Inside Ruprecht’s Decision to Let Go

The New York Times has added to their story on Bill Ruprecht’s decision to move on from his role as CEO. Although they take a poke at Dan Loeb and suggest the hedge fund manager is too thin-skinned to have worked with Ruprecht over the long term, “Of the various counterpunches that Sotheby’s threw during the boardroom battle,” the Times says, “criticisms of Mr. Loeb’s art expertise proved some of the most irksome to the financier.”

Art expertise is hardly the point at this juncture in Sotheby’s history. The firm faces tremendous pressure from its position as an independent company and one that is public. It’s chief rival is a wholly owned subsidiary of a much larger luxury goods retailer and it seems to be evolving into an online luxury retailer under the big tent of its prowess in the Contemporary art market.

That Artemis, Christie’s owner, is a luxury goods conglomerate is far more important than the fact that it is a private company. Those who imagine taking Sotheby’s private would material improve the company’s value would have to ask themselves, how? A private independent Sotheby’s would need a great deal of capital investment to pursue a broader retailing strategy.

It’s hard to remember now, but the great imbalance between Sotheby’s and Christie’s in Contemporary art is only a very recent phenomenon. One could date it to 2011 or possibly back to the Yves Saint-Laurent/Pierre Bergé sale in the depths of the financial crisis. Whatever the sign post, the firms diverged in strategy some time ago. The irony is that Sotheby’s strategy was to focus on the higher value lots but they were outflanked by Christie’s aggressive focus amping up Contemporary art.

And, the Times makes a point of telling us that the decision has been long in the works, not that it was a reaction to last week’s sales much in the way that Tobias Meyer exited the company a year ago:

But people close to Sotheby’s said that the results were not a tipping point in Mr. Ruprecht’s planned departure.

Mr. Ruprecht, a longtime executive of the auction house and its chief for the last 14 years, was a particular focus of Mr. Loeb, who waged a corporate war for months to win board seats and a change in strategy. Mr. Loeb and two of his allies gained board seats after the company capitulated just before the start of the spring auction season in New York. Soon afterward, they joined the other directors in backing the auction house’s management team.

Speculation began swirling within Sotheby’s that Mr. Ruprecht’s days were numbered. By August, the board began considering changes to its leadership, according to people briefed on the matter. Those deliberations eventually tilted toward hiring an executive search firm to find a new chief executive, though by last week the board had begun discussing having Mr. Ruprecht stay on until his successor was found.

The board formalized its decision in a vote on Thursday. Shareholders appeared to cheer the news, with shares in Sotheby’s — the oldest listed company on the New York Stock Exchange — jumping more than 7 percent after hours.

Sotheby’s Chief to Step Down; Drew Fire From Loeb  (NYTimes.com)