Saturday, 1 October 2016
Last updated 13 hours ago
Oct 2 2013 | 11:11am ET
Third Point has made its move on auction house Sotheby's, demanding a seat on its board and the ouster of its CEO.
The activist hedge fund took a 5.7% stake in Sotheby's in August and has boosted that to 9.3%, it said in a regulatory filing, making it the company's largest shareholder. Third Point chief Daniel Loeb, who has done business with Sotheby's as a major art collector, was quiet as to his intentions initially.
No more: In a letter to Sotheby's CEO William Ruprecht, he blasted the "lack of leadership and strategic vision at its highest levels" and called for Ruprecht to step down. He also chided Ruprecht's $6.3 million pay package and limited stock holdings, and took aim at a dinner at which "Sotheby's senior management feasted on organic delicacies and imbibed vintage wines at a cost to shareholders of multiple hundreds of thousands of dollars."
"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."
"Sotheby's is like an old master painting in desperate need of restoration," Loeb wrote. "As with any important restoration, Sotheby's must bring in the right technicians," he said, starting with himself, several other new directors and a new CEO.
Loeb criticized Sotheby's "chronically weak operating margins and deteriorating competitive position relative to Christie's" and what he called "dysfunctional division and a fractured culture."
"It is apparent to us from our meeting that you do not fully grasp the central importance of contemporary and modern art to the company's growth strategy, which is highly problematic since these are the categories expanding most rapidly among new investors," Loeb wrote to Ruprecht.