Sotheby’s largest shareholder has called for William Ruprecht, its current chairman, president, and CEO, to step down.
Daniel Loeb, CEO of activist investor Third Point, which holds 9.3 percent of Sotheby’s stock, suggested that Ruprecht resign in a Oct. 2 letter that was disclosed in a filing with the Securities and Exchange Commission.
“It is also time, Mr. Ruprecht, for you to step down,” he wrote. “While you were an able caretaker of Sotheby’s during times of crisis, you have not shown the innovation or inspiration the Company sorely needs to play offense today.”
Loeb added that Sotheby’s is currently “like an old master painting in desperate need of restoration.”
The letter does not mention jewelry sales, instead focusing mostly on the art market. It claims that Sotheby’s has lowered its margins—including, in some instances, rebating commissions and buyer’s premiums—to compete with Christie’s.
“We believe that Sotheby’s should be competing based on the quality of its service, its expertise, and ability to generate the highest possible price for its customer,” Loeb’s letter said.
It further charges that Sotheby’s has not developed a “coherent plan for an Internet sales” and is struggling in private sales.
“Despite its advantages of historical superiority, a more prestigious brand, and a publicly traded currency with which it can attract, motivate and reward top talent, Sotheby’s has languished while Christie’s has thrived,” the letter states.
It also takes aim at Ruprecht’s $6.3 million pay package, which it says is larger than those of the CEOs of Tiffany & Co. and Nordstorm and includes generous perks, such as a car allowance and reimbursement for his membership in country clubs. Loeb’s letter also notes that company executives recently gave themselves an “extravagant lunch” at a New York City restaurant that cost 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,” the letter says.
Loeb closes by offering to join the company’s board and recruit new directors.
In response, Sotheby’s told JCK: “Rather than debating incendiary and baseless comments, we are focused on serving our clients’ needs during this critical autumn sales season, including this week in Hong Kong, where our offerings are 77 percent higher than the same series last year—the highest estimate of any Sotheby’s sale in Asia.”
Sotheby’s added that it will respond to Loeb’s letter “at the appropriate time.”