Can Anyone Blame Dan Loeb For Speaking Out About Sotheby's?
The Billionaire hedge fund manager Dan Loeb has spoken out about Sotheby's lack of vision and has called for the resignation of William Ruprecht, chairman, president and CEO of the auction house, which was founded in 1744.
Expressing a shortfall in leadership, excessive pay and perks, and the fact that rival Christie’s has outperformed the company, Loeb thinks, "they could be doing much more to enhance shareholder value". In his letter, he sights Chairman Ruprecht’s “generous pay package and scant stock holdings,” and “a perquisite package that invokes the long-gone era of imperial CEOs: a car allowance, coverage of tax planning costs, and reimbursement for membership fees and dues to elite country clubs.”
Forbes Magazine points out that, Third Point, Loeb's aggressive hedge fund has purchased "6.35 million shares (at an average cost of $41.89) making them one of the auction house’s largest shareholder. Loeb has been buying shares since early August, and has gained additional exposure selling put options for an aggregate 2.13 million shares at an exercise price between $45 and $46 per share".
Loeb added that under Ruprecht’s leadership, Christie’s has outperformed them in defining sectors such as modern, post-war, and contemporary art as well as in developing new markets in India and China. He also passed comment on the lack of a cohesive digital strategy. “Our research suggests Sotheby’s crisis of leadership has created dysfunctional divisions and a fractured culture. There is a demoralising recognition among employees that Sotheby’s is not at the cutting edge,” Loeb concluded.
“Sotheby’s is like an old master painting in desperate need of restoration,” Loeb proclaimed. They lack a strategy for “repairing” the company. In order to expand its global footprint, exploit branding opportunities in adjacent businesses, and use its capital to begin to play the art market proprietarily, Sotheby’s needs the “right technicians.” His solution is for Ruprecht to step down immediately and for the role of Chairman and CEO to be split into two jobs. Sotheby's said it would comment on the Third Point communication "at the appropriate time."