The ISS, a leading arbiter in proxy fights, has endorsed Daniel Loeb’s position on Sotheby’s with some qualifications:

In its report, I.S.S. wrote that Mr. Loeb had made a “compelling” case that the company had underperformed financially. Its operating expenses have climbed 26 percent over the last three years, topping out at 74 percent of revenue last year.

Though I.S.S. described Mr. Loeb’s call for change somewhat broad, it agreed with some of his specific arguments for change. Sotheby’s practice of splitting its buyers commission with potential sellers of art, for instance, could limit the company’s strategic flexibility. And it needs to build out its online auction capabilities, it said.

I.S.S. ultimately concluded that two of Mr. Loeb’s nominees, himself and Olivier Reza, would be of great benefit to Sotheby’s because both are active art collectors, unlike the candidates put up by the company.

ISS Backs 2 Loeb Nominees for Sotheby’s Board