Loeb moves on Sotheby’s with attack on lavish dining at shareholders’ expense
By Elizabeth Paton in New York
The activist investor Dan Loeb launched a blistering attack on Sotheby’s chief executive William Ruprecht yesterday, accusing him of lacklustre leadership and his managers of extravagant wining and dining that cost shareholders “hundreds of thousands of dollars”.
The attack, in an open letter addressed to Mr Ruprecht calling for his resignation, came after a federal filing revealed that Mr Loeb’s Third Point had raised its stake in Sotheby’s from 5.7 per cent to 9.3 per cent. The hedge fund is now the largest shareholder in the New York-based auctioneer.
“Sotheby’s is like an old master painting in desperate need of restoration,” said Mr Loeb, adding that he was willing to join the Sotheby’s board and that his team had started to meet potential candidates to replace Mr Ruprecht.
“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 offence today,” he wrote in a letter disclosed in a regulatory filing. Mr Loeb said Sotheby’s management had not fully grasped the importance of contemporary and modern art, and had failed to develop a successful online sales strategy.
He also accused the company’s senior management of lavish and wasteful business practices, including expensive lunches and dinners where, he said, they “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,” he said.
The auctioneer responded with a statement saying that “rather than debating incendiary and baseless comments, we are focused on serving our clients’ needs during this critical autumn sales season”. It said it would comment on Mr Loeb’s letter “at the appropriate time”.
It had produced “superior results – including a share price increase exceeding the Standard & Poor’s Midcap index over the one, five and 10-year periods”, it added.
Sotheby’s has faced pressure from investors to review its financial policies in recent months. In September the company put its Manhattan headquarters up for sale as Mr Loeb and others insisted that management find ways of returning more cash to shareholders.
Several big Wall Street hedge funds alongside Third Point have consolidated long positions in the auctioneer this year. It has long enjoyed a near-duopoly in fine art auctions alongside Christie’s. However, in 2012, sales at Sotheby’s totalled $5.4bn, down 7 per cent from 2011.
Additional reporting by Sam Jones in London
Zeng Fanzhi’s ‘The Last Supper’ at Sotheby’s in Hong Kong. Dan Loeb cast the auctioneer as an ‘old master in need of restoration’
AP |
