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Activist shareholder Dan Loeb Wednesday launched an all-out attack on the management of art auctioneers Sotheby's, calling for a new chief executive and criticizing company expenses.
Loeb, chief executive of hedge fund Third Point, released a blistering letter to Sotheby's chief executive William Ruprecht in which he said the auction house, which traces its history to 1744, had fallen behind rival Christie's in key emerging markets, Internet sales and the growing modern art segment.
Loeb also disclosed that Third Point's stake in Sotheby's has grown to 9.3 percent, making it the largest shareholder in the company.
"Sotheby's is like an old master painting in desperate need of restoration," Loeb wrote.
"Despite its advantages of historical superiority, a more prestigious brand, and a publicly traded currency with which it can attract, motivate and reward top talent, Sotheby's has languished while Christie's has thrived."
Sotheby's released a statement acknowledging the Third Point letter and pointing out that the company, whose shares have risen more than 45 percent in 2013, has outperformed some leading indices.
It also alluded to an already-announced "comprehensive capital allocation review" to ensure strong returns to shareholders.
"Today, rather than debating incendiary and baseless comments, we are focused on serving our clients' needs during this critical autumn sales season, including this week in Hong Kong, where are offerings are 77 percent higher than the same series last year," the statement said.
Sotheby's said it would comment on the Third Point communication "at the appropriate time."
The Loeb letter said its review of Sotheby's securities filings "invokes the long-gone era of imperial CEOs," including reimbursement for fees and dues to "elite country clubs."
Loeb also alluded to anecdotal evidence of waste, including an alleged "farm-to-table" lunch and dinner "where Sotheby's senior management feasted on organic delicacies and imbibed vintage wines at a cost to shareholders of multiple hundreds of thousands of dollars."
Loeb indicated he was willing to join the board, but said Ruprecht should step down for failed leadership. Loeb has already begun "informal" talks with several outside candidates to replace Ruprecht.
He also pointed to "at least two internal candidates for the CEO position who warrant serious consideration."
Sotheby shares rose 0.6 percent to $50.00 in trade Wednesday.