eastunder
10 years ago
EBAY & SOTHEBY’S PARTNER TO BRING WORLD CLASS ART AND COLLECTIBLES
TO A GLOBAL COMMUNITY
http://ih.advfn.com/sothebyslogoa09a02.jpg
Art and collectibles from Sotheby’s live auctions in New York will be made available to eBay’s 145 million active buyers
NEW YORK - July 14, 2014 - Today, eBay and Sotheby’s announced a partnership that will unite the global leader in online shopping with the iconic international art business and auctioneer. Together, they are developing an innovative online platform that will make it easier for millions of people worldwide to discover, browse and acquire exceptional works of art, antiques and collectibles.
Both companies contribute strong capabilities to the partnership. Sotheby’s brings renowned expertise, world-class artwork and collectibles, and historic auction experience while eBay’s technology platform, integrated payment solutions and unrivalled skill in attracting online collectors enable a global audience of 145 million active buyers to enjoy frictionless shopping.
eBay and Sotheby’s will start by offering a number of live auctions that are taking place at Sotheby’s headquarters in New York. To accomplish this, eBay in the near future will be launching a newly-designed experience on its site, tailored for collectors of rare, unique and premium art and collectibles as well as first-time buyers. Sotheby’s will be the preeminent anchor tenant in the revamped marketplace, which will include a new live auction feature and real-time bidding from anywhere around the world.
The Sotheby’s auctions will present 18 collecting categories. Going forward, the partnership will explore themed and time-based sales, as well as live auctions from Sotheby’s other global salesrooms. Evening Sales will not be included.
“The growth of the art market, new generation technology and our shared strengths make this the right time for this exciting new online opportunity,” said Bruno Vinciguerra, Sotheby’s Chief Operating Officer. “We are joining with eBay to make our sales more accessible to the broadest possible audience around the world.”
Devin Wenig, president of eBay Marketplaces, said, “A Sotheby’s-eBay partnership is a significant milestone in our efforts to expand the live auction market. Sotheby’s is one of the most respected names in the world. When you combine its inventory with eBay’s technology platform and global reach, we can give people access to the world’s finest, most inspiring items - anytime, anywhere and from any device. That is an experience we believe our customers will love.”
As technology evolves and mobile commerce becomes ubiquitous, collectors are increasingly purchasing high-end items online and even on-the-go from their mobile devices. Both companies will focus on growing the market at price points where they expect their collectors to converge in the future - particularly in the segments such as jewelry, watches, prints, wine, photographs and 20th Century design. The global art market is currently estimated around $65 billion, with annual online sales far below averages for other luxury goods*. Projections show online art sales could reach $13 billion by 2020*.
“We believe there is a great opportunity, through this partnership, to truly make art more accessible to exponentially more collectors. That’s what makes this so exciting,” added Vinciguerra.
*TEFAF 2014 Report
Sotheby’s by the Numbers
• Online bidders competed for 17% of the total lots offered in 2013
• John James Audubon’s elephant-folio The Birds of America sold in April 2014 for $3.5 million - marking a new record for an online purchase in a live auction at Sotheby’s
• The number of lots purchased online in 2013 increased 36% vs. 2012
• In 2013:
? More than half of all lots sold were in the $5,000-$100,000 range
? The average value for sold Watches was $41,753
? The average value for sold Prints was $27,575
? The average value for sold Books & Manuscripts was $18,484
• 32% of all BIDnow bidders had never transacted at Sotheby’s prior to 2013
• The number of visitors to sothebys.com on mobile devices (tablet + smartphone) doubled in 2013 vs. 2012
• Mobile traffic now in 2014 accounts for 25% of total Sotheby’s website traffic
eBay by the Numbers:
• Collectibles accounted for nearly $8 billion of GMV in 2013 with 36 million active buyers
• Each day on eBay, more than 3,500 auctions close with a price of >$5,000
• eBay has 145 million global active buyers in 190 countries
• 40% of eBay Volume is touched by mobile
• eBay enabled $20 billion in mobile commerce in 2013, up from $0 in 2008
About eBay Marketplaces
eBay is one of the world’s largest online marketplaces, connecting people with the things they need and love virtually anytime, anywhere. eBay has 145 million active buyers globally and more than 650 million live individual and merchant listings at any given time. With mobile apps available in 190 countries, eBay delivers a personalized shopping experience and seamless access to inventory from down the street and around the world. Tailored shopping experiences customize buying and selling; and eBay provides variety and choice for sellers by enabling them to offer goods through online, mobile and local channels to consumers around the world. For more information, visit www.ebay.com.
About Sotheby’s
Sotheby’s has been uniting collectors with world-class works of art since 1744. Sotheby’s became the first international auction house when it expanded from London to New York (1955), the first to conduct sales in Hong Kong (1973) and France (2001), and the first international fine art auction house in China (2012). Today, Sotheby’s presents auctions in eight different salesrooms, including New York, London, Hong Kong and Paris. Sotheby’s offers collectors the resources of Sotheby’s Financial Services, the world’s only full-service art financing company, as well as private sale opportunities in more than 70 categories, including S|2, the gallery arm of Sotheby’s Contemporary Art department, as well as Sotheby’s Diamonds and Sotheby’s Wine. Sotheby’s has a global network of 90 offices in 40 countries and is the oldest company listed on the New York Stock Exchange (BID).
eastunder
11 years ago
Sotheby's and Third Point Reach Agreement
http://finance.yahoo.com/news/sothebys-third-point-reach-agreement-130000402.html
Sotheby's Expands Board of Directors to Combine Sotheby's and Third Point Director Slates
Daniel Loeb, Olivier Reza and Harry Wilson to Join Sotheby's New and Current Directors on the Board
NEW YORK, May 5, 2014 (GLOBE NEWSWIRE) -- Sotheby's (BID) and Third Point LLC (TPRE) (TPOU.L) today announced that they have reached an agreement. Pursuant to the agreement, the Sotheby's Board of Directors has been expanded, and Daniel S. Loeb, Olivier Reza, and Harry J. Wilson have been appointed to the Board and will be included in the Company's slate of director nominees for election at the 2014 Annual Meeting of Shareholders. With these additions, as well as the previously announced additions of new director candidates Jessica Bibliowicz and Kevin C. Conroy, the Sotheby's slate for the Annual Meeting will expand to 15 members, 13 of whom are independent. Sotheby's slate will include John M. Angelo, Jessica Bibliowicz, Kevin C. Conroy, Domenico De Sole, The Duke of Devonshire, Daniel S. Loeb, Daniel Meyer, Allen Questrom, Olivier Reza, William F. Ruprecht, Marsha E. Simms, Robert S. Taubman, Diana L. Taylor, Dennis M. Weibling and Harry J. Wilson. The Annual Meeting is expected to be convened on 6 May 2014 and then adjourned to later in the month of May to allow for updated proxy solicitation materials to be distributed to Sotheby's shareholders. The Company will announce the adjourned meeting date in due course.
"We welcome our newest directors to the Board and look forward to working with them, confident that we share the common goal of delivering the greatest value to Sotheby's clients and shareholders," said Bill Ruprecht, Chairman, President and Chief Executive Officer of Sotheby's. "This agreement ensures that our focus is on the business and that we will benefit from five fresh voices and viewpoints."
Third Point CEO Daniel S. Loeb stated, "Harry, Olivier and I are delighted to join the Sotheby's Board. As of today we see ourselves not as the Third Point Nominees but as Sotheby's directors, and we expect to work collaboratively with our fellow board members to enhance long-term value on behalf of all shareholders. We are confident this Board will benefit from the perspective of aligned shareholder voices. We are committed to working closely with Sotheby's leadership team to unlock shareholder value by pursuing a strategy of sound capital allocation and growth while respecting the best of the Company's rich history, tradition and culture."
Domenico De Sole, Sotheby's Lead Independent Director, stated, "Sotheby's is strongly positioned today, with an executive leadership team committed to delivering excellent results for Sotheby's clients and shareholders. Along with our new directors we look forward to identifying ways to continuously improve our position in the marketplace and our operating performance."
In connection with these appointments, Third Point has agreed to customary standstill and voting commitments and terminated its proxy contest. In addition, Sotheby's will accelerate the termination of its one-year shareholder rights plan concurrent with the 2014 Annual Meeting, and Third Point, whose ownership in Sotheby's will be capped at 15% under the agreement, has withdrawn its litigation with respect to the rights plan. The complete agreement with Third Point will be included as an exhibit to a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission.
eastunder
11 years ago
Delaware Court Upholds Sotheby’s Poison Pill
By MICHAEL J. DE LA MERCED AND ALEXANDRA STEVENSON
May 2, 2014, 10:47 pm
http://dealbook.nytimes.com/2014/05/02/sothebys-poison-pill-is-upheld-by-court/?_php=true&_type=blogs&partner=yahoofinance&_r=0
A Delaware state court judge on Friday blocked efforts by the hedge fund mogul Daniel S. Loeb to overturn a crucial corporate defense at Sotheby’s, the auction house.
In a ruling issued Friday evening, Donald F. Parsons, a vice chancellor of Delaware’s Court of Chancery, decided that he would not overturn a so-called poison pill plan that limits Mr. Loeb to no more than 10 percent of Sotheby’s shares while letting passive investors hold as much as 20 percent.
The company’s annual shareholder meeting is Tuesday, when shareholders will cast their votes in what may be a watershed moment in the company’s 270-year history. And it may pave the way for companies to enact tougher defenses against outspoken activist investors pushing for change.
Mr. Loeb and his firm, Third Point, have nominated three director candidates, including himself, pitted against the current board at Sotheby’s.
Sotheby’s poison pill, formally known as a shareholder rights plan, had set off debate within the corporate governance community. While companies have used such defenses for decades, the auction house’s version specifically discriminated against activist investors, a move that Third Point had contended was unfair.
But in his ruling, Vice Chancellor Parsons wrote that Mr. Loeb’s primary argument — that the poison pill unfairly impedes his ability to wage his campaign — was flawed. Sotheby’s had presented evidence that the rationale behind its defense could be seen as both rational and proportional to the threat of an activist investor.
And even with his current 10 percent stake, Mr. Loeb has been able to fight the company to a draw. Vice Chancellor Parsons noted that the hedge fund manager had roughly 10 times the number of shares that Sotheby’s board now owns, and that his own expert witness testified that, even now, Third Point has a roughly 50-50 chance of winning the proxy contest.
Mr. Loeb even testified in a deposition that nothing has hurt his ability to reach out to other shareholders.
“There is a substantial possibility,” the vice chancellor wrote, “that Third Point will win the proxy contest, which would make any preliminary intervention by this court unnecessary.”
Mr. Loeb has already won the support of Marcato Capital, another activist hedge fund and Sotheby’s third-largest shareholder. Last week, the influential proxy advisory firm Institutional Shareholder Services weighed in with support for Mr. Loeb, advising shareholders to vote for two of his three board nominees.
Mr. Loeb has criticized Sotheby’s for not adapting quickly enough to sweeping changes in the art industry in recent years and has accused it of falling behind its main rival, Christie’s, in crucial parts of the auction business, Impressionist and modern art. He has also railed against the compensation packages of board members, specifically singling out the pay of the chief executive, William F. Ruprecht, who received $6.3 million in 2012.
Sotheby’s adopted its poison pill last October, after Mr. Loeb called for Mr. Ruprecht to step down, arguing that it was in the best interests of all shareholders to ”encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover.”
During the hearing earlier this week in Delaware, Vice Chancellor Parsons was shown emails in which board members discussed the merits of some of Mr. Loeb’s criticisms. In one email, a board member, Steven B. Dodge, wrote that Mr. Ruprecht’s compensation was “red meat for the dogs.”
Mr. Dodge also wrote that the board was “too comfortable, too chummy and not doing its jobs,” in an email to another director, Dennis M. Weibling. “We have handed Loeb a killer set of issues on a platter.”
A rival proxy advisory firm Glass Lewis has supported Sotheby’s slate.
Representatives for Mr. Loeb and Sotheby’s declined to comment.
Gregory P. Taxin, president of the activist hedge fund Clinton Group, said the ruling was disappointing: “In Delaware, stockholders are apparently supposed to be like children in the 1950s: the good ones do not speak unless spoken to.”
eastunder
11 years ago
Bare Knuckles at Sotheby’s Auction House
I.S.S. Backs Two Loeb Nominees for Sothebys Board
By ALEXANDRA STEVENSON and MICHAEL J. DE LA MERCED
April 24, 2014, 7:48 am 13 Comments
Updated, 9:24 p.m. | Directors of Sotheby’s gathered in their wood-paneled boardroom with an urgent goal: how to mollify Daniel S. Loeb, the outspoken hedge fund mogul who is the auction house’s largest shareholder.
Yet on that day, in late February, even as the board was debating whether to give the investor the two board seats he had demanded, Mr. Loeb suddenly struck. He nominated three director candidates, officially declaring war against the art world stalwart.
That battle — being closely watched in Manhattan socialite and art circles as well as on Wall Street — is now heading to its final stages as both sides lobby other shareholders before the company’s annual meeting on May 6.
On Thursday, Mr. Loeb gained a significant advantage as the influential proxy advisory firm Institutional Shareholder Services recommended that shareholders vote for two of the three board nominees he has proposed, including himself. (Glass-Lewis, I.S.S.’s rival, is, however, supporting the Sotheby’s slate.)
With a 9.6 percent stake, the mogul Daniel S. Loeb is Sotheby’s biggest shareholder.
Michael Nagle for The New York Times
With a 9.6 percent stake, the mogul Daniel S. Loeb is Sotheby’s biggest shareholder.
Mr. Loeb, 52, is no stranger to no-holds-barred corporate battles, but this one is different in several ways. For one, it is almost as much a test of his reputation as an art aficionado as it is of his skills as an investor.
Known for his focus on contemporary and feminist art, Mr. Loeb has regularly made ARTnews’ list of the 200 biggest collectors. Works that have graced his Manhattan office or homes include a seven-foot-wide metallic pink-and-blue Jeff Koons egg — which he reportedly sold for $5.5 million — and a Martin Kippenberger sculpture of a crucified frog.
As part of its defense, Sotheby’s has publicly questioned Mr. Loeb’s art expertise, irking him in the process.
For Sotheby’s, the hedge fund challenge comes as the 270-year-old auction house is grappling with a seismic shift in the business of selling art. Fierce competition and the rapid sprouting of new millionaires and potential clients in emerging economies like China have forced auction houses to reconsider their traditional models.
“Sotheby’s is like an old master painting in desperate need of restoration,” Mr. Loeb has argued.
The battle is reverberating not just among investors but also within the exclusive and close-knit circles of the art world. Some have questioned whether Mr. Loeb, as an upstart, is doing what’s best for the business of art.
“I think what people may be concerned about is that although he is a significant collector, his primary focus is finance and he is not an art world insider,” said Jeff Rabin, a co-founder of the art consulting firm Artvest Partners.
Founded in London in 1744 to sell off several hundred rare books, Sotheby’s has been one of the most prestigious names in the art world. It is the oldest listed company on the New York Stock Exchange.
Yet it was hit hard during the financial crisis. For the last year, activist investors have circled the company, anticipating a broader shake-up of the art market.
“The big question for Sotheby’s is how to adapt to a changing market without losing what makes them special and different,” said John D. Shea, the chief executive of Proxy Mosaic, a firm that advises shareholders in activist situations.
To Mr. Loeb, Sotheby’s has not adapted quickly enough, leaving it ripe for the sort of corporate agitation that has made billions for himself and investors in his firm, Third Point. His playbook: buying a large stake in a company, and using that position to call for shifts in strategy and, often, board seats.
According to Mr. Loeb, Sotheby’s has fallen behind its chief rival, Christie’s, in recent years, especially in the Impressionist and Modern art beloved by today’s mega-collectors, like hedge fund moguls. For example, while Sotheby’s reported its biggest-ever night of contemporary art auctions in November, with $390 million in sales, Christie’s equivalent night fetched $691 million in sales. (Christie’s, however, is privately owned by the French businessman François-Henri Pinault and does not report financial results.)
Mr. Loeb has accused Sotheby’s of rebating the fees its takes for selling multimillion-dollar works, while also taking less of the buyer’s fees to attract more business. He has taken issue with the auction house’s strategy of focusing on top clients and headline sales. He has even criticized board members’ relatively low holdings of their own company’s stock.
In Sotheby’s view, Mr. Loeb has disrupted its business for months by contacting major employees and positioning himself as their new boss, while also suggesting that prominent art world figures consider becoming the auction house’s chief executive.
In the fall, he met with Jeff T. Blau, chief executive of the Related Companies, to discuss a possible move to Related’s Hudson Yards complex or the Time Warner Center, according to people briefed on the matter.
Company officials have also complained that Mr. Loeb has sometimes misunderstood the business. Moving Sotheby’s out of its current headquarters, for example, would make life difficult, given how customized it already is for the auction house.
And they have alluded to accusations that Mr. Loeb has committed “greenmail,” the frowned-upon practice of buying up big stakes in companies and then forcing them to buy the shares back. After winning an activist campaign at Yahoo — one of his biggest victories to date — the Internet company bought back the majority of Mr. Loeb’s stake a year later for $1.2 billion, yielding a significant profit.
“Bloodline: Big Family No. 3” by the Chinese artist Zhang Xiaogang, on preview at a Sotheby’s auction in Hong Kong this month.
Tyrone Siu/Reuters
“Bloodline: Big Family No. 3” by the Chinese artist Zhang Xiaogang, on preview at a Sotheby’s auction in Hong Kong this month.
Though the billionaire investor first met with Sotheby’s last August, he came out swinging in October, when, in a typically Loeb-like letter, he disclosed a 9.3 percent stake. He now has a 9.6 percent stake.
He accused the auction house’s chairman and chief executive, William F. Ruprecht, of having outstayed his welcome while being paid a salary that “invokes the long-gone era of imperial C.E.O.s.” Ultimately, he demanded Mr. Ruprecht’s resignation.
Sotheby’s responded by instituting a poison pill, a defense that would limit activist investors from owning more than 10 percent of a company, a move that Mr. Loeb sneered was a “relic of the 1980s.”
Unusually, Mr. Loeb then went quiet, even as another hedge fund manager, Mick McGuire of Marcato Capital Management, announced a multipronged plan for the company to generate $1.3 billion in cash for shareholders. Mr. McGuire, who has a 6.6 percent stake, said this week that he would vote with Mr. Loeb at the annual meeting.
By January, Sotheby’s announced its own initiative to return $450 million to shareholders through dividend payouts and stock buybacks, after concluding a financial review initiated by its new chief financial officer, Patrick S. McClymont.
“We spoke with many of our shareholders, and we asked people for their thinking on these topics,” Mr. McClymont said at the time.
Privately, Mr. Loeb was holding talks with Mr. McClymont and Domenico De Sole, the dapper co-founder of the luxury clothier Tom Ford and Sotheby’s newly installed lead independent director. By winter, the hedge fund manager had dropped his demand that Mr. Ruprecht resign, a matter of some satisfaction for the company.
Sotheby’s offered to make Mr. Loeb a director and to give him plum board committee assignments, including its nominating committee. But Mr. Loeb, irritated by what he perceived was a disinterest in listening to him, argued that a single directorship could not drive home real change, and repeatedly demanded two seats.
Now the two sides are contesting three board seats.
Mr. Loeb has nominated himself and two associates, including Olivier Reza, a former investment banker whose jeweler family has done business with Sotheby’s. The auction house’s slate includes Jessica Bibliowicz, a financier and daughter of Citigroup’s former chief executive, Sanford I. Weill, and Robert S. Taubman, whose family rescued Sotheby’s from a hostile bid in the 1980s, but whose father was convicted in a big price-fixing scandal a decade ago.
Each side has fallen into the timeworn rhythms of a corporate proxy fight, flinging attacks at each other on an almost weekly basis. In its most recent counterpunch, Sotheby’s disclosed on Wednesday its preliminary first-quarter results, including a 34 percent jump in Impressionist and contemporary sales from the same time a year ago. Overall, net auction sales rose 40 percent, to $730 million, while the company’s overall loss narrowed to about $6 million.
In its report on Thursday, I.S.S. wrote that while Mr. Loeb’s plan lacked a solid vision, both his and Marcato’s critiques still had merit. “In the particulars of their criticisms of things like commission margin, there is credible reason to believe their larger criticism about strategic myopia has some credibility,” the advisory firm wrote.
To some outsiders, Sotheby’s seems to be receptive to some of its critics’ recommendations. The question is whether its executives are making certain changes fast enough.
“There is a lot of minutiae with this proxy battle,” said Oliver Chen, a luxury goods analyst with Citigroup. “But there are a lot of big-picture questions — for example, ensuring that the model has another 100 years ahead of it.”
eastunder
11 years ago
Third Point Defends Its Fight Against Sotheby’s
By MICHAEL J. DE LA MERCED
April 14, 2014, 5:35 pm
http://dealbook.nytimes.com/2014/04/14/third-point-defends-its-fight-against-sothebys/?_php=true&_type=blogs&partner=yahoofinance&_r=0
Daniel S. Loeb, founder of Third Point, delivered his latest salvo on Monday in his battle to shake up Sotheby’s board.
Last week, Sotheby’s defended itself against the activist investor Daniel S. Loeb by questioning both his strategy and — perhaps just as galling to him — his credentials in the art world.
On Monday, Mr. Loeb sought to rebut criticisms of both.
In a 30-page document, Mr. Loeb’s Third Point hedge fund laid out its case to shareholders about why it should win three seats on the auction house’s board. It lacked some of the clever visual puns embedded in his firm’s activist campaign website, but the document sought to show that Sotheby’s has underperformed over recent years.
The PowerPoint presentation comes as the battle over Sotheby’s board heats up. The company put up its own slides last week, and both sides have now made their cases to Institutional Shareholder Services, the big investor advisory firm, according to people briefed on the matter.
A recommendation from I.S.S., whose support can often influence the outcome of a proxy fight, is expected as soon as next week.
In Third Point’s presentation, the hedge fund argued that even though Sotheby’s sold more art last year than it did at its last peak in 2007, the auction house generated less revenue and spent more money to accomplish that. Third Point also argued that Sotheby’s management has failed to produce steadily rising returns for shareholders, pointing to the stock’s swings over the past 15 years in an effort. (The company has argued that it has outperformed several stock indexes over the past year, five years and decade, including the Standard & Poor’s mid-capitalization index.)
Over all, according to Mr. Loeb’s firm, the company’s $1.88 in earnings per share last year were down 42 percent from 2007.
Behind that lagging performance, Third Point reiterated, was a mix of poor corporate governance and management, including a failure to seize on private art sales and improving technology. (For its part, Sotheby’s said in its presentation that private sales were up 30 percent last year, at $1.2 billion.) The hedge fund also argued once more that the board members together owned less than 1 percent of Sotheby’s stock, a fraction of the roughly 10 percent that it controls.
Sotheby’s, the hedge fund argued, has failed to take advantage of a booming market for luxury goods to bolster its returns.
“Given the global tailwinds in the marketplace, this performance is unacceptable and we believe it can be linked back to failed leadership of the Sotheby’s board,” the hedge fund wrote.
Third Point also devoted an entire page to what it called “misleading” attacks by the auction house, including questions about Mr. Loeb’s experience in the art world. Here’s what the hedge fund wrote about its founder’s experience:
In the art/auction and luxury spaces, Mr. Loeb is a leading collector of modern and contemporary art, has been recognized by ARTNews as one of the “200 Top Collectors” each year since 2005, has had portions of his personal collection exhibited at the MoMA in New York and in other global museum retrospectives and shows, and is a trustee of the MOCA in Los Angeles.
A climax in the fight is less than a month away: Sotheby’s annual meeting is scheduled for May 6, though both the company and Third Point are in court battling over shareholder defenses that the board put in place this year.
eastunder
11 years ago
Why is Third Point’s Dan Loeb after small cap growth?
http://finance.yahoo.com/news/why-third-point-dan-loeb-213407755.html
By Marc Wiersum, MBA
April 10, 2014 5:34 PM
Small Caps—no shortage of risk and opportunity
The below graph reflects the performance of Sotheby’s (BID) versus the Russell 2000 and Morningstar small cap growth index. Not only has growth been lagging value over the long run, which is normal, but Sotheby’s in particular has also been lagging in its small cap growth sector. From this perspective it might appear that—in terms of equity returns—Sotheby’s has been in the worst of the worst investment category. This makes the firm vulnerable to activist shareholders who believe that the company is not achieving its full earning potential. This article considers the upside prospects for Sotheby’s in light of both the Fed’s recent dovish announcement and Third Point’s Dan Loeb’s shareholder activism.
This article considers the upside prospects for Sotheby’s in light of both the Fed’s recent dovish announcement and Third Point’s Dan Loeb’s shareholder activism.
Hedge fund activist target
Unlike their large cap and mid cap counterparts, small cap companies have some unique risk factors. Sotheby’s is no exception. Small cap growth companies, like Sotheby’s (BID) can be vulnerable to activist investors. Hedge fund activist Dan Loeb of Third Point holds a 9.2% stake in Sotheby’s, which as a total market cap of approximately $3.09 billion. In the case of Sotheby’s, perhaps this activism will increase the share price. Given Loeb’s ~$300 million investment in Sotheby’s, it’s no wonder that he has been (so far, unsuccessfully) seeking to install his own Board nominees. However, hedge fund managers who do not like what they see or get, can just as quickly turn on their investments, and short them with equal vigor and conviction.
Sharks eat the sick, weak, old, and slow
As Sotheby’s has declined nearly 17% so far this year, despite a strong 2013 performance, with quarterly earnings growth up 37.30% year over year, one has to wonder what is taking the wind out of this stock. This looks like a textbook activist opportunity, and if Dan Loeb’s instincts are right, Sotheby’s has a long way to go in terms of improved performance. With a forward 2015 of 14.29 (Capital IQ), this is a growth stock that is priced like a value stock. Yet, Morningstar small cap growth index holds Sotheby’s in its top 25 holdings. Given the price earnings ratio, it is hard to see why they consider it a growth stock, but given the activism brewing, it might be priced like a growth stock in due course.
Sotheby’s
Sotheby’s has a $3.09 billion market cap with EBITDA, of $242 million on $518 million debt, although it holds $721 million in cash. Sotheby’s does not have a high level of debt, and with a profit margin of 15.23% it would seem to be in a position to finance growth. Such a company might be vulnerable to activist shareholders who would like to utilize Sotheby’s cash position and fairly strong earnings stream to borrow more money, add to debt, in order to finance growth. While Sotheby’s management is likely to be cautious on taking on more debt to finance growth, as the ability to service debt could be weak in a soft economic environment, activist investors are often interested in taking the risk that comes with higher levels of debt.
eastunder
11 years ago
Loeb Steps Up Pressure on Sotheby’s Board
By ALEXANDRA STEVENSON
April 4, 2014, 12:42 pm
The activist investor Daniel S. Loeb fired his latest salvo at Sotheby’s on Friday, calling on shareholders to overthrow members of the auction house’s “lackadaisical” board.
In a letter to shareholders just a month before Sotheby’s’ annual meeting, Mr. Loeb’s hedge fund, Third Point, also appealed to shareholders to vote for its proposal for the company.
Accusing the board of lacking any “skin in the game,” Mr. Loeb told shareholders that a “dysfunctional corporate culture” had resulted in a company that is poorly managed and focused only on short-term goals.
Shares in Sotheby’s dipped 2.4 percent, to $42.78, after the letter was released.
It is the latest attack by Mr. Loeb in a battle that has pitted the billionaire hedge fund manager against the oldest publicly listed company on the New York Stock Exchange.
Last week, Mr. Loeb sued Sotheby’s to remove a poison pill that the company put in place in an effort to prevent him or any other activist investor from buying more than 10 percent of the company’s stock. Third Point called the move an “improper attempt by the directors of Sotheby’s to entrench themselves in office,” according to the complaint. Third Point has a 9.6 percent stake in Sotheby’s.
Mr. Loeb went further on Friday, accusing the board of “pulling up the drawbridge” by using a “legal relic” that revealed “that this board’s paramount interest is in ensuring its members’ status.”
Earlier this year, Mr. Loeb mounted a proxy contest against the company and called for three seats on the board. In response, the company rejected those nominees — which included Mr. Loeb — and instead announced its own candidates.
In his letter on Friday, Mr. Loeb told shareholders that they had been misled, adding that the company’s assertion that 2013 was a record year for the auction house was not entirely true. Citing a common metric for investors, Mr. Loeb said shareholders’ earnings per share were 40 percent lower in 2013 than they were in 2007, the last record year for Sotheby’s.
Under pressure from Mr. Loeb and another activist investor, Mick McGuire of Marcato Capital, Sotheby’s announced a financial review in January, promising to return $450 million to shareholders through a dividend and share buyback. It also promised to make changes to its capital cost structure, estimating $22 million in savings.
In response, Mr. Loeb said this overhaul “barely scratched the surface” and lashed back that the cost cuts were the “lowest hanging fruit available.”
In an emailed statement in response to Mr. Loeb’s letter on Friday, Sotheby’s said its board was “independent, active, engaged and focused on further increasing shareholder value.”
“In contrast,” the statement said, “we believe Mr. Loeb has made no case that change is warranted at Sotheby’s, particularly given the company’s strong results and record of value creation.”
eastunder
11 years ago
Sotheby's to Mail Letter to Shareholders
Today : Wednesday 2 April 2014
Sotheby's (NYSE:BID) today announced that it is mailing a letter to shareholders in connection with the Company's 2014 Annual Meeting of Shareholders, which will be held on 6 May 2014.
Highlights of the letter include:
Sotheby's is a market leader with record results and superior shareholder returns.
Your Board is focused on delivering shareholder value through growth opportunities and prudent capital allocation.
Industry experts recognize the progress Sotheby's is making and support the actions the Company is taking to deliver shareholder value.
Mr. Loeb has made no case that change is warranted, and his candidates add no relevant expertise that is not already effectively represented on the Board.
Sotheby's has the right Board, the right leadership, and the right strategy to deliver shareholder value now and over the long term.
IMPORTANT ACTION REQUIRED
PLEASE VOTE YOUR GREEN PROXY CARD TODAY
2 April 2014
Dear Sotheby's Shareholder:
At the Annual Meeting of Shareholders on 6 May 2014, you will have the opportunity to make an important decision regarding the future of your Company and the value of your investment in Sotheby's.
We believe your Board of Directors has the skills and expertise necessary to continue Sotheby's track record of success. Your Board is independent, active, engaged and focused on further increasing shareholder value. In contrast, we believe the interests of Sotheby's shareholders would be compromised if Third Point LLC is successful in replacing any of the members of your Board with any of its hand-picked nominees.
We urge you to protect your investment by voting the enclosed GREEN proxy card today "FOR" Sotheby's 12 director nominees: John M. Angelo, Jessica Bibliowicz, Kevin C. Conroy, Domenico De Sole, The Duke of Devonshire, Daniel Meyer, Allen Questrom, William F. Ruprecht, Marsha E. Simms, Robert S. Taubman, Diana L. Taylor, and Dennis M. Weibling.
Your vote is important. We encourage you to make your voice heard by voting online, by telephone, or by signing and dating the enclosed GREEN proxy card and returning it in the postage-paid envelope provided.
SOTHEBY'S IS A MARKET LEADER WITH
RECORD RESULTS AND SUPERIOR SHAREHOLDER RETURNS
Sotheby's market position is strong. Its global opportunities for profitable growth are substantial and well understood by both the Board and management.
Under the leadership of your Board, Sotheby's has achieved strong financial performance and superior shareholder returns:
In 2013, Sotheby's reported record consolidated sales of $6.3 billion, an 11% increase in total revenues to $853.7 million, and a 20% increase in net income to $130 million.
Sotheby's stock price is trading well above historical averages, and has outperformed all relevant indices over the one, five and ten year periods.
YOUR BOARD IS FOCUSED ON DELIVERING SHAREHOLDER VALUE THROUGH
GROWTH OPPORTUNITIES AND PRUDENT CAPITAL ALLOCATION
Recent accomplishments by your Board and management demonstrate the strength and vigor of your Company's leadership, and that Sotheby's is well positioned to maintain its record of growth and value creation:
Increased Global Footprint: With new offices, new S|2 gallery space and an increased global focus on top clients, Sotheby's has significantly increased its global footprint and expanded into key growth markets, including Asia, the Middle East, Russia and Latin America. Today, Sotheby's platform and footprint reach all key market regions.
Expansion Across Multiple Channels: Over the past several years, Sotheby's has dedicated substantial talent to the private sales arena, where the Company sees a significant growth opportunity. As a result of these efforts, private sales increased by 30% to $1.2 billion in 2013 and have grown nearly 270% since 2008. Our private sales channel is now one of Sotheby's most successful vehicles for sales of major works of art.
To increase global client engagement, Sotheby's continues to invest in its digital strategy. Through Sotheby's BIDnowTM live auction platform, the Company achieved a 45% increase in online bidding in 2013. BIDnow regularly registers bids of over $1 million. Digital delivery has tripled the Company's distribution of catalogues; and original content – a key differentiator – was read by clients in more than 180 countries.
Prudent Capital Allocation: Under Sotheby's new Capital Allocation and Financial Policy Plan, Sotheby's has paid a $300 million special dividend and commenced a $150 million share repurchase program. The plan contemplates potential incremental near term capital return from the Company's loan book and real estate initiatives. In addition, the plan establishes a financial framework for annual return of excess capital and clear financial return hurdles for future investment decisions.
Meaningful Cost Savings: Under the Board's direction, as part of Sotheby's annual planning process, management conducted a cost structure review and identified $22 million of cost savings in 2014, the equivalent of approximately 10% of 2013 operating income – and we won't stop there. In a business with considerable revenue variability, focusing on reducing costs without compromising client service is a crucial – and ongoing – priority as Sotheby's Board and management work to drive shareholder value.
INDUSTRY EXPERTS RECOGNIZE THE PROGRESS WE ARE MAKING AND SUPPORT THE ACTIONS WE ARE TAKING TO DELIVER SHAREHOLDER VALUE NOW AND INTO THE FUTURE
"We continue to think BID is changing to unlock shareholder value during a period where an art cycle is perhaps forming." – Stifel, 11/22/2013
"But Sotheby's is no slouch in China, despite Loeb's suggestion to the contrary. Like Christie's, it now runs sales in the PRC. And its record in Hong Kong is illustrious. Including auctions there, in Beijing and globally, the company's Asian art sales increased 50 percent in 2013, faster than at Christie's." – Reuters BreakingViews, 1/22/2014
"We are impressed with BID's new [Capital Allocation and Financial Policy] Plan which we believe thoughtfully separates BID's Agency & Financial Services businesses, adds leverage to each, and specifies BID's commitment to return capital to shareholders primarily via Annual Special Dividends." – Citi Research, 1/29/2014
In conversations with management, even Dan Loeb of Third Point has acknowledged that the Company's Capital Allocation and Financial Policy Plan is the "right approach," striking a balance between return of capital to shareholders and continuing to invest in the business.
MR. LOEB HAS MADE NO CASE THAT CHANGE IS WARRANTED, AND HIS CANDIDATES ADD
NO RELEVANT EXPERTISE THAT IS NOT ALREADY EFFECTIVELY REPRESENTED ON THE BOARD
Sotheby's has engaged in extensive discussions with Third Point in an effort to reach a resolution, including six in-person meetings and numerous conference calls with Mr. Loeb. As part of these discussions, Sotheby's offered to appoint Mr. Loeb to the Board, which reflected your Board's efforts to avoid a costly and distracting proxy contest.
In the midst of this dialogue, Mr. Loeb abruptly launched a proxy fight. We believe this action calls into question Mr. Loeb's ability to work constructively as a director and thereby effectively serve the interests of ALL Sotheby's shareholders. We also do not believe it is credible for Mr. Loeb to claim that he would have been the "sole voice" representing shareholders' interests in the boardroom, as each member of your Board is dedicated to representing the interests of ALL shareholders, and has consistently helped to drive positive, value-creating action at Sotheby's.
In our view, Mr. Loeb has made no case that change is warranted at the Company, particularly given the strong results and record of value creation your Board and management have demonstrated as well as the diversity, experience and qualifications of your Board's 12 director nominees.
Further, Mr. Loeb's hand-picked nominees add no relevant skills, experience or expertise that is not already effectively represented on the Board. We do not believe jewelry design, as offered by Mr. Reza based on his family's business, is needed on your Board in order to execute the Company's strategy or to enhance shareholder value. As Mr. Loeb's public materials state, Mr. Wilson's skills include distressed debt and corporate restructuring, which are not an area of focus for your company given Sotheby's financial strength and performance.
In addition, Mr. Loeb's service on other public company boards underscores the short-term nature of his representation of shareholders as a director. Indeed, his average tenure as a public company director is less than two years. Mr. Loeb's board "experience" causes us to question whether he would serve the long-term interests of ALL Sotheby's shareholders.
SOTHEBY'S HAS THE RIGHT BOARD, THE RIGHT LEADERSHIP, AND THE RIGHT STRATEGY TO DELIVER SHAREHOLDER VALUE NOW AND OVER THE LONG TERM
PROTECT YOUR INVESTMENT - VOTE THE GREEN PROXY CARD TODAY
Your Board's nominee slate is composed of 12 highly qualified directors, 10 of whom are independent and five of whom will have been added in the past three years, including Sotheby's Lead Independent Director.
As detailed in our previous letter to you, your Board has the diversity, experience and qualifications to continue to provide effective and independent oversight and direction. For example, your Board includes directors who have long-standing, global relationships within the art world and high-end luxury goods category, directors with unique commercial insight into luxury goods, and directors with experience in disciplines that are highly relevant to the Company's businesses, including digital media, marketing, finance, banking, real estate, client service, technology and law.
As demonstrated by the Company's current policies, as well as the enhancements we have recently made, your Board is committed to sound corporate governance policies and practices. We value the views of our shareholders and have a long record of shareholder engagement. We are committed to doing what is in the best interest of ALL Sotheby's shareholders.
We are confident that Sotheby's has the right Board, the right leadership team and the right strategy in place to deliver value for ALL Sotheby's shareholders now and over the long term.
Your Board recommends that you protect your investment by voting the enclosed GREEN proxy card today "FOR" all of Sotheby's nominees.
On behalf of your Board and management team, we thank you for your continued support.
Sincerely,
/s/ /s/
Bill Ruprecht Domenico De Sole
Chairman, President and Chief Executive Officer Lead Independent Director
If you have any questions or require any assistance voting your shares, please contact the Company's proxy solicitor listed below:
MORROW & CO., LLC
470 West Avenue
Stamford, CT 06902
203-658-9400
or
Call toll free at 1-800-279-6413
eastunder
11 years ago
In Snub to Loeb, Sotheby’s Board Nominates 2 Independent Directors
By ALEXANDRA STEVENSON
http://dealbook.nytimes.com/2014/03/13/in-snub-to-loeb-sothebys-board-nominates-2-independent-directors/?_php=true&_type=blogs&partner=yahoofinance&_r=0
Sotheby’s, the auction house fending off attacks by the activist billionaire Daniel S. Loeb, dug in its heels on Thursday by rejecting his proposal for new board members and instead selected two others.
In an open letter to shareholders, Sotheby’s said it had carefully considered Mr. Loeb’s director nominations, but said his nominees — which include Mr. Loeb himself — “add no relevant expertise not already represented on the board of directors.”
The company announced that its nominees for two independent directors were Jessica Bibliowicz, a senior adviser to Bridge Growth Partners and the daughter of former Citigroup chief Sandy Weill; and Kevin C. Conroy, a senior executive at Univision Communications. They will replace two departing directors, Steve Dodge and Michael Sovern.
It is the latest turn in a high-profile battle for control of Sotheby’s, the oldest publicly traded company on the New York Stock Exchange. Last summer, Mr. Loeb’s hedge fund Third Point and another hedge fund, Marcato Capital, emerged as the biggest shareholders in the company and began to make calls for change with the business and its leadership.
Kevin Conroy is president of digital and enterprise development at Univision.
Amy Sussman/AP Images for Univision
Kevin Conroy is president of digital and enterprise development at Univision.
In October, Mr. Loeb called for a makeover of the company, likening it to “an old painting in desperate need of restoration.” He has called on Sotheby’s chief executive, William Ruprecht, to step down, criticizing him for his multimillion-dollar pay packages and privileges that invoke “the long-gone era of imperial C.E.O.’s.”
At the same time, Mick McGuire of Marcato Capital called for a financial restructuring of the business and said Sotheby’s could produce $1.3 billion in cash if it sold some of its buildings, gave up its dealer operations and restructured its financing.
In a gesture to the two, the company pledged in January to return $450 million to shareholders through stock buybacks and special dividends, and announced plans to restructure some of its business units.
Mr. Loeb, who remained quiet for three months, returned to the fighting ring in February to mount a proxy battle. On Feb. 27, the investor disclosed in a regulatory filing that he sought three seats on the board of the auction house. His proposed slate included Harry Wilson, a restructuring expert and former Yahoo board member; and Oliver Reza, who is head of the Parisian jeweler House of Alexandre Reza.
“All shareholders will benefit from having an owner’s perspective in the boardroom,” Mr. Loeb said in the filing, referring to the fact that the current board members own less than 1 percent of the auction house’s shares.
But on Thursday, Sotheby’s said its board unanimously voted against Mr. Loeb’s recommendations and emphasized in a letter to its shareholders that its business was already competitive and focused on bringing them value.
“Indeed, under the leadership and guidance of your board of directors, Sotheby’s has delivered strong financial performance and superior shareholder returns, including a total shareholder return of 32.5 percent over the last year,” the letter stated.
A spokeswoman for Mr. Loeb declined to comment.
eastunder
11 years ago
Sotheby's Sends Open Letter to Shareholders
Thursday , March 13, 2014 15:55ET
Sotheby's Has the Right Plan and the Right Team to Continue Building Sustainable Value for Shareholders and Clients
Sotheby's Concludes Third Point's Nominees Add No Relevant Expertise Not Already Represented on the Board of Directors
NEW YORK, March 13, 2014 (GLOBE NEWSWIRE) -- Sotheby's (NYSE:BID) today issued the following open letter to shareholders regarding its nominees for the Board of Directors and the notice from Third Point LLC submitting nomination of three candidates (the "Third Point Nominees") to stand for election to Sotheby's Board at the Company's 2014 Annual Meeting.
Highlights of the letter include:
Sotheby's is a market leader with superior shareholder returns and record results.
Sotheby's benefits from a solid financial foundation appropriate to the needs of the business.
Your Board has the strength, diversity, experience and qualifications to continue to provide effective and independent oversight and direction.
Your Board is committed to sound corporate governance policies and practices.
Sotheby's has engaged frequently with Third Point and other shareholders, and your Board is committed to doing what is in the best interests of ALL Sotheby's shareholders. We believe shareholders should question whether Mr. Loeb will do the same – putting ALL shareholders' interests first.
Sotheby's Board has concluded that Mr. Loeb's nominees add no relevant skills, experience or expertise that are not already effectively represented on the Board.
Sotheby's has the right Board, the right leadership team and the right strategy in place to deliver value for ALL Sotheby's shareholders now and over the long term
13 March 2014
Dear Sotheby's Shareholder:
The Nominating and Corporate Governance Committee of Sotheby's Board of Directors has carefully considered the director nominations put forth by Third Point. The composition of your Board is something Sotheby's takes very seriously, as the experience and expertise of its directors have been and will continue to be important to enabling the Company's success.
Indeed, under the leadership and guidance of your Board of Directors, Sotheby's has delivered strong financial performance and superior shareholder returns, including a total shareholder return of 32.5% over the last year. Your Board is independent, active, engaged and focused on shareholder value. We believe your Board has the skills and expertise necessary to continue Sotheby's track record of success.
In contrast, we believe the Third Point Nominees – Daniel S. Loeb, Olivier Reza and Harry J. Wilson – add no experience or expertise that is not already represented or that is relevant to the Company's business, strategies or goals. Accordingly, based on the recommendation of the Nominating and Corporate Governance Committee, the Board has unanimously determined to reject the Third Point Nominees.
Sotheby's is a market leader with superior shareholder returns and record results.
Sotheby's has delivered superior shareholder returns and record results over both the short and long term.
The Company's stock price remains near historic highs and has exceeded the S&P Midcap Index over the one, five and ten year periods.
For 2013, Sotheby's reported record consolidated sales of $6.3 billion, an 11% increase in total revenues to $853.7 million and a 20% increase in net income to $130.0 million.
Sotheby's saw transactions from 50% of our top clients in 2013, representing more than a 20% increase in business from this client segment. Furthermore, in 2013, the number of first time buyers grew 17%, which represented 30% of all bidders during the year.
The Company has made a major investment in digital, including the online bidding platform BIDNow, which saw a 21% increase in transactions in 2013.
Sotheby's continued engagement efforts in Asia last year resulted in a 28% increase in transacting clients in China, with net sales among Chinese buyers growing 58% over 2012.
Client satisfaction surveys in 2013 showed steady increases over the previous year, a strong indicator that Sotheby's investments in improving the experience of our most important client relationships are working.
Sotheby's benefits from a solid financial foundation appropriate to the needs of the business.
Earlier this year, we announced the Company's new Capital Allocation and Financial Policy Plan. This plan followed an extensive evaluation by Sotheby's Board of Directors and leadership team and considered input from shareholders, including Third Point. In addition to a significant return of capital, including a $300 million special dividend, a $150 million share repurchase program, and a commitment to return any excess capital to shareholders on an annual basis, this plan also establishes a financial policy framework with clear financial return hurdles for future investment decisions. We believe this plan helps ensure that Sotheby's remains in the strongest position to compete and succeed in the marketplace.
We are committed to growing with discipline. Your Board and management have worked to ensure that the Company's operations run efficiently, but without compromising service to clients. This includes establishing a culture of productivity and financial discipline with $22 million of cost savings already identified for 2014 – and we won't stop there. In a business with considerable revenue variability, focusing on reducing costs is a crucial and continuous part of Sotheby's efforts to drive shareholder value. We expect to identify and communicate additional cost reductions in 2014 and beyond.
At the same time, we are making important investments in key initiatives that support Sotheby's growth both today and into the future, including in new technology, client service and emerging markets, where an increasing portion of the Company's auction sales are generated annually. These innovations position Sotheby's to leverage its advantages as a truly global auctioneer.
Your Board has the strength, diversity, experience and qualifications to continue to provide effective and independent oversight and direction.
Your Board is composed of 12 highly qualified directors, 10 of whom are independent. The Nominating and Corporate Governance Committee regularly reviews the composition of the Board to assess whether it has the right mix of skills and experience, and if it is necessary to add directors to build upon certain relevant expertise. To that end, we will have added five new independent directors in the past three years, including our Lead Independent Director, a role established by the Board in 2012. These new directors include a group of highly qualified, independent thinkers:
On March 13, 2014, we announced that Jessica Bibliowicz has been nominated to stand for election to Sotheby's Board at the 2014 Annual Meeting. Ms. Bibliowicz brings significant leadership skills and entrepreneurial and finance experience to your Board, having built a successful client service business at National Financial Partners Corp., where she served as Chairman and Chief Executive Officer.
On March 13, 2014, we announced that Kevin C. Conroy has been nominated to stand for election to Sotheby's Board at the 2014 Annual Meeting. Mr. Conroy brings significant digital, advertising and media experience and an extensive background in managing popular global Web brands, including AOL, AIM and Netscape.
Domenico De Sole became a director in December 2013 and assumed the role of Lead Independent Director on December 13, 2013. Mr. De Sole brings extensive experience building global luxury brands as well as significant legal experience.
Daniel Meyer joined your Board in May 2011. As the President of Union Square Hospitality Group since 1996, Mr. Meyer has significant experience building trusted, client service-oriented consumer brands, as well as strong connections and name recognition in the critical New York market.
Marsha E. Simms joined your Board in May 2011, having served as a partner of the international law firm Weil, Gotshal & Manges LLP until her retirement in 2010. Ms. Simms has substantial legal and financial skills, including finance and debt restructuring, and a strong governance background.
Together, the Sotheby's Board possesses distinct knowledge and expertise that is critical to the Company's success. This includes significant experience leading and profitably growing other public and private companies with global luxury brands in key markets Sotheby's has targeted for growth, including Asia and Europe. Your Board also includes directors who have long-standing, global relationships within the art world and high-end luxury goods category, and directors with unique commercial insight into luxury goods. Sotheby's directors have experience and backgrounds in disciplines that are highly relevant to the Company's businesses, including marketing, finance, banking, real estate, client service and law. Your directors have demonstrated success leading corporate change and value creation through financings, capital allocation strategies and business development.
Each member of your Board is committed to continuing to deliver superior results and serve the best interests of all Sotheby's shareholders.
Your Board is committed to sound corporate governance policies and practices.
The Sotheby's Board, with substantive feedback from shareholders, recently approved a number of enhancements to the Company's corporate governance. Among others, the enhanced governance guidelines and best practices unanimously approved by the Sotheby's Board include:
Enhanced responsibilities for Sotheby's Lead Independent Director, including engaging with shareholders and facilitating director evaluations;
Mandatory retirement guidelines for non-management directors;
Specific guidelines designed to support direct communications between shareholders and members of the Board, including the Lead Independent Director;
Revisions to make equity awards more long-term focused for all executive officers, and enhanced transparency of the disclosure regarding performance measures and payout rationale; and
The incorporation of "360-degree" evaluations in the Board's assessment of both individual director performance and the contributions of Board committees.
Your Board is committed to doing what is in the best interests of ALL Sotheby's shareholders.
We believe shareholders should question whether Mr. Loeb will do the same –
putting ALL shareholders' interests first.
Sotheby's has engaged in extensive discussions with Third Point over the past several months in an effort to reach a resolution that would avoid a costly and disruptive proxy contest. In doing so, we offered to appoint Mr. Loeb to the Sotheby's Board of Directors, where he would also serve on three committees – the Nominating and Corporate Governance Committee, the Audit Committee and the Finance Committee.
This offer reflected your Board's efforts to work constructively to avoid a distracting proxy contest and not any experience or expertise that Mr. Loeb could bring to the Board.
We are prepared to continue to engage with Mr. Loeb as a shareholder, as we do with all of our shareholders. However, Mr. Loeb's abrupt decision to launch his proxy campaign in the midst of constructive dialogue has caused us to doubt his ability to work effectively as a Board member to serve the interest of all shareholders. In addition, Sotheby's shareholders should question whether Mr. Loeb will make a commitment to long-term directorship, given that his average tenure as a public company director is only between one and two years.
Sotheby's Board has concluded that Mr. Loeb's nominees add no relevant skills, experience or expertise that is not already effectively represented on the Board.
As jewelry designers, Mr. Reza's family has long been known to Sotheby's. Mr. Reza recently left investment banking to join his family's business. His experience in jewelry is too recent to allow him to conduct meaningful oversight, and your Board already has deep luxury goods expertise as well as deep expertise in finance, mergers and acquisitions, and capital allocation. While we appreciate the perspective Mr. Reza brings to jewelry design, we do not believe this skill set is needed on your Board in order to execute the Company's strategy or to enhance shareholder value.
As Mr. Loeb's public materials state, Mr. Wilson's skills include distressed debt and corporate restructuring. Sotheby's financial strength and performance make it clear that a corporate restructuring, akin to his experience advising on the federal bailout of General Motors, would not be relevant to Sotheby's shareholders.
Sotheby's is a market leader that generates 29% EBITDA margins* and has appropriate liquidity to not only invest for future growth, but also to return over $300 million to shareholders in the near-term. The Company's Capital Allocation and Financial Policy Plan has been widely well-received. Even Mr. Loeb has acknowledged that this plan is the "right approach."
Sotheby's has the right Board, the right leadership team and the right strategy in place to deliver value for ALL Sotheby's shareholders now and over the long term.
The Board will present its recommended slate of director nominees in Sotheby's definitive proxy statement and other materials, including the Company's GREEN proxy card, to be filed with the Securities and Exchange Commission and mailed to all shareholders eligible to vote at the 2014 Annual Meeting, which has yet to be scheduled. Sotheby's shareholders are not required to take any action at this time.
/s/ /s/
Bill Ruprecht Domenico De Sole
Chairman, President and Chief Executive Officer Lead Independent Director
Additional information concerning Sotheby's corporate governance guidelines, including the enhancements announced today, are available on Sotheby's website.
* Reconciliation of Non-GAAP Financial Measures
The following is a reconciliation of net income to EBITDA for 2013 (in thousands of dollars):
Net Income 2013
Income tax expense $130,006
Income tax expense related to equity investees 55,702
Interest income 12
Interest expense (2,801)
Depreciation and amortization 42,712
EBITDA 19,435
$245,066
Forward-looking Statements
This release contains certain "forward-looking statements," as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, relating to future events and the financial performance of Sotheby's. Such statements are only predictions and involve risks and uncertainties, resulting in the possibility that the actual events or performance will differ materially from such predictions. As such, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as to management's plans, assumptions and expectations as of the date hereof. In addition to the considerations and factors referred to in this release and prior filings and releases, major factors which Sotheby's believes could cause actual events to differ materially include, but are not limited to, the overall strength of the international economy and financial markets, political conditions in various nations, competition with other auctioneers and art dealers, the success of Sotheby's risk reduction and margin improvement efforts, the amount of quality property being consigned to art auction houses, the marketability at auction of such property, the success of Sotheby's future auction sales and the results and reception of Sotheby's announced capital allocation and financial review and other initiatives, including but not limited to its cost reduction initiatives, review of its real estate portfolio and related alternatives and its plans and framework for returning capital to stockholders and optimizing its capital structure and financial policies. Please refer to Sotheby's most recently filed Form 10-Q (and/or 10-K) and other filings for a more comprehensive list of material Risk Factors. Sotheby's disclaims any duty to update or alter any forward-looking statements, except as required by applicable law.
Important Additional Information
Sotheby's, its directors and certain of its executive officers are participants in the solicitation of proxies from stockholders in connection with Sotheby's 2014 Annual Meeting of Stockholders. Sotheby's intends to file a proxy statement and GREEN proxy card with the U.S. Securities and Exchange Commission (the "SEC") in connection with such solicitation of proxies from Sotheby's stockholders. SOTHEBY'S STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT (INCLUDING ANY AMENDMENTS AND SUPPLEMENTS) AND ACCOMPANYING GREEN PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.
Information regarding the names of Sotheby's directors and executive officers and their respective interests in Sotheby's by security holdings or otherwise is set forth in Sotheby's proxy statement for the 2013 Annual Meeting of Stockholders, filed with the SEC on March 26, 2013. To the extent holdings of such participants in Sotheby's securities have changed since the amounts described in the 2013 proxy statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information can also be found in Sotheby's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on February 27, 2014.
These documents, including any proxy statement (and amendments or supplements thereto) and other documents filed by Sotheby's with the SEC, are available for no charge at the SEC's website at http://www.sec.gov and at Sotheby's investor relations website at http://investor.shareholder.com/bid/index.cfm. Copies may also be obtained by contacting Sotheby's Investor Relations by mail at 1334 York Avenue, New York, NY 10021 or by telephone at 800-700-6321 or 212-894-1023.
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Sotheby's has been uniting collectors with world-class works of art since 1744. Sotheby's became the first international auction house when it expanded from London to New York (1955), the first to conduct sales in Hong Kong (1973), India (1992) and France (2001), and the first international fine art auction house in China (2012). Today, Sotheby's presents auctions in eight different salesrooms, including New York, London, Hong Kong and Paris, and Sotheby's BidNow program allows visitors to view all auctions live online and place bids in real-time from anywhere in the world. Sotheby's offers collectors the resources of Sotheby's Financial Services, the world's only full-service art financing company, as well as private sale opportunities in more than 70 categories, including S|2, the gallery arm of Sotheby's Contemporary Art department, as well as Sotheby's Diamonds and Sotheby's Wine. Sotheby's has a global network of 90 offices in 40 countries and is the oldest company listed on the New York Stock Exchange (BID).
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