Sotheby’s are preparing for a crunch vote at the May 6 annual shareholder meeting when they hope to see off a bid by investor Daniel Loeb to join the board.
In a special investor update just published on their website,
the board hit back at Mr Loeb's claims that the directors are
overpaid and underperforming.
The 16-page presentation, in which
the board say they are setting the record straight, sets out a raft
of figures showing how the company has driven sales growth over the
past decade, developed its digital strategy, brand expansion and
loan portfolio, and chased opportunities across the globe.
The directors also caution that "not all market share is good
market share", a direct response to Mr Loeb's belief that the
auction house's recent performance is cast in a poor light when
compared with rivals Christie's. "Management has taken a deliberate
and rational approach to pursuing market share; not all share is
good share, particularly if the price to Sotheby's is a lower than
acceptable margin" - a reference to deals offered to secure trophy
consignments that can be so preferential to vendors that the
auctioneers can actually lose money on the sale.
The directors turn the tables on Mr Loeb and his company Third
Point, who own just under 10% of Sotheby's stock, saying that not
only does his claim that the board lack fresh perspective not stand
up to scrutiny - five new directors have been appointed since 2011
- but that it has widespread relevant expertise that Mr Loeb
himself and his nominees lack.
And they add that Third Point "offers no plan to create value"
for Sotheby's shareholders and that Mr Loeb's "erratic and
aggressive behaviour suggest he would be a disruptive force" on the
Sotheby's followed up the briefing with an early announcement of
results for the first quarter of 2014 which reports a 40% rise in
net auction sales to $730m accompanied by an 81% improvement in net
losses for the period (the first quarter is traditionally loss
making because of the seasonal nature of sales).
Sotheby's expect to confirm official figures the day after the
annual shareholders' meeting and have appealed directly to
shareholders in a letter to vote for Sotheby's director nominees
rather than Third Point's, urging those not attending the meeting
to vote by proxy.
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