Value Investing

Dan Loeb Wages Proxy War: Letter To BID

Dan Loeb Wages Proxy War: Letter To BID (excerpts from SEC doc below)

General

The Company’s Board of Directors currently comprises one class of directors who are elected annually at each year’s annual meeting of the Company’s stockholders and serve until the next annual meeting following their election or until their successors have been elected and qualified. At the Annual Meeting, we expect that twelve directors are to be elected to the Board of Directors to hold office until the Company’s 2015 annual meeting of stockholders or their successors have been elected and qualified.

Dan Loeb Wages Proxy War: Letter To BID

We are currently seeking your proxy to vote for the election to the Board of Directors of three individuals – Mr. Daniel S. Loeb, Mr. Harry J. Wilson and Mr. Olivier Reza. We are also seeking your proxy to vote for the election of the candidates who have been nominated by the Company other than  and .

For information concerning voting procedures at the Annual Meeting, see “Voting and Proxy Procedures.”

Background of this solicitation

Third Point is a registered investment adviser headquartered in New York with over $14 billion under management. Founded in 1995, Third Point follows an event-driven, value-based approach to investing globally across the capital structure. Third Point’s investment framework identifies mispriced securities and corresponding catalysts that it believes will unlock the company’s latent value.

The Third Point Entities began building their current position in shares of Common Stock in February 2013 and currently own an aggregate of 6,650,000 shares, representing approximately 9.62% of the Common Stock outstanding. We believe that the Third Point Entities collectively are the largest stockholder of the Company.

Third Point and Loeb filed a Schedule 13D

Third Point initially acquired the shares of Common Stock in the Company for investment purposes. On August 26, 2013, Third Point and Mr. Loeb filed a Schedule 13D disclosing that, as of such date, they beneficially owned 5.7% of the Common Stock outstanding, based on the total number of shares of Common Stock outstanding as reported by the Company as of July 31, 2013.

On October 2, 2013, Mr. Loeb sent a letter to Mr. William F. Ruprecht, Chairman, President and Chief Executive Officer of the Company, expressing concerns about the Company’s operating margins and competitive position relative to Christie’s. Mr. Loeb also highlighted the Company management’s lack of alignment with stockholder interests, noting the Third Point Entities’ stake at the time was nearly ten times the number of fully-vested shares held by the Company’s directors and executive officers. Mr. Loeb offered to “join the Board immediately and to help recruit several new directors who have experience increasing shareholder value, share a passion for art, understand technology and luxury brands, or have operated top-performing sales organizations.”

On October 3, 2013, the Company announced the adoption of a shareholder rights plan (commonly referred to as a “poison pill”) in response to the “recent rapid accumulations of significant portions of Sotheby’s outstanding common stock.”

Between October 2013 and February 2014, representatives of the Company and Third Point held a number of in-person and telephonic meetings. Among other things, they discussed Third Point’s ideas about how to increase stockholder value. The Company also shared certain non-public information under the terms of a standard confidentiality agreement. During these discussions, the Company offered to appoint Mr. Loeb to the Board of Directors, which we believe represented both an acknowledgment of Mr. Loeb’s contributions to improving the Company’s value for stockholders over the past six months and their determination that he would be a constructive addition to the Board.

While we welcomed the Company’s endorsement of Mr. Loeb as an appropriate Board member, based on Third Point’s experience a sole voice representing stockholders’ interests in the boardroom is insufficient to bring about necessary change at the Company. Based on this belief, Third Point consistently adhered to a request for multiple board seats. The Company was always well aware of Third Point’s insistence on multiple seats, and so its offer of a single seat was not, in our opinion, a serious attempt to forge a settlement that would avoid a proxy contest.

On January 29, 2014, the Company announced both a $300 million special dividend payable to stockholders in March and the authorization of a $150 million share repurchase program, with approximately $25 million of shares scheduled for repurchase by the end of 2014. The announcement also stated that the Company intended to return excess capital to stockholders on an annual basis. The Company further noted that it would consider additional debt financing and evaluate its real estate holdings in London and New York. Finally, the Company announced that it would separate capital structure and financial policies for the Agency (Auction and Private Sales) business and Financial Services business.

On February 27, 2014, Third Point Offshore Master Fund L.P., a Third Point Entity that is a record holder of Common Stock, delivered to the Company formal notice of its nomination of the Third Point Nominees for election to the Board at the Annual Meeting.

Reasons for this Solicitation

Although we commend the Company for taking some action following our initial Schedule 13D filing, we believe there remains much to be done to enhance the Company’s competitive position, refocus its strategy, and boost stockholder value. As Sotheby’s largest stockholder, we remain firm in our conviction that the Board will benefit greatly from new perspectives and different expertise to move the Company forward. Therefore, we are nominating the Third Point Nominees to the Board.

We believe that the Company’s improvements since our initial Schedule 13D filing, most notably in certain capital allocation practices and the evaluation of the Company’s real estate holdings in London and New York, make the case that the Company and all stockholders will continue to benefit from having an owner’s perspective in the boardroom. While Third Point and Mr. Loeb currently beneficially own almost 10% of the Company’s Common Stock, the Company’s nominees for the Board of Directors, as disclosed in the Company’s Preliminary Proxy Statement for the Annual Meeting filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2014 (the “2014 Preliminary Proxy Statement”), collectively hold less than 1%, with only two of the Company’s nominees to the Board holding above 0.01% of the shares outstanding. We believe that the Board’s refusal to fully embrace its stockholders’ desire for change was revealed by its adoption of a “poison pill” in October. We believe the pill has been put into place solely to entrench the current Board and the Company’s nominees for the Board and is wrongful. As a response to stockholder demands for increased transparency and accountability, the adoption of the pill, in our opinion, demonstrated that the current Board’s paramount interest is in ensuring its members and the Company’s nominees are protected rather than maximizing stockholder value by considering stockholders’ (evidently valid) suggestions for improvement. In our view, no action could have revealed more clearly the need for new blood and fresh views in the boardroom at this critical inflection point for the Company.

We also believe the Company’s directors lack the fresh perspective necessary to overhaul the Company’s challenged operational structure and cure its cultural malaise. Institutional Shareholder Services recently released “QuickScore 2.0” guidelines for optimal board structure, stating that “tenure of more than nine years (can) . . . potentially compromise a director’s independence.” Using this metric, the Company’s current nominees for the Board are weak, with nearly 60% entering their 8th year of service if elected. We note that the new Company nominees were selected by this long-serving Board only after we began pressuring the current directors to improve stockholder value. We believe that these changes came only in response to stockholder pressure and their existence on the slate serves as further evidence that this Company requires a vocal stockholder presence to help move the Company forward.

We contend that the Company’s proposed Board also lacks an expert in the type of fundamental corporate restructuring that the Company must undertake. The tasks that lie ahead for this Board remain formidable – including critical cost-cutting treated to date, in our view, only superficially, and further leveraging of the Company’s brand and market knowledge to capture a greater share of the global art profit pool by refocusing online initiatives, increasing private sales, and taking a larger slice of the contemporary art market. We believe it is a matter of concern to all stockholders that no Board member today possesses a demonstrated track record in this type of restructuring.

Finally, we believe that despite the recent appointment of Domenico De Sole to the Board, all stockholders will benefit from further depth of experience in the Company’s key business building block: luxury customer relationship development.

The Third Point Nominees will, if elected, constitute only a minority of the Board and, even if they were to vote together unanimously, will not be able to adopt single-handedly any measures (including any measures proposed by the Third Point Nominees) without the support of additional members of the Board. We believe, however, that the Third Point Nominees, if elected to the Board, will collectively be in a position to influence the strategic direction of the Company and will bring to the Board of Directors necessary and valuable experience in corporate restructuring, optimizing capital allocation, cultivating relationships with luxury customers, and unlocking value for stockholders. Each of the Third Point Nominees is committed to acting in the best interest of the Company’s stockholders.

The Third Point Nominees recognize fully that as members of the Board they will owe fiduciary duties to all stockholders. Except as set forth in this Proxy Statement, none of the Third Point Nominees has any contract, arrangement or understanding with the Company, and no other direct financial interest concerning the Company.

We Strongly Recommend a vote for the Election of the Third Point Nominess

And here is Dan Loeb’s bio as per the SEC filing

LOGO

ame, Age and BusinessAddress

Principal Occupation or Employment During the

Last Five Years; Public Company Directorships

Daniel S. Loeb(Age: 52)Business Address:

390 Park Avenue,

18th Floor

New York, NY 10022

Daniel S. Loeb is the Chief Executive Officer of Third Point LLC, a New York-based investment management firm he founded in 1995. Third Point employs an event-driven approach to investing in securities across the globe. Immediately before founding Third Point, Mr. Loeb was Vice President of high yield sales at Citigroup. From 1991 to 1993, he was Senior Vice President in the distressed debt department at Jefferies & Co. Mr. Loeb began his career as an Associate in private equity at E.M. Warburg Pincus & Co. in 1984. From May 2012 until July 2013, Mr. Loeb was a member of the board of directors of Yahoo! Inc. He is a Trustee of the United States Olympic Foundation, Mount Sinai Hospital, the Manhattan Institute, Prep for Prep, and the Museum of Contemporary Art, Los Angeles. He is the Chairman of the Board of Success Academies Charter Schools. He is also a member of the Council on Foreign Relations and the American Enterprise Institute’s National Council. Mr. Loeb graduated with an A.B. in Economics from Columbia University in 1983.Over the course of his career, Mr. Loeb has developed an understanding of value creation and the methods by which companies can unlock value for stockholders. As Chief Executive Officer of one of the Company’s largest stockholders, if elected to the Company’s Board of Directors Mr. Loeb would serve as a vocal advocate for owners of the Company. For these reasons, we believe Mr. Loeb is exceptionally well-qualified to serve as a director of the Company.

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