SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
SOTHEBY'S HOLDINGS, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SOTHEBY'S HOLDINGS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 30, 1998
To the Shareholders of
SOTHEBY'S HOLDINGS, INC.
The Annual Meeting of Shareholders of SOTHEBY'S HOLDINGS, INC. (the
"Company") will be held on Thursday, April 30, 1998, at Sotheby's, 34-35 New
Bond Street, London, England, at 10 o'clock in the forenoon, local time, for the
following purposes:
1. To elect ten (10) directors to serve until the next annual meeting of
shareholders and until their successors are elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 20, 1998 as
the record date for determining the shareholders that are entitled to notice of,
and to vote at, the annual meeting or any adjournment or postponements thereof.
By Order of the Board of Directors
A. ALFRED TAUBMAN, Chairman
Bloomfield Hills, Michigan
March 30, 1998
SHAREHOLDERS WHO DO NOT INTEND TO BE PRESENT AT THE MEETING IN PERSON ARE
REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND TO RETURN IT IN THE
ACCOMPANYING ENVELOPE IN ORDER THAT THE NECESSARY QUORUM MAY BE ASSURED. ANY
PROXY MAY BE REVOKED IN THE MANNER DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT
AT ANY TIME BEFORE IT HAS BEEN VOTED AT THE MEETING.
SOTHEBY'S HOLDINGS, INC.
500 N. WOODWARD AVENUE
SUITE 100
BLOOMFIELD HILLS, MICHIGAN 48304
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies (each, a "Proxy") by and on behalf of the Board of Directors of
Sotheby's Holdings, Inc. (the "Company"), for use at the annual meeting of
shareholders and at any adjournment or adjournments thereof (the "Meeting") to
be held, for the purposes set forth in the accompanying Notice of Annual
Meeting, on Thursday, April 30, 1998, at Sotheby's, 34-35 New Bond Street,
London, England ("Sotheby's U.K."), at 10 o'clock in the forenoon, local time.
The Company expects to mail this Proxy Statement on or about March 30, 1998.
Valid Proxies will be voted as specified thereon at the Meeting. Any
shareholder giving a Proxy in the accompanying form retains the power to revoke
the Proxy, by written notice to the Company, at any time prior to its exercise.
In addition, attendance at the Meeting will not constitute a revocation of a
Proxy unless the shareholder affirmatively indicates at the Meeting that such
shareholder intends to vote the shares in person.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1997,
including financial statements audited by Deloitte & Touche LLP, independent
auditors, and their reports thereon dated February 27, 1998, is being mailed
with this Proxy Statement to each of the Company's shareholders of record at the
close of business on March 20, 1998. IN ADDITION, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WILL BE SENT TO ANY SHAREHOLDER, WITHOUT
CHARGE, UPON WRITTEN REQUEST TO INVESTOR RELATIONS, C/O SOTHEBY'S, INC., 1334
YORK AVENUE, NEW YORK, NEW YORK 10021.
VOTING SECURITIES
The holders of record of shares of Class A Limited Voting Common Stock, par
value $0.10 per share (the "Class A Common Stock"), or shares of Class B Common
Stock, par value $0.10 per share (the "Class B Common Stock," and together with
the Class A Common Stock, the "Common Stock"), of the Company at the close of
business on March 20, 1998, are entitled to vote at the Meeting. On that date,
there were outstanding and entitled to vote 39,525,452 shares of Class A Common
Stock, entitled to one vote per share, and 16,973,094 shares of Class B Common
Stock, entitled to ten votes per share. At the Meeting, the holders of Class A
Common Stock, voting as a class, will elect three directors, and the holders of
Class B Common Stock, voting as a class, will elect the remaining seven
directors.
With respect to all matters that may properly come before the Meeting (other
than the election of directors), holders of Common Stock will vote as a single
class.
Unless contrary instructions are indicated on the Proxy, all shares of
Common Stock represented by valid Proxies received pursuant to this solicitation
(and not revoked before they are voted) will be voted:
(1) FOR the election of the nominees for directors named in the Proxy;
and
(2) FOR the ratification of the appointment of Deloitte & Touche LLP as
the Company's independent auditors.
Other than the election of directors, all matters that may properly come
before the Meeting require the affirmative vote of a majority of the votes cast
at the Meeting. Holders of Class A Common Stock elect
three directors by a plurality of the votes cast by such holders at the Meeting,
and holders of Class B Common Stock elect seven directors by a plurality of the
votes cast by such holders at the Meeting.
Where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not provided voting instructions for a particular
matter, those shares ("Non-Voting Shares") will not be included in the vote
totals for that matter but will be counted for determining the presence of a
quorum. Consequently, Non-Voting Shares will not affect the determination of
whether a matter is approved.
Shares voted to abstain regarding a particular matter ("Abstaining Shares")
will not be counted in determining whether a matter is approved. Accordingly,
Abstaining Shares will not affect the determination of whether a matter is
approved.
The Company knows of no business other than that set forth above to be
transacted at the Meeting, but if other matters requiring a vote do arise, it is
the intention of the persons named in the Proxy to vote in accordance with their
judgment on such matters.
ELECTION OF DIRECTORS
Ten (10) directors are to be elected at the Meeting to serve until the next
annual meeting and until their respective successors have been elected and
qualified. Directors are elected by a plurality of the votes cast at the
Meeting.
The shares of Class A Common Stock represented by the enclosed Proxy, if
given and unless otherwise specified, will be voted by the persons named as
proxies for the election of the following individuals nominated by the Board of
Directors:
YEAR FIRST ELECTED
NAME AGE A DIRECTOR
- ---------------------------------------------------------------------- --- -------------------
Walter J.P. Curley.................................................... 75 1993
Max M. Fisher......................................................... 89 1983
A. Alfred Taubman..................................................... 73 1983
Mr. Curley has been a director of the Company since April 1993. From 1989 to
March 1993, Mr. Curley served as U.S. Ambassador to France. From 1993 to 1997,
Mr. Curley was a director of American Exploration Company, an oil and gas
exploration and development company. He currently serves as a director of The
France Growth Fund, a closed end investment company. Mr. Curley is also a member
of the International Advisory Committee of Compagnie Financiere de Paribas, an
international bank, Chairman of the French American Foundation, President of the
Curley Land Company, a family real estate company, and a Trustee of the Frick
Collection.
Mr. Fisher is a private investor and has been Vice Chairman of the Company
since 1986 and a director of the Company since 1983. Mr. Fisher is a director of
Comerica, Inc., a bank holding company.
Mr. Taubman is a private investor. Since 1983, Mr. Taubman has been the
largest shareholder and Chairman of the Company. He is Chairman of Taubman
Centers, Inc., a company engaged in the regional retail shopping center
business. Mr. Taubman serves as a member of the board of directors of Livent
Inc., a producer of theatrical works. He also serves as a director of Hollinger
International Inc., a publisher of newspapers.
2
The shares of Class B Common Stock represented by the enclosed Proxy, if
given and unless otherwise specified, will be voted by the persons named as
proxies for the election of the following individuals nominated by the Board of
Directors:
YEAR FIRST
ELECTED
NAME AGE A DIRECTOR
- ---------------------------------------------------------------------- --- ----------------
Conrad Black.......................................................... 53 1997
Viscount Blakenham.................................................... 60 1987
Diana D. Brooks....................................................... 47 1992
The Marquess of Hartington............................................ 54 1994
Henry R. Kravis....................................................... 54 1996
Jeffrey H. Miro....................................................... 55 Nominee
Sharon Percy Rockefeller.............................................. 53 Nominee
Mr. Black became a director of the Company in February 1997. He is the
Chairman and Chief Executive Officer of Hollinger Inc. and its subsidiary,
Hollinger International Inc., a publisher of newspapers, and the Chairman of
Telegraph Group Limited. Mr. Black is also Chairman and Chief Executive Officer
of Southam Inc., Chairman of Argus Corporation Ltd., and serves as a director of
the Canadian Imperial Bank of Commerce, Brascan Limited, and Livent Inc. He also
is a member of the advisory boards of The National Interest, Gulfstream
Aerospace Corporation, and The Council on Foreign Relations.
Lord Blakenham became a director of the Company in 1987. Since 1961, he has
served in various executive positions with Pearson plc, a British media company
that serves worldwide information, education and entertainment markets and that
has a substantial interest in the three Lazard investment banking firms. He was
Executive Chairman of Pearson plc from 1983 until 1997. Lord Blakenham is the
non-executive Chairman of MEPC plc, a commercial real estate investment and
development company.
Ms. Brooks was appointed President and Chief Executive Officer of the
Company in April 1994. From March 1993 until April 1994, Ms. Brooks served as
President and Chief Executive Officer of Sotheby's, a division which conducts
the Company's worldwide auction business. She has been Chief Executive Officer
of Sotheby's, Inc. since 1990 and President of Sotheby's, Inc., responsible for
North and South American operations, since 1987. Ms. Brooks joined the Company
in 1979 and has been a director since 1992. In December 1997, Ms. Brooks became
a director of Morgan Stanley Dean Witter & Co., a global financial services
firm.
The Marquess of Hartington became a director of the Company in September
1994 and assumed the role of Deputy Chairman of the Company, effective April 15,
1996. He serves as a director of a number of private companies.
Mr. Kravis became a director of the Company in October 1996. He co-founded
Kohlberg Kravis Roberts & Co., a merchant banking firm, in 1976 and currently
serves as a director of Accuride Corporation, Amphenol Corporation, Borden,
Inc., Bruno's, Inc., Evenflo & Spalding Holdings Corporation, Gillette Co., IDEX
Corporation, Kinder Care Learning Centers, Inc., Newsquest Capital, plc, Owens-
Illinois, Inc., Owens Illinois Group, Inc., Primedia, Inc., Safeway, Inc., Union
Texas Petroleum Holdings, Inc., and World Color Press, Inc. Mr. Kravis is a
member of the Council on Foreign Relations. He also serves on the boards of
trustees of the Metropolitan Museum of Art, Central Park Conservancy, Mount
Sinai Hospital, Claremont McKenna College, the Fund for New York City Public
Education, The New York City Partnership, Columbia Graduate School of Business
and The Vail Valley Foundation. Mr. Kravis is Chairman of the Board of Public
Television Channel 13/New York and the New York City Investment Fund.
3
Mr. Miro is Chairman of the law firm of Miro, Weiner and Kramer, with
offices in Bloomfield Hills, Michigan and New York, New York. In addition, Mr.
Miro is an Adjunct Professor of Law at the University of Michigan Law School.
Mr. Miro serves as a director of M.I. Schottenstein Homes, Inc.
Mrs. Rockefeller is President and Chief Executive Officer of WETA TV/FM
public stations in Washington, D.C., a position she has held since 1989, and has
been a member of the Board of Directors of WETA since 1985. She has served as a
director of PepsiCo, Inc. since 1986. Mrs. Rockefeller is a member of the Board
of Directors of the Public Broadcasting Service, Washington, D.C. and was a
member of the Board of Directors of the Corporation for Public Broadcasting
until 1992. She is also a member of the Trustee's Council of the National
Gallery of Art, the Kennedy Center Community Board, the National Cathedral,
Washington D.C.'s Board of Trade and Economic Club and The George Washington
University Board of Trustees. She has served as a member of the Boards of
Stanford University and the University of Chicago. Mrs. Rockefeller is active in
Rockefeller Family Boards and Foundations.
It is not contemplated that any of the nominees will be unable or unwilling
to serve; however, if any nominee is unable or unwilling to serve, it is
intended that the shares represented by the Proxy, if given and unless otherwise
specified therein, will be voted for a substitute nominee or nominees designated
by the Board of Directors.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 16, 1998 by its directors,
nominees for director, executive officers and 5% shareholders. In compiling the
table, the Company has relied upon information supplied by its officers,
directors, nominees for director, and certain shareholders and upon information
contained in filings with the Securities and Exchange Commission. Each share of
Class B Common Stock is freely convertible into one share of Class A Common
Stock. Accordingly, under the applicable rules of the Securities and Exchange
Act of 1934 (the "Exchange Act"), holders of Class B Common Stock are deemed to
own an equal number of shares of Class A Common Stock. For purposes of the
calculation of the percentage of each class that each Named Executive Officer
(as such term is defined under the caption "Compensation of Executive
Officers"), director, nominee for director and 5% shareholder beneficially owns,
the number of shares of such class deemed to be outstanding is the sum of all
outstanding shares of such class plus the number of shares that such beneficial
owner has, or is deemed to have, the right to acquire by the exercise of options
or conversion.
CLASS A AND CLASS B COMMON STOCK OWNERSHIP OF DIRECTORS,
NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS AND 5% SHAREHOLDERS
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------- -------------------------
DIRECTORS, NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS NUMBER OF PERCENT NUMBER OF PERCENT
AND 5% SHAREHOLDERS SHARES OF CLASS SHARES OF CLASS
- --------------------------------------------------------- ------------ ----------- ------------ -----------
George Bailey............................................ 143,700(1) * 120,500(2) *
Sotheby's
34-35 New Bond Street
London W1 2AA England
Baron Capital Group...................................... 6,324,300 16.0% 0 *
767 Fifth Avenue, 24th Floor
New York, New York 10153
The Honorable Conrad M. Black............................ 2,065 * 0 *
Telegraph Group Ltd
1 Canada Square
Canary Wharf
London E145 DT England
4
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------- -------------------------
DIRECTORS, NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS NUMBER OF PERCENT NUMBER OF PERCENT
AND 5% SHAREHOLDERS SHARES OF CLASS SHARES OF CLASS
- --------------------------------------------------------- ------------ ----------- ------------ -----------
Viscount Blakenham....................................... 2,815 * 0 *
12 Saint James Square
London SWIY 4LB England
Kevin A. Bousquette...................................... 9,000 * 0 *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
Diana D. Brooks.......................................... 765,000(3) 1.9% 765,000(4) 4.3%
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
Ambassador Walter J.P. Curley............................ 3,250 * 0 *
450 Park Avenue
Suite 2104
New York, New York 10022
Max M. Fisher............................................ 2,468,860(5) 5.9% 2,466,045(6) 14.5%
2700 Fisher Building
Detroit, MI 48202
FMR Corp................................................. 3,573,300 9.1% 0 *
82 Devonshire Street
Boston, MA 02109
GeoCapital Corporation................................... 2,299,905 5.8% 0 *
767 Fifth Avenue
New York, New York 10153
The Rt. Hon. The Earl of Gowrie.......................... 2,250 * 0 *
Sotheby's
34-35 New Bond Street
London W1 2AA England
The Marquess of Hartington............................... 8,815 * 0 *
Beamsley Hall
Bolton Abbey, Skipton
North Yorkshire BD23 6HD
England
Henry R. Kravis.......................................... 2,065 * 0 *
Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Jeffrey H. Miro.......................................... 8,000 * 0 *
Miro Weiner & Kramer
500 North Woodward Avenue
Suite 100--P.O. Box 908
Bloomfield Hills, MI 48304
5
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------- -------------------------
DIRECTORS, NOMINEES FOR DIRECTOR, EXECUTIVE OFFICERS NUMBER OF PERCENT NUMBER OF PERCENT
AND 5% SHAREHOLDERS SHARES OF CLASS SHARES OF CLASS
- --------------------------------------------------------- ------------ ----------- ------------ -----------
Portfolio D Investors, LP and............................ 5,272,900(7) 13.4% 0 *
other Related Parties
201 Main Street, Suite 2600
Fort Worth, TX 76102
Sharon Percy Rockefeller................................. 2,600 * 0 *
WETA TV/26 and FM 90.9
P.O. Box 2626
Washington, DC 20013
William F. Ruprecht...................................... 6,400(8) * 6,400(9) *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
A. Alfred Taubman........................................ 13,244,243 10) 25.1% 13,241,328 11) 78.0%
200 E. Long Lake Road
Bloomfield Hills, MI 48304
Henry Wyndham............................................ 84,000 12) * 84,000 13) *
Sotheby's
34-35 New Bond Street
London, W1 2AA England
Directors, Nominees for Director, and Executive Officers
as a Group............................................. 16,753,063 14) 29.9% 16,683,273 14) 93.3%
- ------------------------
* Represents less than 1%.
(1) In addition to 11,686 shares of Class A Common Stock that Mr. Bailey owns,
this figure includes 120,500 shares of Class A Common Stock that Mr. Bailey
has the right to acquire by exercising options for shares of Class B Common
Stock and converting such shares as well as 11,514 shares of Class A Common
Stock owned by Mr. Bailey's wife.
(2) This figure represents 120,500 shares of Class B Common Stock that Mr.
Bailey has the right to acquire by exercising options.
(3) This figure includes 62,000 shares of Class A Common Stock that Ms. Brooks
has the right to acquire by converting shares of Class B Common Stock and
703,000 shares of Class A Common Stock that she has the right to acquire by
exercising options for shares of Class B Common Stock and converting such
shares.
(4) In addition to 62,000 shares of Class B Common Stock that Ms. Brooks owns,
this figure includes 703,000 shares of Class B Common Stock that Ms. Brooks
has the right to acquire by exercising options.
(5) In addition to 2,815 shares of Class A Common Stock that Mr. Fisher owns as
trustee of his grantor trust, this figure includes 2,466,045 shares of Class
A Common Stock that Mr. Fisher has the right to acquire by converting shares
of Class B Common Stock. Mr. Fisher disclaims beneficial ownership of all
shares of Class A Common Stock other than the 2,815 shares of Class A Common
Stock and the 1,830,161 shares relating to the shares of Class B Common
Stock held by him as trustee of his grantor trust. See footnote 6 below.
(6) This figure includes 10,760 shares of Class B Common Stock owned by various
family trusts of which Mr. Fisher is a co-trustee and 1,830,161 shares of
Class B Common Stock that Mr. Fisher holds as
6
trustee of his grantor trust. This figure also includes 625,124 shares owned
by Martinique Hotel, Inc., a corporation owned by Mr. Fisher's family. This
figure excludes 14,345 shares of Class B Common Stock owned by various
family trusts of which Mr. Fisher's wife is a co-trustee. Mr. Fisher
disclaims beneficial ownership of all shares other than those held by him as
trustee of his grantor trust.
(7) This figure represents the total number of shares of Class A Common Stock
owned by the following persons or entities: Trinity Capital Management,
Inc., Trinity I Fund, L.P., TF Investors L.P., Thomas M. Taylor, Portfolio D
Investors, L.P., Portfolio Associates, Inc., Portfolio Partners, L.P., The
Bass Management Trust, Sid R. Bass, Nancy L. Bass, Sid R. Bass Management
Trust, Perry Bass, Lee M. Bass, and E.P. Bass.
(8) This figure represents 6,400 shares of Class A Common Stock that Mr.
Ruprecht has the right to acquire by exercising options for shares of Class
B Common Stock and converting such shares.
(9) This figure represents 6,400 shares of Class B Common Stock that Mr.
Ruprecht has the right to acquire by exercising options.
(10) In addition to 2,915 shares of Class A Common Stock that Mr. Taubman owns
as trustee of his grantor trust, this figure includes 9,772,698 shares of
Class A Common Stock that he has the right to acquire by converting shares
of Class B Common Stock that Mr. Taubman owns as trustee of his grantor
trust and also includes 3,468,630 shares of Class A Common Stock that he has
the right to acquire by converting shares of Class B Common Stock owned by
Taubman Investments Limited Partnership, over which shares he has sole
voting and dispositive control.
(11) This figure includes 9,772,698 shares of Class B Common Stock owned by Mr.
Taubman and 3,468,630 shares of Class B Common Stock owned by Taubman
Investments Limited Partnership, over which shares Mr. Taubman has sole
voting and dispositive control. This figure excludes 792,830 shares of Class
B Common Stock owned by Judith Taubman, his wife. Mr. Taubman disclaims
beneficial ownership of all shares of Class B Common Stock owned by Judith
Taubman.
(12) This figure represents 84,000 shares of Class A Common Stock that Mr.
Wyndham has the right to acquire by exercising options for shares of Class B
Common Stock and converting such shares.
(13) This figure represents 84,000 shares of Class B Common Stock that Mr.
Wyndham has the right to acquire by exercising options.
(14) See above notes.
MANAGEMENT
EXECUTIVE OFFICERS
Officers of the Company are appointed by the Board of Directors and serve at
the discretion of the Board. The executive officers of the Company (including
certain officers of certain principal subsidiaries and divisions) are listed
below as well as biographical information for each person, unless that person
has been nominated for a director position, in which case, such executive
officer's biography is contained under the caption "Election of Directors":
NAME AGE PRESENT TITLE
- -------------------------------------------- --- --------------------------------------------------------------
George Bailey............................... 44 Co-Managing Director, Sotheby's Europe
Kevin A. Bousquette......................... 40 Executive Vice President and Chief Operating Officer
Diana D. Brooks............................. 47 President and Chief Executive Officer
Donaldson C. Pillsbury...................... 57 Senior Vice President and General Counsel
William F. Ruprecht......................... 42 Managing Director, Sotheby's North and South America
7
NAME AGE PRESENT TITLE
- -------------------------------------------- --- --------------------------------------------------------------
William S. Sheridan......................... 44 Senior Vice President and Chief Financial Officer
Robin Woodhead.............................. 46 Co-Managing Director, Sotheby's Europe
Henry Wyndham............................... 44 Chairman, Sotheby's Europe
Since 1994, Mr. Bailey has been Managing Director of Sotheby's Europe. From
1992 through 1993, he served as director of business development, Sotheby's
Europe.
Mr. Bousquette became a director of the Company and was appointed Executive
Vice President and Chief Operating Officer of the Company in September 1996. He
had been the Company's Chief Financial Officer from March 1993 to November 1996
and a Senior Vice President of the Company from March 1993 to November 1996.
From 1985 to 1992, Mr. Bousquette was an executive at Kohlberg Kravis Roberts &
Co., L.P., a merchant banking firm, and a limited partner of KKR Associates,
L.P. Mr. Bousquette has voluntarily resigned as a director and executive officer
of the Company, effective April 30, 1998.
Mr. Pillsbury joined the Company as Senior Vice President and General
Counsel in January 1998. From 1993 until January 1998, he was Senior Counsel to
the law firm Davis Polk & Wardwell and from 1973 until 1993 he was a partner of
that firm. He also is the Chairman of the Board of The Chamber Music Society of
Lincoln Center and a Director of Lincoln Center for the Performing Arts, Inc.
Mr. Ruprecht was appointed Executive Vice President and Managing Director of
Sotheby's, Inc. in February 1994. From 1992 to February 1994, Mr. Ruprecht
served as Director of Marketing for the Company worldwide and also oversaw a
number of specialist departments. From 1986 to 1992, he served as Director of
Marketing for Sotheby's, Inc.
Mr. Sheridan was appointed Senior Vice President and Chief Financial Officer
of the Company in November 1996. From 1987 until November 1996, Mr. Sheridan was
a partner at the accounting and consulting firm of Deloitte & Touche LLP.
Mr. Woodhead was appointed Co-Managing Director, Sotheby's Europe in January
1998. From 1992 until 1997, he was the Chief Executive of the London Commodity
Exchange.
Mr. Wyndham was appointed Chairman of Sotheby's Europe in November 1997, and
was Chairman of Sotheby's (U.K.) from February 1994 until October 1997. From
1988 until 1994, he was a partner of the St. James Art Group, an art dealing
business.
Based on the Company's review of the filings made by the Company's directors
and officers under Section 16 of the Exchange Act, all transactions in and
beneficial ownership of the Company's equity securities were reported in a
timely manner, except that a Form 4 with respect to two transactions by George
Bailey was inadvertently filed late.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company met six times during 1997. The Board
of Directors has an Audit and Compensation Committee, which met three times
during 1997, and an Executive Committee, which met once during 1997. As of
December 31, 1997, the Audit and Compensation Committee consisted of Mr. Fisher,
Mr. Black, Viscount Blakenham, Mr. Curley, and Mr. Kravis, and the Executive
Committee consisted of Mr. Taubman, Mr. Fisher, and Ms. Brooks. Each of the
directors attended at least 75% of the meetings of the Board and the committees
of the Board on which he or she served during the applicable time period.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation of the Chief Executive
Officer and each of the other five most highly compensated executive officers
(collectively, the "Named Executive Officers" and, individually, a "Named
Executive Officer") of the Company during each of the last three years.
8
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------
------------------------------------------------ SHARES ALL OTHER
OTHER ANNUAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (4) COMPENSATION OPTIONS (9) (11)
- ---------------------------------------------- --------- --------- ----------- ------------- ------------- -------------
Diana D. Brooks............................... 1997 $ 550,000 $ 588,400(5) $ 12,000(7) 450,000 $ 88,457
President and Chief 1996 $ 525,000 $ 557,800(5) $ 12,240(7) 50,000 $ 51,240
Executive Officer 1995 $ 500,000 $ 351,050(5) $ 7,920(7) 200,000 $ 37,299
Kevin A. Bousquette (1)....................... 1997 $ 435,000 $ 246,638 $ 0 125,000 $ 50,801
Executive Vice President 1996 $ 375,042 $ 200,000 $ 0 175,000 $ 34,564
and Chief Operating Officer 1995 $ 343,000 $ 177,000 $ 0 20,000 $ 24,397
Simon de Pury (2)............................. 1997 $ 303,188 $ 100,000 $ 14,438(7) 20,000(10) $ 54,785
Chairman, Sotheby's Europe 1996 $ 403,877 $ 248,000 $ 22,745(7) 25,000 $ 70,808
1995 $ 418,883 $ 179,025 $ 21,739(7) 20,000 $ 53,895
Henry Wyndham (3)............................. 1997 $ 281,877 $ 165,258 $ 95,990(8) 115,000 $ 13,526
Chairman, Sotheby's Europe 1996 $ 212,085 $ 207,990(6) $ 75,408(8) 25,000 $ 44,384
1995 $ 206,716 $ 222,900(6) $ 74,400(8) 40,000 $ 4,939
William F. Ruprecht........................... 1997 $ 315,000 $ 152,852 $ 0 112,000 $ 39,525
Managing Director, 1996 $ 300,000 $ 181,563 $ 0 25,000 $ 29,260
Sotheby's North and 1995 $ 260,000 $ 177,000 $ 0 17,500 $ 19,977
South America
George Bailey................................. 1997 $ 261,302 $ 165,258 $ 8,230(7) 112,000 $ 10,452
Co-Managing Director, 1996 $ 227,795 $ 180,563 $ 4,022(7) 25,000 $ 9,112
Sotheby's Europe 1995 $ 205,140 $ 108,827 $ 3,985(7) 17,500 $ 8,206
- ------------------------
(1) Mr. Bousquette was appointed Executive Vice President and Chief Operating
Officer in September 1996.
(2) Mr. de Pury resigned from this position in September 1997.
(3) Mr. Wyndham became the Chairman of Sotheby's Europe in November 1997.
(4) Bonus amounts include cash paid in respect of the previous year's
performance.
(5) The 1997, 1996 and 1995 bonus amounts include a deferred bonus of $13,400,
$43,300 and $21,050, respectively, paid for services rendered in connection
with the acquisition of Pierre Matisse Gallery Corporation and the
management of Acquavella Modern Art.
(6) The 1995 and 1996 bonus amounts include a supplemental payment of $45,990
which was paid in each of the first three years of Mr. Wyndham's
employment, in accordance with the terms of his employment agreement.
(7) Car and travel allowance.
(8) The 1997 amount represents a car and housing allowance, while the 1996 and
1995 amounts represent housing and travel allowances.
(9) For 1997 and 1996, the number of shares underlying options refers to option
grants under the Company's 1997 Stock Option Plan (the "1997 Plan") and the
Company's Performance Share Purchase Plan (the "Performance Plan"). For
1995, the number of shares underlying options refers to option grants under
the Company's 1987 Stock Option Plan (the "1987 Plan"), which was replaced
by the 1997 Plan. Options include those granted in respect of the previous
year's performance.
(10) These unvested options granted under the Performance Plan were cancelled as
a result of Mr. de Pury's resignation. See footnote 2 above.
(11) The amounts disclosed in this column for 1997 include:
(a) Company contributions of the following amounts under the Company's
Retirement Savings Plan, a qualified defined contribution plan: $12,700 on
behalf of Ms. Brooks, $9,438 on behalf of Mr. Bousquette, and $11,950 on
behalf of Mr. Ruprecht.
(b) Company accruals of the following amounts under benefit equalization
agreements: $75,757 on behalf of Ms. Brooks, $41,363 on behalf of Mr.
Bousquette, and $27,575 on behalf of Mr. Ruprecht.
(c) a Company contribution under the Switzerland plans of $54,785 on
behalf of Mr. de Pury.
(d) a Company contribution under the United Kingdom ("U.K.") pension
plan of $13,526 on behalf of Mr. Wyndham and of $10,452 on behalf of Mr.
Bailey.
9
U.K. PENSION PLAN
Sotheby's (U.K.) maintains a funded defined benefit pension plan for its
employees who are U.K. residents. Henry Wyndham and George Bailey are the only
Named Executive Officers who participate in the plan. Mr. Wyndham has four
credited years of service with the Company, and Mr. Bailey has 20 credited years
of service with the Company.
Standard pension benefits under the plan for employees contributing 4% of
salary are 1/60th of the employee's final pensionable salary for every year of
service up to a maximum of 40 years. For participants contributing 2% of salary,
the benefits accrue at half the rate indicated above. Benefits are paid monthly
commencing at retirement, which is at age 60, although the Company may elect to
continue employment of the individual after that date, and if the Company
agrees, the employee may elect to make further contributions until the age of
65. For a fixed period of two years commencing April 1, 1997, the contribution
rates have been decreased by 50% to take advantage of a surplus in the scheme
fund. The compensation covered by the plan is the employee's pensionable
earnings (subject to the limitation described below), which includes "Salary",
but excludes "Bonus" and "Other Annual Compensation" disclosed in the Summary
Compensation Table.
A special arrangement approved by the plan Trustees was approved so that Mr
Wyndham's benefits will accumulate based on 1/30th of his salary for each year
of service in order to provide a pension benefit with respect to salary amounts
above L84,000. In addition, a Funded Unapproved Retirement Benefit Scheme,
structured as a defined contribution scheme, is being established to provide a
pension benefit with respect to salary amounts exceeding L168,000.
The plan also provides for a death benefit in the amount of four times the
employee's base salary at the time of death plus the refund of the employee's
contributions to the plan and provides for a pension of 33 1/3% of the
employee's base salary at the date of death to be paid to the employee's spouse,
or proportionately less if the employee has elected to contribute at the reduced
rate.
The table below sets forth the estimated annual benefits (in pounds
sterling) payable upon retirement under the plan assuming the employee
contributes at 2% of base salary. Current Inland Revenue regulations limit the
pensionable salary with respect to which pension benefits may be based to a
maximum of L84,000.
PENSION TABLE
REMUNERATION YEARS OF SERVICE
- ------------- -----------------------------------------------------
(L) 15 20 25 30 35
- ------------- --------- --------- --------- --------- ---------
40,000 10,000 13,333 16,667 20,000 23,333
60,000 15,000 20,000 25,000 30,000 35,000
80,000 20,000 26,666 33,333 40,000 46,666
SWITZERLAND PLAN
In accordance with the requirements of Swiss law, Sotheby's AG, the
Company's Swiss operating subsidiary, established in 1985 a fully insured
pension plan (the "First Swiss Plan") for its full-time employees whose salaries
exceed 23,880 Swiss francs ("SF") (equivalent to approximately $16,549), up to a
fixed ceiling of SF 119,400 (equivalent to approximately $82,744). There are two
elements of the First Swiss Plan: a savings element (the "Savings Plan") and a
risk element (the "Risk Plan"). Employees are eligible to join the Savings Plan
as of the January 1 following attainment of age 24 and the Risk Plan as of the
January 1 following attainment of age 17.
Under the Savings Plan, an individual retirement account is established for
each participating employee. Each year, the account is credited with a
percentage of the employee's adjusted salary, which is
10
the employee's annual salary, excluding bonuses and other allowances, reduced by
SF 23,880. Longer serving employees were made eligible for additional Company
contributions in respect of service with the Company prior to 1985. The
percentage of adjusted salary credited to the account ranges from 7% to 30%,
depending on the employee's age, sex and past service. The Company pays 70% of
this total contribution, with the remainder paid by employees. The account is
also credited with interest at a rate fixed by the Swiss government's executive
branch.
At retirement age, which is age 65 for men and age 62 for women, the
employee's account is convertible, at the employee's election, to a life
annuity, with provisions for contingent widow's pension of 60% of the retiree's
benefit and immediate pensions of 20% of the retiree's benefit for certain
children of the retiree.
The Risk Plan provides disability and death benefits to employees, their
widows and certain of their children. Benefits are generally a percentage of the
amount credited to the employee's account, excluding interest. Benefits under
the Risk Plan are funded by insurance premiums, all of which are paid by the
Company.
Sotheby's A.G. has also established a second pension plan (the "Second Swiss
Plan") which is non-compulsory and has a savings element and a risk element.
Benefits under the Second Swiss Plan are based on the amount by which an
employee's total salary exceeds SF 119,400. The Company pays approximately 74%
of the total contribution, with the remainder paid by employees.
Mr. de Pury is the only Named Executive Officer who participates in the
First Swiss Plan and the Second Swiss Plan. A total of SF 79,054 ($54,785)
contributed in 1997 by the Company on behalf of Mr. de Pury is included in the
Summary Compensation Table.
BONUSES
The Company's officers are eligible to receive incentive bonuses. Bonuses
are recommended by management and approved by the Audit and Compensation
Committee. Actual awards are a function of the Company's after-tax worldwide
profit and each individual's performance. Every supervisor conducts an employee
review. As part of the review, the supervisor and the employee determine future
objectives against which the employee's performance will be measured. In
addition, the program allows the Audit and Compensation Committee the discretion
to address exceptional performance and unusual circumstances.
BENEFIT EQUALIZATION AGREEMENTS
The total annual contributions by the employee and employer to the Company's
Retirement Savings Plan, which is the Company's U.S. qualified defined
contribution plan, are subject to certain limitations under applicable law, as
amended, for each participant. Officers (generally senior vice presidents and
above) of the Company and its U.S. subsidiaries who are affected by such
limitations may enter into agreements pursuant to which their salaries will be
reduced, and the Company will maintain accounts on their behalf, in the amount
of the difference between (i) the aggregate amount of contributions that would
have been made to the Retirement Savings Plan in the absence of the limitations,
and (ii) the aggregate amount of contributions actually made to the Retirement
Savings Plan. Benefits under these unfunded agreements are paid to a participant
one year following the participant's termination of employment with the Company,
unless the participant elects to defer receipt of payment. Amounts contributed
by the Company on behalf of the Named Executive Officers of the Company pursuant
to benefit equalization agreements in 1997 have been included in the Summary
Compensation Table.
11
STOCK OPTIONS
The following tables set forth information regarding option grants under the
Company's 1997 Plan and the Company's Performance Plan, including its U.K.
sub-plan, to the Named Executive Officers in 1997:
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS
------------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS FAIR MARKET PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE VALUE OF OPTION TERM(5)
OPTIONS EMPLOYEES PRICE PER UNDERLYING EXPIRATION --------------------------------
GRANTED IN 1997(3) SHARE(4) SHARES DATE 0% 5% 10%
----------- --------------- ----------- ----------- ----------- --------- --------- ----------
Diana D. Brooks........... 50,000(1) 18.4% $ 4.29 $ 17.125 2/17/07 $ 641,750 $1,180,241 $2,006,392
400,000(2) 17.5% $ 15.75 $ 15.75 4/28/07 $ 0 $3,962,036 $10,040,577
Kevin A. Bousquette....... 25,000(1) 9.2% $ 4.29 $ 17.125 2/17/07 $ 320,875 $ 590,121 $1,003,196
100,000(2) 4.4% $ 18.9375 $ 18.9375 9/1/07 $ 0 $1,190,969 $3,018,150
Henry Wyndham............. 15,000(1) 5.5% $ 4.29 $ 17.125 2/17/04 $ 192,525 $ 297,099 $ 436,373
100,000(2) 4.4% $ 18.6875 $ 18.6875 10/29/07 $ 0 $1,175,247 $2,978,306
William F. Ruprecht....... 12,000(1) 4.4% $ 4.29 $ 17.125 2/17/07 $ 154,020 $ 283,258 $ 481,534
100,000(2) 4.4% $ $18.9375 $ 18.9375 8/20/07 $ 0 $1,190,969 $3,018,150
George Bailey............. 12,000(1) 4.4% $ 4.29 $ 17.125 2/17/04 $ 154,020 $ 237,679 348,981
100,000(2) 4.4% $ 18.6875 $ 18.6875 10/29/07 $ 0 $1,175,247 $2,978,306
- ------------------------
(1) These options were granted under the Performance Plan and will be
exercisable upon the fulfillment of certain performance criteria based on
the Company's earnings per share and return on equity as well as fulfillment
of time vesting requirements established by the Audit and Compensation
Committee. The options, which have a three-year performance period, time
vest, regardless of achieving performance criteria, in one-third increments
on each of the third, fourth, and fifth anniversaries of the date of grant.
If the performance goal has been achieved at the time these options begin
time vesting, the options will become exercisable when the time vesting
requirement is met. If the performance goal is not achieved by the end of
the performance period, the options will not become exercisable upon time
vesting. Rather, the designated performance goal will automatically be
adjusted by a predetermined amount and the performance period will be
extended one year. Upon achievement of the adjusted performance goal, the
options will be exercisable to the extent that they have time vested. If the
adjusted performance goal is not achieved by the end of the seventh year
after the date of grant, the option will expire. During the term of each
Performance Plan option, the option accrues dividend equivalents which are
payable to the option holder when the option becomes exercisable. With
respect to the grants under the Performance Plan made in 1996 and 1997, the
Audit and Compensation Committee, on October 30, 1997, approved the
acceleration of time vesting to be the same date on which the relevant
performance criteria are met.
(2) These options were granted under the 1997 Plan and will vest and become
exercisable to the extent of one-fifth of the number of shares subject to
the option on each of the first, second, third, fourth and fifth
anniversaries of the date of grant.
(3) This figure is calculated by dividing the total number of options granted
under a plan to the individual by the total number of options granted under
that plan to all employees.
(4) The exercise price of each option under the Performance Plan is 25% of the
fair market value of the underlying shares, determined as of the date of
grant. The exercise price of each option under the 1997 Plan is the fair
market value of the underlying shares as of the date of grant. Only options
to purchase Class B Common Stock may be granted under the 1997 Plan and the
Performance Plan. Because Class B Common Stock is convertible into Class A
Common Stock and there is no public market for the Class B Common Stock, for
purposes of the 1997 Plan and the Performance Plan, the fair market value of
the stock underlying an option is the NYSE closing price per share of the
Class A Common Stock on the last business day before the option grant.
(5) The actual value, if any, that may be realized by each individual will
depend on the closing price of the Class A Common Stock on the NYSE on the
day preceding the exercise date. The option term is ten years for options
granted under the 1997 Plan and ten years under the Performance Plan (seven
years for options granted to U.K. residents), as indicated in the
"Expiration Date" column. The appreciation rates used in the table are
provided to comply with Item 402(c) of Regulation S-K and do not necessarily
reflect the views of management as to the potential realizable value of
options.
12
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR END
ACQUIRED ON VALUE ---------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UN-EXERCISABLE EXERCISABLE UN-EXERCISABLE
- ----------------------------------------- ----------- --------- ----------- --------------- ----------- --------------
Diana D. Brooks.......................... 0(1) $ 0 508,000 670,000 $2,445,000 $2,660,625
0(2) $ 0 0 100,000 $ 0 $1,476,000
Kevin A. Bousquette...................... 0(1) $ 0 128,000 262,000 $ 715,500 $ 642,000
0(2) $ 0 0 50,000 $ 0 $ 738,000
Simon de Pury............................ 153,600(1) $ 415,975 0 0 $ 0 $ 0
Henry Wyndham............................ 0(1) $ 0 45,000 170,000 $ 101,250 $ 388,750
0(2) $ 0 0 40,000 $ 0 $ 593,400
William F. Ruprecht...................... 0(1) $ 0 97,800 113,700 $ 695,675 $ 89,888
0(2) $ 0 0 37,000 $ 0 $ 550,020
George Bailey............................ 0(1) $ 0 106,000 136,500 $ 594,750 $ 246,188
0(2) $ 0 0 37,000 $ 0 $ 550,020
- ------------------------
(1) Information in this row concerns option grants under the 1997 Plan and the
1987 Plan only.
(2) Information in this row concerns option grants under the Performance Plan
only.
REPORT OF THE AUDIT AND COMPENSATION COMMITTEE
The Audit and Compensation Committee is responsible to the Board of
Directors for overseeing and reviewing audit results, monitoring the
effectiveness of internal audit functions, and advising the Board with respect
to compensation matters and employee benefit plans of the Company. The Audit and
Compensation Committee has authority to grant options under the 1997 Plan and
the Performance Plan. As of December 31, 1997, the Audit and Compensation
Committee consisted of Max M. Fisher, Chairman, Conrad Black, Viscount
Blakenham, Walter J.P. Curley, and Henry R. Kravis, none of whom participated in
any of the plans administered by the Audit and Compensation Committee.
PHILOSOPHY
The Company has a long-standing philosophy of establishing compensation
levels that are designed to both attract and retain executives with outstanding
leadership ability and experience and be competitive in the market.
Compensation for executive officers is comprised of three major components:
salary, cash bonuses and equity-based incentives.
The Audit and Compensation Committee considers the following factors in
determining an executive officer's total compensation, including equity-based
incentives: (i) Company performance, (ii) individual performance and job
responsibilities, (iii) comparative analyses of compensation levels and option
grant levels at companies in various comparable lines of business, (iv)
historical compensation levels and stock option grants by the Company and (v)
recommendations of management. The comparative analysis of compensation packages
and the companies selected for comparison are provided by professional
compensation consultants approved by the Audit and Compensation Committee and
retained by the Company for this purpose. The executive compensation comparative
analysis includes companies from other industries, because the Audit and
Compensation Committee believes that the Company's range of competitors for
executive talent is broader than the peer group that is appropriate for purposes
of comparing shareholder return in the Performance Comparison Graph on page 16.
13
COMPENSATION DEDUCTIBILITY
The Audit and Compensation Committee has taken into consideration Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and
related regulations as they relate to compensation paid to the Named Executive
Officers. In order to preserve the deductibility for federal income tax purposes
of certain compensation in excess of $1 million that may be paid to the Named
Executive Officers, the applicable requirements of Section 162(m) of the Code
("Section 162(m)") have been incorporated into the 1997 Plan and the Performance
Plan.
ANNUAL COMPENSATION
SALARY
The Audit and Compensation Committee sets base salaries for executives which
both reflect the job responsibilities of each individual and are consistent with
base salaries paid for competitive positions in the market.
ANNUAL CASH INCENTIVES
Effective January 1, 1995, the Company adopted a new bonus program for all
bonus-eligible employees, including the Chief Executive Officer ("CEO") and the
other Named Executive Officers, based upon the achievement of both Company and
individual objectives. Positions within the Company have been separated into
salary grades, with bonus opportunities (expressed as a percentage of salary)
gradually increased through the grades. Within each grade there is a range of
bonus targets. The bonus amount is subject to the overall approval of the Audit
and Compensation Committee with respect to all participants, and to the specific
approval of the Audit and Compensation Committee with regard to senior
management. Targets are set each year by senior management. Targets and bonus
opportunities are communicated to employees at the beginning of each year.
Every supervisor conducts an employee review. However, as part of the
review, the supervisor and the employee will determine future objectives against
which the employee's performance will be measured. A certain percentage of an
employee's bonus target is based upon individual performance; the remaining
percentage is based on worldwide Company performance. If all objectives are met,
the employee can receive up to 100% of the bonus target amount. If performance
exceeds the established objectives, the Audit and Compensation Committee has the
discretion to address such circumstances.
For 1997, the CEO and the other Named Executive Officers, as well as all
other bonus plan participants eligible for a bonus, received bonuses that
reflected achievement of the worldwide Company performance target. In addition,
certain individuals, including the CEO and the other Named Executive Officers,
who surpassed their individual performance objectives were awarded bonuses that
reflected performance exceeding the established objectives.
LONG-TERM COMPENSATION
STOCK OPTIONS
The purpose of the Company's 1987 Plan, which expired in July 1997, the 1997
Plan, and the Performance Plan is to provide employees with long-term incentives
that link their interests with the interests of shareholders. In addition, the
1987 Plan's, the 1997 Plan's, and the Performance Plan's vesting schedules
encourage key employees to continue in the employ of the Company. The Company
granted stock options to approximately 23% of its employees in 1997.
The Audit and Compensation Committee determines the stock option grants to
the Named Executive Officers based on each individual's current and expected
future contribution to the Company, as well as competitive market practice and
related factors listed above.
14
CEO COMPENSATION
The Audit and Compensation Committee meets, apart from the Board, to review
the CEO's performance, determine annual and long-term compensation for the CEO,
and set the CEO's bonus target.
THE AUDIT AND COMPENSATION COMMITTEE
Max M. Fisher, Chairman
Conrad Black
Viscount Blakenham
Walter J.P. Curley
Henry R. Kravis
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total shareholder
return on its Class A Common Stock (for the five year period from December 31,
1992 to December 31, 1997) with the cumulative return of the Standard & Poors
MidCap 400 Stock Index ("S&P Midcap 400") and Christie's International plc
("Christie's").
The Company and Christie's, a publicly held company in the United Kingdom,
are the two largest art auction houses in the world. The auction sales in 1997
of the next largest auction house totaled approximately 5% of the combined sales
of Sotheby's and Christie's in that year. Based on the unique nature of the
international art auction business and the large gap between the two largest
auction houses and the next competitor, a peer group of one, Christie's,
provides the most appropriate index.
The graph reflects an investment of $100 in the Company's Class A Common
Stock, the S&P MidCap 400, which includes the Company, and Christie's stock,
respectively, on December 31, 1992, and a reinvestment of dividends at the
average of the closing stock prices at the beginning and end of each quarter.
Christie's stock trades on the London Stock Exchange in pounds sterling; the
sterling amounts at each date on the graph have been translated into U.S.
dollars using the exchange rates prevailing at the close of business on those
dates.
15
FIVE YEAR CUMULATIVE TOTAL RETURN
OF SOTHEBY'S, CHRISTIE'S, AND THE S&P MIDCAP 400
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FIVE YEAR CUMULATIVE TOTAL RETURN
of Sotheby's, Christie's, and the S&P MidCap
400
12/31/92 12/31/93 12/31/94 13/31/95 12/31/96 12/31/97
Sotheby's $100 $130 $99 $124 $166 $171
Christie's 100 151 126 151 188 219
S&P MidCap 400 100 114 110 144 171 227
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
----------- ----------- ----------- ----------- ----------- -----------
Sotheby's............................................. $ 100 $ 130 $ 99 $ 124 $ 166 $ 171
Christie's............................................ $ 100 $ 151 $ 126 $ 151 $ 188 $ 219
S&P MidCap 400........................................ $ 100 $ 114 $ 110 $ 144 $ 171 $ 227
CERTAIN EMPLOYMENT AND COMPENSATION ARRANGEMENTS
In April 1996, the Company entered into a consulting agreement, effective
April 15, 1996, with the Marquess of Hartington, which has required him to
devote approximately two days per week to providing consulting services to the
Company. Under this agreement, the Marquess of Hartington is reimbursed for
expenses and had been paid a consulting fee at a rate of L50,000 per year until
June 1, 1997. On June 1, 1997, the fee was increased to a rate of L100,000 per
year to reflect an increase in the Marquess of Hartington's time commitment and
an expansion of his responsibilities.
In 1997, the Company retained, and continues to retain in 1998, the law firm
of Miro Weiner & Kramer, of which Jeffrey H. Miro is Chairman, to provide legal
services to the Company.
CERTAIN TRANSACTIONS
LOAN PROGRAMS
The Company maintains two U.S. bank loan programs which are available to
certain employees at the discretion of the Chief Executive Officer. The first
program allows U.S. employees to borrow from a bank on a demand note basis and
pay interest at the prime rate. Under the second program, certain executives may
borrow from a bank for a term of 15 years to purchase or refinance a residence
at an interest rate of the prime rate minus 1.0% to 2.0%. Under all programs,
any loan exceeding $400,000 requires the approval of either the Audit and
Compensation Committee or the Executive Committee of the Board of Directors. All
payment obligations under both U.S. bank loan programs are guaranteed by the
Company,
16
and all loans under both programs are repayable in full when an employee leaves
the Company. As of March 16, 1998, William Ruprecht, an executive officer, has
borrowings outstanding under the second program of $776,806, for which the
highest balance outstanding during 1997 was $805,139. In addition, Henry
Wyndham, an executive officer, had a bank mortgage loan which was partially
guaranteed by the Company. The amount of the guarantee was $265,600 and the loan
was repaid in full during 1997.
PURCHASE OF ASSETS
In October 1993, Sotheby's (U.K.) entered into an agreement with Henry
Wyndham Fine Art Ltd. ("Fine Art"), an art dealing business in which Henry
Wyndham, currently Chairman of Sotheby's Europe has a substantial equity
interest. Under the agreement, the Company agreed to purchase various paintings
from Fine Art, as well as Fine Art's partial interest in another painting. Under
the terms of the agreement, the Company paid Fine Art L150,000 (approximately,
$225,450) as an advance for a portion of its interest in such painting in
February 1994. On February 1, 1995, the advance began to bear interest and will
continue to do so until Fine Art exercises its right to sell its remaining
interest in such painting to Sotheby's (U.K.) for L180,000 (approximately
$288,180). The original cost to Fine Art of its ownership interest in such
painting was approximately L300,000 (approximately $480,300). However, the
Company believes the fair market value of such interest to be in excess of the
purchase price. The various purchase prices were determined by the Company with
reference to recent sale prices of comparable property.
YORK PROPERTY
Sotheby's, Inc. (a wholly-owned subsidiary of the Company) is headquartered
at 1334 York Avenue, New York, New York (the "York Property"). The Company
currently leases the York Property, comprising approximately 160,500 square
feet, from an unaffiliated party under a 30-year lease expiring in 2009, which
contains an option to extend the term for an additional 30 years until July 31,
2039. The lease also grants the Company a right of first refusal with respect to
the sale of the York Property.
York Avenue Development, Inc. ("York"), an indirect subsidiary of the
Company, has the right to purchase the York Property by exercising certain
options available through January 31, 1999 and during the months of August 1999,
August 2004 and July 2009.
Sotheby's, Inc. has arranged for The Taubman Company ("TTC"), an affiliate
of A. Alfred Taubman, to provide construction planning consulting services
related to the planned expansion of the York Property. As of March 16, 1998, TTC
has been paid $39,374 by Sotheby's, Inc. Sotheby's, Inc. anticipates that TTC's
total consulting fees will not exceed $75,000.
COMPENSATION OF DIRECTORS
Prior to 1998, each non-employee director of the Company received an annual
retainer fee of the equivalent of $10,000 in shares of the Company's Class A
Common Stock, which the director could have elected to receive in cash, and
1,500 shares of the Company's Class A Common Stock. Each non-employee director
also received a fee of $1,000 for each Board meeting attended by such director,
and a fee of $500 for each committee meeting ($1,000 for the chairman of the
committee) attended by such director, in addition to reimbursement of expenses.
Except as noted, all of the foregoing fees were paid in cash. Effective April
30, 1998, and pursuant to the Sotheby's Holdings, Inc. 1998 Stock Compensation
Plan For Non-Employee Directors (the "Director Plan"), each non-employee
director will receive an annual retainer of 2,260 shares of the Company's Class
A Common Stock, the receipt of which may be deferred until the director
terminates service on the Company's Board. All deferred stock compensation will
accrue dividend equivalents. The Company's directors will continue to receive
expense reimbursements and the per meeting cash fees described above.
17
INDEPENDENT AUDITORS
Deloitte & Touche LLP, has been the independent auditors for the Company
since 1983. The Board of Directors has selected Deloitte & Touche LLP as the
independent auditors for 1998. Although shareholder approval of the appointment
is not required by law and is not binding on the Board of Directors, the Board
will take the appointment of Deloitte & Touche LLP under advisement if such
appointment is not approved by the affirmative vote of a majority of the votes
cast at the Meeting.
The Company expects that representatives of Deloitte & Touche LLP will be
present at the Meeting and will be afforded an opportunity to make a statement
if they desire to do so. The Company also expects such representatives of
Deloitte & Touche LLP to be available at that time to respond to appropriate
questions addressed to the officer presiding at the Meeting.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 1999 must be received by the Company at 500 N.
Woodward Avenue, Suite 100, Bloomfield Hills, Michigan 48304 by the close of
business on December 30, 1998. If the date of such meeting is changed by more
than 30 days from the date such meeting is scheduled to be held, the proposal
must be received by the Company at a reasonable time before the solicitation of
proxies for such meeting is made. Proposals should be sent to the attention of
the Secretary. A person may submit only one proposal for inclusion in the proxy
materials, and under certain circumstances enumerated in the Securities and
Exchange Commission's rules relating to the solicitation of proxies, the Company
may be entitled to omit the proposal and any statement in support thereof (which
in the aggregate may not exceed 500 words in length) from its proxy statement
and form of proxy.
COSTS OF PROXY SOLICITATION
The cost of preparing, assembling and mailing the proxy material will be
borne by the Company. The Company will also request persons, firms and
corporations holding shares in their names or in the names of their nominees,
which shares are beneficially owned by others, to send the proxy material to,
and to obtain Proxies from, such beneficial owners and will reimburse such
holders for their reasonable expenses in doing so.
18
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PLEASE MARK
PROPOSALS 1 AND 2. IF NO DIRECTION IS GIVEN, THE YOUR VOTES AS /X/
SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2. SUCH INDICATED IN
SHARES WILL BE VOTED IN THE PROXIES' DISCRETION THIS EXAMPLE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
1. Election of Directors Election by Holders of Class B Common Stock of Conrad Black, Viscount
Blakenham, Diana D. Brooks, The Marquess of Hartington, Henry R. Kravis,
FOR all Nominees WITHHOLD AUTHORITY Jeffrey H. Miro, and Sharon Percy Rockefeller as directors.
listed (except as to vote for all
marked to the Nominees To withhold authority to vote for any individual nominee, write that
contrary to the right) nominee's name on the space provided below.
/ / / / -------------------------------------------------------------------------
2. Ratification of the appointment of
Deloitte & Touche LLP as independent
auditors for 1998. Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
FOR AGAINST ABSTAIN trustee, or guardian, please give full title as
such. If a corporation, please sign full corporate
/ / / / / / name by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
---------------------------------------------------
Signature
---------------------------------------------------
Signature if held jointly
Dated: , 1998
---------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
FOLD AND DETACH HERE
Dear Shareholders of Sotheby's Holdings, Inc.:
Enclosed you will find material regarding the Company's 1998 Annual Meeting
of Shareholders. The notice of the Annual Meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a shareholder, please
remember that you vote is important to us. We look forward to hearing from you.
SOTHEBY'S HOLDINGS, INC.
CLASS B COMMON STOCK
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- APRIL 30, 1998
The undersigned hereby appoints each of A. ALFRED TAUBMAN and DIANA D.
BROOKS, with full power of substitution, to represent the undersigned at the
annual meeting of shareholders of Sotheby's Holdings, Inc., on Thursday,
April 30, 1998, at Sotheby's, 34-35 New Bond Street, London, England, at 10
o'clock in the forenoon local time, and at any adjournment thereof, and to
vote at such meeting the shares of Class B Common Stock that the undersigned
would be entitled to vote if personally present in accordance with the
following instructions and to vote in their judgement upon all other matters
which may properly come before the meeting and any adjournment thereof.
If at least one of the above named Proxies shall be present in person
or by substitution at such meeting or at any adjournment thereof, said Proxy
or Proxies, as the case may be, so present and voting, either in person or by
substitution, shall exercise all of the powers hereby given. The undersigned
hereby revokes any proxy heretofore given to vote at such meeting.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
FOLD AND DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PLEASE MARK
PROPOSALS 1 AND 2. IF NO DIRECTION IS GIVEN, THE YOUR VOTES AS /X/
SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2. SUCH INDICATED IN
SHARES WILL BE VOTED IN THE PROXIES' DISCRETION THIS EXAMPLE
UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
1. Election of Directors Election by Holders of Class A Limited Voting Common Stock of Walter J.P.
Curley, Max M. Fisher, and A. Alfred Taubman as directors.
FOR all Nominees WITHHOLD AUTHORITY
listed (except as to vote for all To withhold authority to vote for any individual nominee, write that
marked to the Nominees nominee's name on the space provided below.
contrary to the right)
-------------------------------------------------------------------------
/ / / /
2. Ratification of the appointment of
Deloitte & Touche LLP as independent
auditors for 1998. Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
FOR AGAINST ABSTAIN trustee, or guardian, please give full title as
such. If a corporation, please sign full corporate
/ / / / / / name by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
---------------------------------------------------
Signature
---------------------------------------------------
Signature if held jointly
Dated: , 1998
---------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
FOLD AND DETACH HERE
Dear Shareholders of Sotheby's Holdings, Inc.:
Enclosed you will find material regarding the Company's 1998 Annual Meeting
of Shareholders. The notice of the Annual Meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a shareholder, please
remember that you vote is important to us. We look forward to hearing from you.
SOTHEBY'S HOLDINGS, INC.
CLASS A LIMITED VOTING COMMON STOCK
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- APRIL 30, 1998
The undersigned hereby appoints each of A. ALFRED TAUBMAN and DIANA D.
BROOKS, with full power of substitution, to represent the undersigned at the
annual meeting of shareholders of Sotheby's Holdings, Inc., on Thursday,
April 30, 1998, at Sotheby's, 34-35 New Bond Street, London, England, at 10
o'clock in the forenoon local time, and at any adjournment thereof, and to
vote at such meeting the shares of Class A Limited Voting Common Stock that the
undersigned would be entitled to vote if personally present in accordance with
the following instructions and to vote in their judgement upon all other
matters which may properly come before the meeting and any adjournment thereof.
If at least one of the above named Proxies shall be present in person
or by substitution at such meeting or at any adjournment thereof, said Proxy
or Proxies, as the case may be, so present and voting, either in person or by
substitution, shall exercise all of the powers hereby given. The undersigned
hereby revokes any proxy heretofore given to vote at such meeting.
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
FOLD AND DETACH HERE