Sotheby's

Sotheby's

Company type	Public Company
Traded as	NYSE: BID
Industry	Auctioneering, Specialty Retail
Founded	London, United Kingdom (11 March 1744 (1744-03-11))
Founder	Samuel Baker George Leigh and John Sotheby
Headquarters	1334 York Avenue New York City, USA
Number of locations	90 locations (as of 2012)
Area served	40 countries, worldwide
Key people	Michael I. Sovern, Executive Chairman William F. Ruprecht, President and CEO William S. Sheridan, CFO and Executive VP Bruno Vinciguerra, COO and Executive VP
Products	Fine arts, books
Revenue	US$ 853.678 million (2013)
Operating income	US$ 222.575 million (2013)
Net income	US$ 130.006 million (2013)
Total assets	US$ 2.893 billion (2013)
Total equity	US$ 1.139 billion (2013)
Number of employees	1,577 (Dec 2013)
Divisions	Sotheby's New York Sotheby's London Sotheby's Hong Kong Sotheby's Moscow
Subsidiaries	Sotheby's International Realty Sotheby's Diamonds Sotheby's Institute of Art Sotheby's Wine Sotheby's Art Storage Facility
Website	www.sothebys.com

Sotheby's is a multinational corporation, originally British but now headquartered in New York City. One of the world's largest brokers of fine and decorative art, jewelry, real estate, and collectibles, Sotheby's operation is divided into three segments: Auction, Finance, and Dealer. The company’s services range from Corporate Art Services to Private Sales.

Sotheby’s is the world’s fourth oldest auction house in continuous operation, with 90 locations in 40 countries. As of December 2011, the company had 1,446 employees worldwide. It is the world's largest art business with global sales in 2011 totaling $5.8 billion and it sold $5.4 billion worth of art in 2012.

Sotheby’s was established on 11 March 1744 in London. The American holding company was initially incorporated in August 1983 in Michigan. In June 2006, Sotheby’s Holdings, Inc. reincorporated in the State of Delaware and was renamed Sotheby’s.

History

Beginnings

A book sale in progress at Messrs Sotheby, Wilkinson & Hodge of Wellington Street, 1888.

Sotheby's predecessor, Baker and Leigh, was founded in London on 11 March 1744, when Samuel Baker presided over the disposal of "several hundred scarce and valuable" books from the library of Rt Hon Sir John Stanley Bt., of Alderley. Three Swedish auction houses are even older, and Sotheby's great rival in London and then New York, Christie's, dates from 1759 or shortly after. The current business dates back to 1804, when two of the partners of the original business (Leigh and Sotheby) left to set up their own book dealership. The library Napoleon took with him into exile at St Helena, as well as the library collections of John Wilkes, Benjamin Heywood Bright and the Dukes of Devonshire and of Buckingham (both related to George Leigh) were sold through Samuel Baker’s auctions.

After Baker’s death in 1778, his estate was divided between Leigh and John Sotheby. George Leigh died unmarried in 1816, but not before endeavoring to secure his succession by recruiting Samuel E Leigh into the business. Under the Sotheby family, the auction house extended its activities to auctioning prints, medals, and coins. John Wilkinson, Sotheby’s Senior Accountant, became the company’s new CEO. The business did not seek to auction fine arts in general until much later, their first major success in this field being the sale of a Frans Hals painting for nine thousand guineas as late as 1913.

In 1917, Sotheby’s relocated from 13 Wellington Street to 34-35 New Bond Street, which remains as its London base to this day. They soon came to rival Christie's as leaders of the London auction market, which had become the most important for art. In 1955, Sotheby’s opened an office at Bowling Green, New York City. In 1964, Sotheby’s purchased Parke-Bernet, then the largest auctioneer of fine art in the United States. In the following year, Sotheby’s moved to 980 Madison Avenue, New York. With international popularity of fine art auction growing, Sotheby’s opened offices in Paris and Los Angeles in 1967, became the first auction house to operate in Hong Kong in 1973, and Moscow in 1988.

Public company

York Avenue headquarters, New York City.

Sotheby’s became a U.K. public company in 1977. A 25 percent drop from the 1980-81 record of $610 million in sales contributed to Sotheby's decision to relocate its North American headquarters from Madison Avenue to a former cigar factory at 1334 York Avenue, New York, in 1982. The auction house closed its Madison Avenue galleries at East 76th Street. The Los Angeles galleries were sold and auctions of West Coast material moved to New York.

In the following year, a group of investors (such as American millionaire Alfred Taubman) purchased and privatized Sotheby’s. Sotheby’s was initially incorporated as Sotheby’s Holdings, Inc. in Michigan in August 1983. Taubman took Sotheby’s public in 1988, listing the company’s shares on the New York Stock Exchange, making Sotheby’s the oldest publicly traded company on the NYSE under the ticker symbol "BID." In June 2006, Sotheby’s Holdings, Inc. reincorporated in the State of Delaware and was renamed Sotheby’s shortly after.

With private transactions constituting an essential and increasingly profitable business segment, through the years Sotheby's has bought art galleries and helped dealers finance purchases. It has also gone into partnership with dealers on private sales. In 1990, Sotheby's teamed up with dealer William Acquavella, to form Acquavella Modern Art, a Nevada general partnership and a subsidiary of Sotheby's Holding Company. The subsidiary paid $143 million for the contents of the Pierre Matisse Gallery in Manhattan, which included about 2,300 works by such artists as Miró, Jean Dubuffet, Alberto Giacometti, and Marc Chagall, and began selling the works both at auction and privately. In 1996, Sotheby's acquired Andre Emmerich Gallery to operate a division called Emmerich/Sotheby's, and in 1997 it purchased a 50% interest in Deitch Projects. As a consequence, the Josef and Anni Albers Foundation, the main beneficiary of the artists' estates, as well as the estates of Morris Louis and Milton Avery announced that they would not renew their Emmerich contracts. That decision came right after it was disclosed that Sotheby's had decided to close Emmerich's prime space at 41 East 57th Street, and that its artists would be handled out of Deitch Projects. Sotheby's subsequently closed Andre Emmerich in 1998 and later sold its share in Deitch Projects back to Jeffrey Deitch. In 2006, Sotheby's acquired a Dutch dealership, Noortman Master Paintings, from its owner, Robert Noortman, for $82.5 million ($56.5 million worth of Sotheby’s stock and assumption of more than $26 million in gallery debt, including $11.7 million owed to the auction house). Sothebys and Noortman had collaborated before in 1995, when the sales of Dutch plastic millionaire Joost Ritman were divided between the two companies.

Already in 1990, Sotheby's New York had successfully lobbied for a zoning change permitting the construction of a 27-story residential tower above the five-story headquarters; this expansion was never realized. Instead, Sotheby’s throughout the 1990s expressed interest in sites that ranged from the old Alexander’s building on East 59th Street to the New York Coliseum site on Columbus Circle, and was even considering moving into the old B. Altman building on Fifth Avenue. The company eventually bought its York Avenue building for $11 million in 2000 and completed a $140 million expansion and renovation in 2001, adding six floors and 240,000 square feet. The renovation added the capability to store works on the same premises as the specialist departments, galleries, and auction spaces. Sotheby's New York's offices also house Sotheby's Wine and the former Bid (an American contemporary restaurant and later bistro), which was closed due to poor attendance. The company sold the building in 2002 for $175 million. In May 2007, Sotheby's opened an office in Moscow in response to rapidly growing interest among Russian buyers in the international art market and held sales in Qatar in 2009.

Sotheby's office on New Bond Street, London.

As many industries took a blow from the economic crisis of 2008, the art market also saw a contraction. In international figures, art prices fell by 7.5% in Q1 of 2008 in comparison to the previous quarter. In September and October 2008, major auction houses saw a sharp decline in sales: artprice.com, the world leader in art market information, coined the term "Black October." Sotheby’s bought-in rate was 27%, Christie’s was 45% and Phillips de Pury’s was 46%. However, the total values of global and United States Fine Art auction sales were USD$8.3 billion and USD$2.9 billion, respectively. In 2009, art collector Steven A. Cohen built a 6 percent stake in the auction house for his hedge fund SAC Capital Advisors.

Today

Today, the firm has an annual revenue of approximately US$831.8 million and offices on Manhattan's York Avenue and London's New Bond Street. This position has been achieved through natural growth, acquisitions (most notably the 1964 purchase of the United States' largest auctioneer of fine art, Parke-Bernet), and management during the cyclical "art recessions" of the 20th century.

In 2011, Noortman's Amsterdam space was closed and the gallery moved to London. Two years later, Sotheby's closed Noortmans, after having written down $8.3 million of inventory and started selling off lower-valued works of art through other auction houses. As of 2011, Sotheby’s is present in over 90 locations in 40 countries with ten salesrooms. In 2012, the company signed a 10-year joint-venture agreement to form Sotheby’s (Beijing) Auction Co. Ltd., the first international auction house in China; under the agreement, it invested $1.2 million to take an 80 percent stake in the venture with state-owned Beijing Gehua Cultural Development Group.

Sotheby's enjoys a longstanding and intense rivalry with Christie's for the position of the world's preeminent fine art auctioneer, a title of much subjectivity. In August 2004, Sotheby's introduced an online system – MySotheby's – allowing clients to track lots and create "wishlists" that could be automatically updated as new works became available. Sotheby’s also created the BIDnow service, which allows bidders to bid real-time online while watching the broadcast auctions, with the exception of Wine auctions. LiveBid is Sotheby’s online bidding system exclusively for wine auctions. In the meantime, income from classic auctioneering has fallen, as Sotheby's reported a decrease of 42% in net income in the first half of 2012.

As well as numerous high profile real life auctions being held at Sotheby's, the auctioneers has also been used in various films, including the 1983 James Bond film Octopussy in which Bond (played by Roger Moore) unsuccessfully tried to bid for a rare Fabergé egg, which he had cleverly exchanged for a fake that was finally sold to the villainous Afghan prince, Kamal Khan (Louis Jourdan).

Auction process

Sotheby’s auctions are usually held during the day. The majority are free and open to the public, with the exception of occasional evening auctions, which require tickets. All attendees have no obligation to bid. When an auction takes place, Sotheby’s auctioneers begin the sale by describing the item in house and announcing the beginning price that is lower than its reserve price. The bid begins and is finished when a sole bidder remains willing to purchase the lot at the bidder’s declared price. The auctioneer "knocks down" the lot, declaring it sold to the winning bidder. The winning bid for a lot is also called the hammer price. Sotheby’s organizes the delivery of the lot in private with the buyer.

Buying

Interested buyers can find out what is up for sale at Sotheby’s through browsing Sotheby’s e-catalogues, visiting Sotheby’s presale exhibitions, purchasing Sotheby’s print catalogues and registering for the listserv for e-mail alerts. Buyers can register to bid in person at Sotheby’s offices, or online on Sotheby’s website. Sotheby’s requires that prospective buyers provide government-issued proof of identity and a bank reference (where required). Once registration is approved, there are four ways buyers can bid at Sotheby’s: buyers can choose to bid in person at Sotheby’s auction rooms, place bids online in real time through BIDnow or LiveBid, register to Telephone Bid with a representative from Sotheby’s and submit an Absentee Bid online. When a bid is successful, Sotheby’s calculates and sums the hammer price, the buyer’s premium, and local taxes (if any). The winning bidder can choose to pay with cash, cheque, money order or wire transfer. Credit card acceptance varies upon location.

Selling

Interested sellers are required to fill out the Sotheby’s Auction Estimate Form, providing thorough information on the item and email the form and a photograph of the item to Sotheby’s. Once accepted as appropriate for a Sotheby’s auction, the seller and Sotheby’s sign a contract, which sets out the reserve price and the seller’s commission. If bidding on a seller’s lot does not reach the reserve price, Sotheby’s does not sell the item at the auction.

Service categories

Sotheby’s has eleven service categories that cover most facets of the art market.

Private Sales

Sotheby’s links sellers with prospective buyers in private if sellers do not want a public auction. The identities of buyers and consignors are not disclosed. Sotheby’s Private Sales works with clients with confidentiality and tailors the buying and selling process in a private setting. Private Sales accounted for 16.5% of all Sotheby’s sales in 2011. That year, Sotheby's inaugurated a new gallery space called S2 at its York Avenue headquarters with a show of work by American abstract painter Sam Francis. Unlike Haunch of Venison, a gallery that Christie's bought in 2007, S2 is solely devoted to showcasing the auction house's private sales. The company reported $513 million in private sales in the first half of 2012, making commission revenues of $41.5 million on them. In 2013, Sotheby's opened a gallery for private sales close to its branch in London, in a five-story block at 31 George Street. The auction house also conducts private sales through its selling exhibitions of monumental sculpture at Chatsworth House, Derbyshire, and at the Singapore Botanic Gardens.

Sotheby's Financial Services

Established in 1988, Sotheby's Financial Services offers loans for consigned property and loans against the value of client's items through customized terms. The auction house also makes term loans, for a defined period of time, on works that clients aren’t planning to sell, in part to "establish or enhance mutually beneficial relationships with borrowers" that can lead to future consignments. Despite criticism from the media and dealers that it operates like a bank by inflating prices back in the 1990s, its loan portfolio amounted to about USD$212 million in 2011. While traditional lenders such as banks provide loans at a lower cost to borrowers, Sotheby’s said in its 2011 annual report, few will accept works of art as the sole collateral.

Corporate Art Services

Sotheby’s Corporate Art Services specializes in assisting corporations in various processes to build and value their corporate art collections. Sotheby’s assists handling acquisitions, deaccessions, valuations and plans special events related to artwork for corporate clients. Sotheby’s has worked with companies such as AT&T, Bank of America, CBS, Citigroup, Coca-Cola, Credit Suisse, HSBC, MetLife, Merrill Lynch, Neuberger Berman, PNC Bank, and Unilever. For example, in 2010, Sotheby’s auctioned works from the Neuberger Berman and Lehman Brothers Corporate Art Collections when the corporations were under financial distress.

iCollect

iCollect is Sotheby’s collection management system powered by Collector Systems, a web-based collection management software creator. As a free, online software, iCollect provides a compilation of Sotheby’s entire collection of items ever sold, detailed information about each item and track condition history. After registration, clients can upload images of their items and provide condition reports, appraisal documents and insurance certificates. The software is also available as applications on various devices such as the iPhone.

Sotheby's Picture Library

Sotheby’s Picture Library contains images in a variety of formats available for licensing. It is one of the image suppliers to various databases such as the British Association of Picture Libraries and Agencies (BAPLA).

HK Central Landmark 朱銘 Ju Ming art exhibition interior Sotheby's

Museum Services

Sotheby’s Museum Services works with museums through providing assistance in item valuations, deaccessions and sales, tailored acquisition opportunities and cultivation and development opportunities.

Sotheby's Café

Sotheby’s Café, located in Sotheby’s Bond Street auction house in London, offers breakfast, lunch, and traditional English afternoon tea. The Café’s wine list is created by Serena Sutcliffe, the head of Sotheby’s International wine department.

Sotheby's Fine Art Storage Facility

Sotheby's Fine Art Storage facility is located in Greenford Park, Middlesex. The facility provides 100,000 square feet of storage over two floors. Storage charges vary.

Tax & Heritage

Sotheby’s Tax & Heritage assists fiscal and legal aspects of items handled by Sotheby’s in the United Kingdom and Europe.

Trusts & Estates

Sotheby’s Trusts & Estates service assists fiduciaries, executors and beneficiaries in the United States for valuation and disposition of personal property assets, estate tax, family division, insurance loans, collateral loans, and consignment management. Clients are not restricted to sell at Sotheby’s.

Valuations

Sotheby’s Valuations service provides valuations of the market, charitable donations, insurance for loans, indemnification valuations for government applications and auction estimates.

Other Services

Sotheby’s publishes Sotheby’s at Auction, a luxury magazine highlighting rare works of art on the market. Periodicals are priced at USD$20 per issue in the United States and Canada. Sotheby’s also publishes Sotheby’s Blogs featuring reports from Sotheby’s press office.

Art Departments

• Antiquities
• Books and Manuscripts
• Ethnographic Arts
• Furniture and Decorative arts
• Jewelry and Watches
• Musical Instruments
• Paintings, Sculptures and Drawings
• Photographs
• Prints
• Special Projects
• Wine

Auctioned artwork

Sotheby's holds a number of world records for auctioned works of art. The following monetary values are given in United States dollars.

• On 22 May 2002, Norman Rockwell's painting of Rosie the Riveter was sold for $ 4.96 million.
• On 3 May 2006, Sotheby's auctioned Pablo Picasso's Dora Maar au Chat which was sold for $95 million to an undisclosed purchaser, becoming the second most expensive artwork ever sold at auction at that time.
• On 7 June 2007, a Roman-era bronze sculpture of Artemis and the Stag was sold at Sotheby's by the Albright–Knox Art Gallery in Buffalo, New York for $ 28.6 million, by far exceeding its estimates and setting the new record as the most expensive sculpture as well as work from antiquity ever sold at auction.

Hispano J12 1933 coach Pourtout - Sotheby's 1989

• Sotheby's holds the world record for most expensive piece of contemporary art ever sold at auction, with Mark Rothko's quintessential 1950 White Center (Yellow, Pink and Lavender on Rose), which grossed $ 72.8 million in May 2007 and was famously offered by David Rockefeller as well as the most expensive work sold at auction by a living artist with Damien Hirst's "Lullaby Spring" pill cabinet, which grossed roughly $ 19 million in a June 2007 London sale.
• On 6 December 2007, Sotheby's auctioned the Guennol Lioness, a 31⁄4-inch limestone lion from ancient Mesopotamia. It is thought to be at least 5,000 years old. It was sold for US-$ 57 million, fetching the highest price ever paid for at an auction for a sculpture.
• On 15 December 2007, Sotheby's auctioned a limited edition copy of The Tales of Beedle the Bard, written by J. K. Rowling. Although expected to make just $ 98,350, the book was purchased for a hammer price of $ 3,835,980 by London fine art dealers Hazlitt, Gooden and Fox on behalf of Amazon.com. The novel, which contained children's stories, was originally mentioned in the Harry Potter novel series. J.K. Rowling finished the actual story in late 2007. Only seven copies are in existence, each version unique by its cover. Six were given away as gifts to those close to her, while the remaining "moonstone edition" was sent up for auction with proceeds going to The Children's Voice charity. Each leather bound copy was hand written and illustrated by J.K. Rowling.
• On 19 December 2007, Sotheby’s auctioned a 710 year old copy of the Magna Carta, the last remaining copy in private hands out of the 17 that are known to exist. The copy sold for $ 21.3 million.
• On 3 February 2010, the sculpture L'Homme qui marche I by Alberto Giacometti was sold in London for £65 million (US$103.7 million), setting a new world record for a work of art sold at auction.
• On 2 May 2012, the painting "The Scream" was sold for $119,922,500 USD
• On 12 October 2012, the painting "Abstraktes Bild" by Gerhard Richter was sold for $34,000,000 USD, which set the record for a work by a living artist.

Controversy

Price fixing scandal

In February 2000, A. Alfred Taubman and Diana (Dede) Brooks, the CEO of the company, stepped down amidst a price fixing scandal. The FBI had been investigating auction practices in which it was revealed that collusion involving commission fixing between Christie's and Sotheby's was occurring. In October 2000, Brooks admitted her guilt in hopes of receiving a reduced sentence, implicating Taubman. In December 2001, jurors in a high profile New York City courtroom found Taubman guilty of conspiracy. He served ten months of a one year sentence in prison, while Brooks received a six-month home confinement and a penalty of USD $350,000. Sotheby's was sentenced to pay a fine of USD $45 million. No staff from Christie's were charged.

Growing out of the four-year criminal antitrust investigation by the United States Department of Justice, some 130,000 buyers and sellers filed class-action lawsuit, arguing they were cheated in the price-fixing conspiracy by Sotheby's and Christie's. In 2001, the United States District Court for the Southern District of New York gave final approval to a USD $512 million agreement. The structure of the settlement was said to have helped stave off insolvency for both companies, especially the publicly held Sotheby's.

At the time of the scandal, 59 percent of the company's Class A was owned by Baron Funds.

Illegal antiquities

In 1997, a Channel 4 Dispatches programme alleged that Sotheby's had been trading in antiquities with no published provenance, and that the organisation continued to use dealers involved in the smuggling of artifacts. As a result of this exposé, Sotheby's commissioned their own report into illegal antiquities, and made assurances that only legal items with published provenance would be traded in the future. In 2012, however, the U.S. Immigration and Customs Enforcement moved to seize a 10th-century Cambodian sandstone statue from Sotheby’s, alleging in a civil complaint before the United States District Court for the Southern District of New York that the company had put the work up for auction "despite knowing that it had been stolen from a temple" in Koh Ker.

Failure of payment issues

In 2003, Sotheby's filed suit against Michael Jackson's production company MJJ Productions, saying the entertainer had refused to pay for two paintings worth more than $1.3 million that he had successfully bid for the year before. The auction house launched another lawsuit in 2008, in which it claimed technology entrepreneur Halsey Minor failed to pay for three paintings.

Auctions and artists' authorship rights

In 2012, art dealer Marc Jancou filed suit in the Supreme Court of the State of New York, suing both Sotheby’s and artist Cady Noland after the auction house pulled a work he had consigned by the artist from a sale, apparently at her request. The suit argued that this presented a breach of the consignment agreement. Noland had told Sotheby’s there were problems with the condition of her painting Cowboys Milking (1990), estimated to sell for between USD $260,000 and $350,000. Jancou sued Sotheby’s for USD $6 million in compensatory damages, and Noland for USD $20 million in punitive damages. Both Sotheby's and Noland argued withdrawing the work from auction was well within the artist's rights under the Visual Artists Rights Act (VARA) and New York’s Artists’ Authorship Rights Act (AARA).

Activist investors

In 2013 and 2014, Sotheby’s was the target of a takeover attempt by activist investor Daniel S. Loeb of Third Point LLC, a registered investment adviser founded in 1995 and headquartered in New York with over $14 billion in assets under management. Third Point began acquiring shares in Sotheby’s in February 2013. By July 2013, Loeb's stake in Sotheby’si increased to 3.7%, and in August he raised his stake to 5.7%, and requested to talk with the management and board. In July, activists at Marcato Capital Management revealed a 6.6% stake, saying that the shares were undervalued. At that point, Marcato and Third Point were Sotheby’s second and third largest shareholders, following BlackRock Fund Advisors. Third Point’s August purchase brought its stake in Sotheby’s to 3.9 million shares.

On October 2, Third Point increased its share of Sotheby’s to 9.3 percent and, in a letter to Sotheby’s President, CEO, and Chairman William F. Ruprecht, called for a change in management, due to “the company's chronically weak operating margins and deteriorating competitive position relative to Christie's, as evidenced by each of the contemporary and modern art evening sales over the last several years." Third Point noted “We acknowledge that Sotheby's is a luxury brand, but there appears to be some confusion - this does not entitle senior management to live a life of luxury at the expense of shareholders.” Criticizing Sotheby’s “for what he called an incoherent Internet strategy and for not being aggressive enough in the contemporary art market,” Loeb said that he wanted the firm to expand globally and “exploit the Sotheby’s brand through adjacent businesses” and offered to “join the Board immediately and to help recruit several new directors who have experience increasing shareholder value, share a passion for art, understand technology and luxury brands, or have operated top-performing sales organizations.”

On October 3, 2013, Sotheby’s responded to Third Point’s rapid accumulation of Sotheby’s stock by announcing its adoption of a shareholder rights plan, known generally as a “poison pill,” whereby it forcibly diluted investor holdings in an attempt to ward off a hostile takeover. Third Point described the action as “a disproportionate response” and "a relic from the 1980s,” saying: "Rather than address our well-documented citations of mismanagement and initiate a constructive dialogue with its largest shareholder, the Board and the CEO have attempted to further entrench themselves,” putting "their job security ahead of shareholders.” Third Point wrote that “no action could have revealed more clearly the need for new blood and fresh views in the boardroom at this critical inflection point” for Sotheby’s.

Between October 2013 and February 2014, representatives of Sotheby’s and Third Point “held a number of in-person and telephonic meetings” in which “they discussed Third Point’s ideas about how to increase stockholder value.” At these meetings, Third Point insisted on multiple seats on Sotheby’s board; the firm offered only a single seat for Loeb himself. In Third Point’s view, this offer did not represent “a serious attempt to forge a settlement that would avoid a proxy contest.”

In February 2014, Third Point, which by now was Sotheby’s largest stockholder, stated in a filing that it would nominate three people – Loeb, Harry Wilson, and Olivier Reza – to Sotheby’s board, saying that current board members "lack the fresh perspective necessary to overhaul the company's challenged operational structure and cure its cultural malaise." Informing Sotheby’s formally on February 27, 2014, of its nomination of Loeb, Wilson, and Reza as board candidates, Third Point commended Sotheby’s for having taking certain actions that Third Point considered productive, but stated that “there remains much to be done to enhance” the firm’s “competitive position, refocus its strategy, and boost stockholder value.” It was reported in early March that Marcato would support Third Point’s nominees to the board.

On March 13, a day after Third Point increased its stake in Sotheby’s slightly to 9.6%, the firm rejected Third Point’s board nominees, saying that they "add no relevant skills, experience or expertise that is not already effectively represented on the board." Instead, the firm nominated executive Jessica Bibliowicz and former AOL and Univision executive Kevin Conroy. This proposed board, complained Third Point, “lacks an expert in the type of fundamental corporate restructuring that the Company must undertake.”

April 24, 2014 ISS recommendation

On April 24, 2014 the investor shareholder advisory firm Institutional Shareholder Services recommended that Sotheby's investors should vote for two of the three board members recommended by Daniel Loeb, including himself. The second board member recommended by the ISS was Olivier Reza, a "former investment banker who's jewelry family has done business with Sotheby's".

Prior to the ISS recommendation, on April 21, 2014 Mr. Loeb wrote a letter to the Sotheby's board noting the following:

We are convinced that having an owner's perspective in the boardroom yields better results, that this board is in dire need of fresh insights, and that our candidates are more qualified than the company's emissaries we are seeking to replace.

In the report the ISS noted that, "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". ISS recommended shareholders vote for Loeb and Olivier Reza and that introducing change into the boardroom was warranted. Writing for The New York Times on April 24, of 2014, Alexandria Stevenson notes:

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.

Later that day, Sotheby's issued a statement in regards to the report by the ISS:

We believe that Sotheby's shareholders should vote for all of Sotheby's director nominees. We note that ISS rejected one of Third Point's nominees and recommends that shareholders vote for our Say on Pay proposal.

On May 5th, Dan Loeb and Sotheby's reach an agreement. The agreement stipulates that Dan Loeb, Olivier Reza and Harry J. Wilson joined the board in exchange for Third Point having an ownership cap at 15%, William Ruprecht would stay as CEO and the proxy context to be held at Sotheby's AGM would cease On the newest board members, Bill Ruprecht, Chairman, President and CEO of Sotheby's noted:

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. This agreement ensures that our focus is on the business and that we will benefit from five fresh voices and viewpoints.

Further reading

• Learmount, Brian (1985). A history of the auction. Barnard & Learmont. ISBN 0-9510240-0-0.
• Mason, Christopher (2004). 'The Art of the Steal. Putnam. ISBN 0-399-15093-5.
• Watson, Peter (1998). Sotheby's: The Inside Story. Random House. ISBN 978-0-679-41403-2.
• Lacey, Robert (1998). Sotheby's: Bidding For Class. Little Brown & Co. ISBN 0-316-51139-0.

External links

• Official website
• Sotheby's Impressionist Sale Totals $239m, Tops Low Estimate
• IR ON THE NET: Going once, twice... delisted!
• Sotheby's International Realty Dallas, Texas Branch
• Sotheby's International Realty
• Sotheby's Institute of Art (Education)
• Sotheby's Group on Facebook