Sotheby’s have revised employee incentive packages in a move that should help stabilise costs and prevent key staff from being poached by rivals.
The announcement came as part of the third quarter results, which showed a net loss of $30m, up 50 per cent on the same period last year. The figure – effectively a blip on an otherwise upward trend of profit – is partly blamed on rising salaries and senior executives exercising stock options as well as increased general and administrative costs.
Competing more fiercely for the upper end of the Modern and Contemporary art markets means spending more on marketing and entertainment, but, as the year-to-date figures show, this is paying off handsomely. Profits have more than trebled for the first nine months to $36.74m, compared to a figure of $11.29m for the same period in 2005.
Staff increases in departments selling Contemporary, Russian and Asian art account for at least some of the rise in salary costs, and there has been a heavier bill for payroll tax where executives have exercised their stock options.
This last figure should reduce in the months to come as the company enforce their new incentives policy, effectively tying valued senior staff into a five-year performance cycle before they can cash in up to 50 per cent of their stock.
Chief executive Bill Ruprecht stipulated that the twin targets of cost control and “strategic investment spending” would determine ongoing policy.
Among other areas, the latter policy focusses on auction guarantees and advance guarantees, key weapons in securing market share in the growing and highly profitable sectors of Contemporary and Modern art.