders of currently outstanding common stock, except for effects incidental to increasing the outstanding number of shares of the common stock, such as dilution of the earnings per share and voting rights of current holders of common stock. In addition to the 1,348,840,742 shares of common stock outstanding at April 1, 2005, we have reserved 250,929,280 shares for issuance upon the exercise of options and rights granted or to be granted under our equity compensation plans.
Our Certificate of Incorporation also authorizes 10,000,000 shares of preferred stock. There are no outstanding shares of preferred stock, and this amendment would not change the number of authorized shares of preferred stock.
If this amendment to increase the authorized number of shares of common stock is approved by the stockholders, it will become effective when we file the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware.
In May 2000, August 2003, and February 2005, we effected two-for-one stock splits in the form of a stock dividend. These stock splits used a substantial portion of the currently authorized 1,790,000,000 shares of common stock. Without increasing the number of authorized but unissued shares of common stock, we will be unable to effect any stock splits in the form of a stock dividend in the future. We believe that it is advisable and in the best interests of the stockholders to have available additional authorized but unissued shares of common stock in an amount adequate to provide for our future needs. We currently have no specific plans to issue the additional shares of common stock that would be authorized by this proposal. However, these shares will provide additional flexibility to use our capital stock for business and financial purposes in the future. The additional shares may be used for various purposes, including stock dividends similar to those discussed above and the following:
Although an increase in the authorized shares of common stock could, under certain circumstances, have an anti-takeover effect (for example, by diluting the stock of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for a combination of the company with another company), this proposal is not in response to any effort of which we are aware to accumulate eBays stock or obtain control of the company, nor is it part of a plan by management to recommend a series of similar amendments to the Board of Directors and stockholders.
The affirmative vote of the holders of a majority of the shares of common stock will be required to approve this amendment to our Certificate of Incorporation. As a result, abstentions and broker non-votes will have the same effect as negative votes.