Third Point (NYSE: TPRE; LSE: TPOU LN) Urges Sothebys (NYSE:BID) Stockholders to Support Its Slate of Independent and Highly Qualified Nominees: Vote the White Proxy Card Today!
NEW YORK, NEW YORK, April 21, 2014: Third Point released this letter to its fellow Sotheby’s (the “Company”) shareholders, calling on them to vote for “Shareholder Slate” Director nominees Daniel S. Loeb, Harry J. Wilson, and Olivier Reza instead of the Company’s nominees Jessica Bibliowicz, Robert Taubman, and Daniel Meyer (the “Sotheby’s Three”) at this year’s Annual Meeting.
Dear Fellow Shareholder:
Third Point has nominated the Shareholder Slate because we are convinced that having an owner’s perspective in the Boardroom yields better results, that this Board is in dire need of fresh insights, and that our candidates are more qualified than the Company’s emissaries we are seeking to replace. We are confident that adding three shareholder voices to this twelve-person Board will do more to improve Sotheby’s long-term growth and increase its share price than would rubber-stamping the Company’s latest set of hand-picked nominees.
Two weeks ago, Sothebys (NYSE:BID) released a presentation disparaging the Shareholder Slate. The Company made false statements, and used disingenuous criticism as well as misleading quotations to demean our nominees’ qualifications. This approach should not surprise anyone given that this is the same Sotheby’s that called 2013 a “record year” when the facts showed earnings-per-share were down 42% from their prior peak in 2007.
Had the Sotheby’s Board bothered to formally interview our Director nominees, it could not possibly have declared them unqualified. On a head-to-head basis, we are confident our nominees have more relevant experience, more impressive track records of long-term value creation, and will bring more valuable insight to better represent Sotheby’s shareholders. We believe you will agree and ask that you support the Shareholder Slate by voting your white proxy card today.
Sothebys: Daniel S. Loeb vs. Jessica Bibliowicz
Dan is the Founder and Chief Executive Officer of Third Point, one of the world’s most respected and successful asset management firms. Since founding the firm in 1995, he and his team have compiled a cumulative net return for investors of 3,644% and generated net annualized returns of approximately 21.2%, more than doubling the S&P’s return over the same period with significantly less volatility.
In February, Sothebys (NYSE:BID) offered Dan a single seat on its Board of Directors. It is obviously perplexing that this group would have done so if they believed he had nothing to bring to the table, as they stated in their presentation two weeks ago. What facts changed? Surely there must be an answer beyond Sothebys (NYSE:BID) stated reason, which can be characterized as “we were willing to put a person we judged to be unqualified on the Board if he agreed not to mount a public proxy contest against us”. Without an explanation or even an acknowledgement of this obvious inconsistency, shareholders cannot help but ask whether the legacy Directors are capable of making long-term, well-reasoned decisions about who should serve on the Board.
Unlike the Company – which strained the bounds of credulity by dismissing Dan’s experience as irrelevant – we believe his tenure as a Director at Yahoo! Inc. (“Yahoo!”) is directly applicable to Sotheby’s and instructive for investors considering which nominees are most qualified to serve on the Board.
Like Sothebys (NYSE:BID) today, Yahoo! in 2011 was suffering from a cultural malaise brought about by a long-serving Board that stood by as the company fell behind in a rapidly changing world. As was the case in Yahoo! Inc. (NASDAQ:YHOO), Sothebys (NYSE:BID)s mediocre performance has been camouflaged by factors beyond the Board’s control (in this case, enormous tailwinds from global growth in sales of luxury goods). Ultimately, Yahoo! settled its proxy contest with Third Point and agreed to appoint three of Third Point’s nominees to the Board.
Dan and his Yahoo! slate are generally acknowledged to have been the leaders in hiring Yahoo!’s CEO Marissa Mayer, settling potentially damaging litigation against Facebook Inc (NASDAQ:FB), earning hundreds of millions of dollars for investors by advocating for the hedging of currency exposure, overseeing numerous acquisitions of mobile internet companies, and bringing accountability and better processes to the Board. The Third Point directors worked collaboratively and constructively with their fellow Board members to reach consensus on each of these important issues. Although Third Point does not take all the credit for the move in Yahoo!’s stock price, it is instructive to note that an investor who purchased shares on the date of Third Point’s initial 13D filing in September 2011 and continues to own them today would have seen the investment rise by approximately 152%. Even since Third Point sold the majority of its stake back to the Company at its request in July 2013, Yahoo!’s shares have risen by an additional 25%.
Finally, evidence exists that Dan’s engagement with the Sothebys (NYSE:BID) Board has already benefited shareholders. Since Third Point announced its investment in Sotheby’s in October 2013, direct lines can be drawn between our calls for change and the Company’s overdue capital allocation improvements. There is tangible proof – in the form of an expanded capital return policy, a commitment to monetize real estate assets, an initial attempt at cost cutting, and a new CFO – that Third Point’s direct engagement with the Board benefits shareholders.
Sotheby’s has nominated Jessica Bibliowicz, whom we are familiar with because she is a respected and accomplished businesswoman. However, in our opinion, her skills and experience are not particularly relevant to being a director of Sotheby’s. In contrast to Dan’s skills of finding and unlocking shareholder value honed over almost three decades as a professional investor, Ms. Bibliowicz has spent the bulk of her career in the retail investment advisory business. Her sole connection to Sotheby’s appears to be a directorship for less than one year at Realogy, a privately-owned company that licenses the Sotheby’s name to sell real estate. She has not, to our knowledge, purchased any Sotheby’s stock.
Why Elect Daniel Loeb vs. Jessica Bibliowicz?
Dan will be relentless in demanding top performance from both management and his fellow Board members by combining his long-term vision for the Company with a sense of urgency. Sotheby’s shareholders have already seen the benefits of this approach. While the Company claims Dan would not add any “incremental, relevant skills experience or expertise” to the Board (a familiar refrain we have heard from other entrenched management teams fearful of scrutiny and accountability1), certainly both Third Point’s own investors and any Yahoo! shareholder would disagree. Dan brings to Sotheby’s more directly applicable experience, a true “owner’s perspective”, and a substantial track record of success not only in guiding his own firm but also in making significant contributions to public companies and their shareholders.
Harry Wilson vs. Danny Meyer
Harry spent the first 15 years of his career investing across a broad range of industries, applying private equity discipline and insights to new situations. Many of those situations involved companies like Sotheby’s that were substantially under-managed. In these cases, Harry worked successfully with management and his fellow directors – often serving as the lead director – to improve operations and create substantial shareholder value.
Over the last several years, Harry has focused his efforts on playing a critical leadership role in some of the