Sotheby’s CEO Ruprecht to Step Down After Loeb FightJames Tarmy
William Ruprecht, the chief executive officer of Sotheby’s for 14 years, will step down, six months after the auction house ended a bitter proxy battle with billionaire activist investor Daniel Loeb.
Sotheby’s has begun a search for a replacement and Ruprecht, 58, will continue as chairman, president and CEO until a successor is found, the New York-based auction house said in a statement yesterday. The decision is by mutual agreement, Sotheby’s said.
“The board is focused on ensuring a smooth transition that will facilitate Sotheby’s continued success,” Domenico De Sole, the board’s lead independent director who is heading the search committee, said in the statement. “We are moving with a sense of urgency but we will take the time we need to find the right leader for Sotheby’s.”
Sotheby’s shares rose 9.4 percent to $42.95 at 10:25 a.m. in New York. The shares have declined 10.7 percent this year with reinvested dividends.
Ruprecht had been under pressure from Loeb to cut costs and increase shareholder value since last year. A proxy fight ended May 5 when Sotheby’s agreed to appoint Loeb, founder of Third Point LLC, and two of his candidates to its board of directors. Third Point is Sotheby’s largest shareholder as of Sept. 30, with 6.6 million shares, a 9.64 percent stake.
In a June letter to Sotheby’s shareholders, Loeb, who is also a contemporary art collector, said that the board stood “behind the management team led by Bill Ruprecht.”
Elissa Doyle, a spokeswoman for Third Point, said the hedge fund firm declined to comment.
Sotheby’s board has been discussing the future of its executive leadership since August, according to a person familiar with the matter. The full board was involved in the discussions and it agreed unanimously to keep Ruprecht on as CEO until a successor was named, said the person, who asked not to be identified because the talks were private. The decision for Ruprecht to step down was unrelated to Sotheby’s performance, this person said.
Sotheby’s said Nov. 10 that losses narrowed in the third quarter because of lower expenses.
The loss was $27.7 million in the three months ended Sept. 30, or 40 cents a share, compared with $30.1 million, or 44 cents, in the same period last year.
Sotheby’s attributed the improved performance to cost-cutting measures and lowered expenses. The company said it’s on track to exceed $22 million in its cost savings target, with $5 million of the cuts in marketing expenses, $9 million in professional fees and $9 million in other general and administrative expenses.
The proxy battle with Third Point cost Sotheby’s $20.1 million in the first nine months of the year for legal, advisory and other fees, Patrick McClymont, the company’s chief financial officer, said in an earnings conference call on Nov. 10.
“This is very positive news for Sotheby’s as it paves the way for termination of tension” between shareholders and management, Skate’s, a New York-based art market researcher, said in a statement yesterday about Ruprecht. “Right move, Mr. Ruprecht. Thank you.”
David A. Schick, an analyst at Stifel, Nicolaus & Co. who has a buy rating on Sotheby’s, wrote in a report yesterday that the change “could close the gap between the strong Sotheby’s brand and the output of the Sotheby’s business.”
The news about Ruprecht comes after a record November auction season for Sotheby’s. Over a two-week period, the auction house sold $1.1 billion of Impressionist, modern, postwar, and contemporary art. Its record $422 million Impressionist and modern art evening sale included a sculpture by Alberto Giacometti that fetched $101 million.
Yesterday, Sotheby’s sold a Georgia O’Keeffe painting of a white flower that set an auction record for a work by a female artist when it fetched $44.4 million. “Jimson Weed/White Flower No. 1” sold for almost three times the work’s high estimate of $15 million.
Sotheby’s yesterday also sold a 9.75-carat blue diamond for $32.6 million, setting an auction record for any blue diamond. The previous auction record for a blue diamond was $24.3 million, set at Christie’s London in December 2008. A private Hong Kong collector bought yesterday’s diamond, which was consigned to Sotheby’s by the estate of American socialite Rachel “Bunny” Mellon.
Ruprecht joined Sotheby’s in 1980 and worked in various positions including serving as executive vice president and director of marketing. He also oversaw a number of specialist departments.
“I am comfortable and confident saying Sotheby’s is well positioned for the next chapter of its success,” Ruprecht said in yesterday’s statement. “I will do all I can to contribute to a smooth leadership transition.”
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