Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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 [X]
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 Section 240.14a-11(c) or Section
240.14a-12
SOTHEBY'S HOLDINGS, INC.
..................................................................
(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:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(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):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] 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:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
SOTHEBY'S
SOTHEBY'S HOLDINGS, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD APRIL 23, 2002
To the Shareholders of
SOTHEBY'S HOLDINGS, INC.
The Annual Meeting of Shareholders of SOTHEBY'S HOLDINGS, INC. (the
'Company') will be held on Tuesday, April 23, 2002, at the office of Sotheby's,
Inc., 1334 York Avenue, New York, New York, at 10 o'clock a.m., local
time, for the following purposes:
1. To elect fifteen (15) 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, 2002; and
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 6, 2002 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 postponement thereof.
By Order of the Board of Directors
MICHAEL I. SOVERN, Chairman
Bloomfield Hills, Michigan
April 2, 2002
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.
38500 WOODWARD AVENUE
SUITE 100
BLOOMFIELD HILLS, MICHIGAN 48304
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 2002
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 Tuesday, April 23, 2002, at the office of Sotheby's, Inc.,
1334 York Avenue, New York, New York, at 10 o'clock a.m., local time. The
Company expects to mail this Proxy Statement on or about April 2, 2002.
Valid Proxies will be voted as specified in each Proxy 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, 2001 and
the Annual Report on Form 10-K of the Company for the year ended December 31,
2001, which includes financial statements audited by Deloitte & Touche LLP,
independent auditors, and their report thereon dated February 18, 2002, are
being mailed with this Proxy Statement to each of the Company's shareholders of
record at the close of business on March 6, 2002. ALSO, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, WILL BE SENT TO ANY SHAREHOLDER, WITHOUT
CHARGE, UPON WRITTEN REQUEST TO INVESTOR RELATIONS, 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 6, 2002, are entitled to vote at the Meeting. On that date,
there were outstanding and entitled to vote 44,902,064 shares of Class A Common
Stock, entitled to one vote per share, and 16,549,650 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 four directors, and the holders of
Class B Common Stock, voting as a class, will elect the remaining eleven
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 four directors by a
plurality of the votes cast by such holders at the Meeting, and holders of Class
B Common Stock elect eleven 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 since no vote is being cast on the 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 have the same effect as a vote against the matter. Accordingly, Abstaining
Shares will affect the determination of whether a matter is approved because
Abstaining Shares are not an affirmative vote for a matter.
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
Fifteen (15) 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
---- --- ------------------
George S. Blumenthal................................... 57 2000
Steven B. Dodge........................................ 56 2000
Dr. Henry G. Jarecki................................... 68 2000
Brian S. Posner........................................ 40 2000
Mr. Blumenthal became a director of the Company in August 2000 and has been
the Chairman, and was a founder, of NTL Incorporated, a provider of business and
residential telecommunications services in the United Kingdom, Republic of
Ireland, France and Switzerland since its formation in April 1993. He has also
been the Chairman, and was a founder, of CoreComm Limited, a local, long
distance, and internet services provider in the United States, since its
formation in March 1998. Mr. Blumenthal was the Chairman and a founder of
Cellular Communications, Inc., which was merged into Airtouch Cellular Inc. in
1996 and also was the Chairman and a founder of Cellular Communications of
Puerto Rico, which was merged into SBC Communications Inc. in 1999.
Mr. Dodge became a director of the Company in August 2000 and has served as
the Chairman of the Board of Directors, President and Chief Executive Officer of
American Tower Corporation, an owner and operator of broadcast and
communications towers throughout the United States, since its formation in July
1995. He previously was the Chairman of the Board of Directors, President and
Chief Executive Officer of American Radio Systems, the former parent corporation
of American Tower Corporation. Mr. Dodge also serves as a director of TD
Waterhouse Group, Inc., Nextel Partners, Inc., Citizens Financial Group, and
Sensitech, Inc.
Dr. Jarecki became a director of the Company in August 2000 and has been
Chairman of the Board of Directors of The Falconwood Corporation, an investment
banking company, since 1969. He is currently Assistant Clinical Professor of
Psychiatry at the Yale University School of Medicine. Dr. Jarecki was the
Chairman of MovieFone, Inc. until its sale in 1999 to America Online, Inc.
Previously, he was a Director of the National Futures Association and the
Futures Industry Association. Dr. Jarecki currently serves as a director of the
International Liaison Committee for Food Corps Programs, Rural Voice Inc., and
the American Hepatitis Association.
Mr. Posner became a director of the Company in August 2000 and is
co-founder, Managing Partner and Chief Investment Officer of Hygrove Partners
LLC, an investment management company formed in May 2000. From 1997 to December
1999, he was a Managing Director, Co-Chief Investment Officer, Director of
Research, and portfolio manager at Warburg Pincus Asset Management. From 1987
through
2
1996, Mr. Posner was a Vice President and portfolio manager at Fidelity
Investments. He currently serves as a member of the Board of Visitors for the
Weinberg College of Arts and Sciences at Northwestern University.
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
---- --- ------------------
Lord Black of Crossharbour PC(C), OC, KCSG............. 57 1997
Michael Blakenham...................................... 64 1987
Max M. Fisher.......................................... 93 1983
The Marquess of Hartington............................. 57 1994
Henry R. Kravis........................................ 58 1996
Jeffrey H. Miro........................................ 59 1998
Sharon Percy Rockefeller............................... 57 1998
William F. Ruprecht.................................... 46 2000
Michael I. Sovern...................................... 70 2000
Robert S. Taubman...................................... 48 2000
Robin Woodhead......................................... 50 2000
Lord 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. Lord Black is also Chairman of Argus Corporation Ltd.,
and serves as a director of the Canadian Imperial Bank of Commerce and Brascan
Limited. He also is a member of the advisory boards of The National Interest,
The Council on Foreign Relations, The Institute of International Economics and
the Hudson Institute.
Lord Blakenham became a director of the Company in 1984. Since 1972, he
served in various executive positions with Pearson plc, a British media company
that serves worldwide information, education and entertainment markets and had a
substantial interest in the three Lazard investment banking firms. He was
Executive Chairman of Pearson plc from 1983 until 1997 and served as the non-
executive Chairman of MEPC plc, a commercial real estate investment and
development company, from 1993 to 1998. He is currently Chairman of the Board of
Trustees of the RBG Kew, a director of Lafarge SA and the UK-Japan 21st Century
Group and a member of the Toshiba Corporation International Advisory Group.
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 Incorporated, a bank holding company.
The Marquess of Hartington became a director of the Company in September
1994 and assumed the role of Deputy Chairman of the Company in April 1996.
He serves as a director of a number of private companies.
Mr. Kravis became a director of the Company in October 1996. He is a
founding partner of Kohlberg Kravis Roberts & Co., a merchant banking firm,
which was established in 1976, and currently serves as a director of Accuride
Corporation, Alliance Imaging, Inc., Amphenol Corporation, Borden, Inc., The
Boyds Collection Ltd., Evenflo Company Inc., The Gillette Company, IDEX
Corporation, KinderCare Learning Centers, Inc., KSL Recreation Corporation,
PRIMEDIA Inc., Regal Cinemas, Inc., Spalding Holdings Corporation and Willis
Group Holdings Limited. 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, Mount Sinai Hospital, Claremont McKenna College and The New York City
Partnership. Mr. Kravis also serves as the Chairman of the New York City
Investment Fund.
Mr. Miro became a director of the Company in April 1998. Since 1981, he has
served as Chairman of the law firm of Miro Weiner & 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, a national home building
company.
3
Mrs. Rockefeller became a director of the Company in April 1998. She 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. Mrs. Rockefeller has served as a
director of PepsiCo, Inc. since 1986. She 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 from 1979 until
1992. Mrs. Rockefeller is also a member of the Trustee's Council of the National
Gallery of Art, the Kennedy Center Community and Friends Board, the Board of
Trustees of The Phillips Collection, the Colonial Williamsburg Foundation Board
of Trustees, the Collections Committee of Harvard University Art Museums, the
Protestant/Episcopal Cathedral Foundation Board, Washington D.C.'s 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 also active in Rockefeller Family Boards and Foundations.
Mr. Ruprecht became a director and the President and Chief Executive Officer
of the Company in February 2000 and served as Executive Vice President of the
Company and Managing Director of Sotheby's North and South America from February
1994 until February 2000. From 1992 to February 1994, he served as Director of
Marketing for the Company worldwide and also oversaw a number of specialist
departments. From 1986 to 1992, Mr. Ruprecht served as Director of Marketing for
Sotheby's, Inc.
Mr. Sovern became a director and Chairman of the Board of the Company in
February 2000 and is President Emeritus and the Chancellor Kent Professor of Law
of Columbia University. Since 1960, he has been a professor of law at Columbia
University and served as the President of Columbia University from 1980 until
1993. Mr. Sovern is a member of the Board of Directors of AT&T and Sequa Corp.
He also has served as the President of the Shubert Foundation since 1996 and as
the Chairman of the Japan Society and of the American Academy in Rome since
1993.
Mr. Taubman became a director of the Company in August 2000. Since 1992, he
has been a director and the President and Chief Executive Officer of Taubman
Centers, Inc., a company engaged in the regional retail shopping center
business, becoming Chairman of the Board of Taubman Centers, Inc. in December
2001. In addition, he is a director of Fashionmall.com, Inc., a company that
markets and sells fashion apparel and related accessories and products over the
internet. Mr. Taubman is also a member of the Board of Governors of the National
Association of Real Estate Investment Trusts, a director of Comerica Bank, a
director of the Real Estate Roundtable and a trustee of the International
Council of Shopping Centers and of the Urban Land Institute.
Mr. Woodhead became a director of the Company in February 2000. He was
appointed Executive Vice President of the Company and Chief Executive of
Sotheby's Europe in December 1998 and in 1999 also became Chief Executive of
Sotheby's Asia. He was Co-Managing Director, Sotheby's Europe from January until
December 1998. From 1992 until 1997, he was the Chief Executive of the London
Commodity Exchange.
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 1, 2002 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.
4
CLASS A AND CLASS B COMMON STOCK OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND 5% SHAREHOLDERS
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ -------------------------
DIRECTORS, EXECUTIVE OFFICERS NUMBER OF PERCENT NUMBER OF PERCENT
AND 5% SHAREHOLDERS SHARES OF CLASS SHARES OF CLASS
--------------------------------------------- ---------- -------- ----------- --------
Baron Capital Group......................... 22,386,950 49.86% 0 *
767 Fifth Avenue, 49th Floor
New York, New York 10153
Lord Black of Crossharbour PC(C), OC, KCSG 11,030(1) * 0 *
Telegraph Group Ltd.
1 Canada Square
Canary Wharf
London E14 5DT England
Michael Blakenham ........................... 11,780(2) * 0 *
1 St. Leonard's Studios
Smith Street
London SW3 4EN England
George S. Blumenthal ........................ 3,390(3) * 0 *
NTL Incorporated
110 East 59th Street, 26th Floor
New York, New York 10022
Steven B. Dodge ............................. 3,390 * 0 *
American Tower Corporation
116 Huntington Avenue, 11th Floor
Boston, Massachusetts 02116
Max M. Fisher ............................... 2,449,825(4) 5.17% 2,432,665(5) 14.7%
3011 West Grand Boulevard
27th Floor
Detroit, Michigan 48202
The Marquess of Hartington .................. 22,480(6) * 0 *
Sotheby's
34-35 New Bond Street
London, W1 2AA England
Dr. Henry G. Jarecki ........................ 3,390(7) * 0 *
The Falconwood Corporation
565 Fifth Avenue, 3rd Floor
New York, New York 10017
Henry R. Kravis ............................. 11,030(8) * 0 *
Kohlberg Kravis Roberts & Co.
9 West 57th Street
New York, New York 10019
Jeffrey H. Miro ............................. 16,525(9) * 0 *
Miro Weiner & Kramer
500 North Woodward Avenue
Suite 100
Bloomfield Hills, Michigan 48304
Donaldson C. Pillsbury ...................... 131,334(10) * 131,334(11) *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
Brian S. Posner ............................. 3,390(12) * 0 *
Hygrove Partners
350 Madison Avenue, 21st Floor
New York, New York 10017
Private Capital Management .................. 2,268,000 5.05% 0 *
3003 Tamiami Trail North
Suite 360
Naples, Florida 34103
5
CLASS A COMMON STOCK CLASS B COMMON STOCK
------------------------ -------------------------
DIRECTORS, EXECUTIVE OFFICERS NUMBER OF PERCENT NUMBER OF PERCENT
AND 5% SHAREHOLDERS SHARES OF CLASS SHARES OF CLASS
--------------------------------------------- ---------- -------- ----------- --------
Sharon Percy Rockefeller .................... 11,075 * 0 *
WETA TV/26 and FM 90.9
2775 South Quincy Street
Arlington, Virginia 22206
William F. Ruprecht ......................... 345,000(13) * 345,000(14) 2.04%
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
William S. Sheridan ......................... 120,800(15) * 120,800(16) *
Sotheby's Inc.
1334 York Avenue
New York, New York 10021
Stuart N. Siegel ............................ 95,734(17) * 95,734(18) *
Sotheby's International Realty, Inc.
38 East 61st Street
New York, New York 10021
Michael I. Sovern ........................... 6,400 * 0 *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
A. Alfred Taubman ........................... 13,249,253(19) 22.79% 13,241,328(20) 80%
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Robert S. Taubman ........................... 3,476,020(21) 7.19% 3,468,630(22) 20.96%
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Robin Woodhead .............................. 183,334(23) * 183,334(24) 1.10%
Sotheby's
34-35 New Bond Street
London, W1 2AA England
Directors and Executive Officers as a 7,065,727(25) 13.61% 6,937,297(25) 39.45%
Group......................................
------------------------
* Represents less than 1%.
(1) This figure represents 6,800 shares of Class A Common Stock that Lord Black
owns, as well as 4,230 Deferred Stock Units, which automatically convert to
an equal number of shares of Class A Common Stock if Lord Black terminates
service on the board. For a description of the Deferred Stock Units, see
'Compensation of Directors.'
(2) This figure represents 3,305 shares of Class A Common Stock that Lord
Blakenham owns, as well as 8,475 Deferred Stock Units, which automatically
convert to an equal number of shares of Class A Common Stock if Lord
Blakenham terminates service on the board.
(3) This figure consists of 3,390 Deferred Stock Units, which automatically
convert to an equal number of shares of Class A Common Stock if Mr.
Blumenthal terminates service on the board.
(4) In addition to 3,305 shares of Class A Common Stock and 8,475 Deferred
Stock Units, which automatically convert to an equal number of shares of
Class A Common Stock if Mr. Fisher terminates service on the board, that
Mr. Fisher owns as trustee of his grantor trust, this figure includes
2,438,045 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
3,305 shares of Class A Common Stock, the 8,475 Deferred Stock Units 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 (5) below.
6
(5) This figure includes 5,380 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 trustee of his grantor trust.
This figure also includes 597,124 shares owned by Martinique Hotel, Inc., a
corporation owned by Mr. Fisher's family. This figure excludes 17,930
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.
(6) This figure represents 14,005 shares of Class A Common Stock that The
Marquess of Hartington owns, as well as 8,475 Deferred Stock Units, which
automatically convert to an equal number of shares of Class A Common Stock
if The Marquess of Hartington terminates service on the board.
(7) This figure consists of 3,390 Deferred Stock Units, which automatically
convert to an equal number of shares of Class A Common Stock if Dr. Jarecki
terminates service on the board.
(8) This figure represents 2,555 shares of Class A Common Stock that Mr. Kravis
owns, as well as 8,475 Deferred Stock Units, which automatically convert to
an equal number of shares of Class A Common Stock if Mr. Kravis terminates
service on the board.
(9) This figure represents 8,475 Deferred Stock Units owned by Mr. Miro, which
automatically convert to an equal number of shares of Class A Common Stock
if Mr. Miro terminates service on the board, as well as 8,050 shares of
Class A Common Stock owned by his wife and children.
(10) This figure consists of 131,334 shares of Class A Common Stock that Mr.
Pillsbury has the right to acquire upon exercising options granted under
the Company's 1997 Stock Option Plan, as amended (the '1997 Plan') for
shares of Class B Common Stock and converting such shares.
(11) This figure represents 131,334 shares of Class B Common Stock that Mr.
Pillsbury has the right to acquire by exercising options under the 1997
Plan.
(12) This figure represents 3,390 Deferred Stock Units owned by Mr. Posner,
which automatically convert to an equal number of Shares of Class A Common
Stock if Mr. Posner terminates service on the Board.
(13) This figure consists of 320,000 shares of Class A Common Stock that Mr.
Ruprecht has the right to acquire upon exercising options granted under the
Company's 1987 Stock Option Plan (the '1987 Plan') and the 1997 Plan for
shares of Class B Common Stock and converting such shares and 25,000 shares
of Class A Common Stock that he has the right to acquire upon exercising
purchase rights granted under the Company's Performance Share Purchase Plan
(the 'Performance Plan') for shares of Class B Common Stock and converting
such shares. See Note 2 to the 'Aggregate Options Exercises in 2001 and
Year End Option Values' table under 'Stock Options' below describing the
status of the Performance Plan.
(14) This figure consists 320,000 shares of Class B Common Stock that Mr.
Ruprecht has the right to acquire by exercising options under the 1987 and
1997 Plans and 25,000 shares of Class B Common Stock that he has the right
to acquire by exercising purchase rights granted under the Performance
Plan. See Note 2 to the 'Aggregate Options Exercises in 2001 and Year End
Option Values' table under 'Stock Options' below describing the status of
the Performance Plan.
(15) This figure represents 120,800 shares of Class A Common Stock that Mr.
Sheridan has the right to acquire upon exercising options granted under the
1997 Plan for shares of Class B Common Stock and converting such shares.
(16) This figure represents 120,800 shares of Class B Common Stock that Mr.
Sheridan has the right to acquire by exercising options under the 1997
Plan.
(17) This figure represents 95,734 shares of Class A Common Stock that Mr.
Siegel has the right to acquire upon exercising options granted under the
1987 Plan and the 1997 Plan for shares of Class B Common Stock and
converting such shares.
(18) This figure represents 95,734 shares of Class B Common Stock that Mr.
Siegel has the right to acquire by exercising options under the 1987 and
1997 Plans.
(19) In addition to 7,925 shares of Class A Common Stock that A. Alfred Taubman
owns as trustee of his grantor trust, this figure includes 9,772,698 shares
of Class A Common Stock that he has the
7
right to acquire by converting shares of Class B Common Stock that A.
Alfred 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. A. Alfred Taubman has pledged certain of these shares to a
commercial bank. If the commercial bank foreclosed on such shares, a change
of control with respect to the Company would occur.
(20) This figure includes 9,772,698 shares of Class B Common Stock that A.
Alfred Taubman owns as trustee of his grantor trust and 3,468,630 shares of
Class B Common Stock owned by Taubman Investments Limited Partnership, over
which shares A. Alfred Taubman has sole voting and dispositive control.
This figure excludes 792,830 shares of Class B Common Stock owned by Judith
Taubman, his wife. A. Alfred Taubman disclaims beneficial ownership of all
shares of Class B Common Stock owned by Judith Taubman.
(21) This figure includes 3,390 Deferred Stock Units, which automatically
convert to an equal number of shares of Class A Common Stock if Robert S.
Taubman terminates service on the Board. This figure also includes
3,468,630 shares of Class A Common Stock that Taubman Investments Limited
Partnership has the right to acquire by converting shares of Class B Common
Stock. Robert S. Taubman does not have voting or dispositive control over
such shares and disclaims any beneficial ownership of such shares beyond
the pecuniary interest he has in Taubman Investments Limited Partnership.
This figure also includes 3,000 shares of Class A Common Stock for which
Robert S. Taubman is the custodian for the benefit of his son and 1,000
shares of Class A Common Stock, which his wife owns.
(22) This figure represents 3,468,630 shares of Class B Common Stock owned by
Taubman Investments Limited Partnership. Robert S. Taubman does not have
voting or dispositive control over such shares and disclaims beneficial
ownership of such shares beyond the pecuniary interest he has in Taubman
Investments Limited Partnership.
(23) This figure represents 183,334 shares of Class A Common Stock that Mr.
Woodhead has the right to acquire by exercising options granted under the
1997 Plan for shares of Class B Common Stock and converting such shares.
(24) This figure represents 183,334 shares of Class B Common Stock that Mr.
Woodhead has the right to acquire by exercising options under the 1997
Plan.
(25) See above notes.
8
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
---- --- --------------------------------------------------
Donaldson C. Pillsbury.................... 61 Executive Vice President, General Counsel and
Secretary
William F. Ruprecht....................... 46 President and Chief Executive Officer
William S. Sheridan....................... 48 Executive Vice President and Chief Financial
Officer
Stuart N. Siegel.......................... 46 President and Chief Executive Officer, Sotheby's
International Realty
Robin Woodhead............................ 50 Executive Vice President and Chief Executive,
Sotheby's Europe and Asia
Mitchell Zuckerman........................ 55 President, Sotheby's Financial Services, Inc. and
Sotheby's Ventures, LLC
Mr. Pillsbury was appointed as Executive Vice President and General Counsel
of the Company in February 2001. He previously served as Senior Vice President
and General Counsel of the Company from January 1998 until February 2001. From
1993 until January 1998, Mr. Pillsbury was Senior Counsel to the law firm Davis
Polk & Wardwell; from 1973 until 1993, he was a partner of that firm. Mr.
Pillsbury 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. Sheridan was appointed Executive Vice President and Chief Financial
Officer of the Company in February 2001. From November 1996 until February 2001,
he served as Senior Vice President and Chief Financial Officer of the Company.
From 1987 until November 1996, Mr. Sheridan was a partner at the accounting and
consulting firm of Deloitte & Touche LLP. Mr. Sheridan also serves as a director
of Standard Commercial Corporation.
Mr. Siegel, President and Chief Executive Officer of Sotheby's International
Realty, was appointed President and Managing Director in 1991 and has been with
Sotheby's International Realty since 1981.
Mr. Zuckerman has been President of Sotheby's Financial Services, Inc. since
1988 and Sotheby's Ventures, LLC since 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon 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.
9
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company met seven times during 2001. In
addition, The Board of Directors has an Executive Committee, which met four
times during 2001, an Audit Committee, which met seven times during 2001, a
Compensation Committee, which met four times during 2001, and a Special
Committee, which met nine times in 2001. The Board of Directors formed the
Special Committee in August 2000, composed entirely of independent directors, as
such term is defined in the Michigan Business Corporation Act, as amended, to
provide oversight and take appropriate action with respect to the investigation
by the United States Department of Justice regarding possible antitrust
violations by the Company as well as related civil antitrust, shareholder and
shareholder derivative litigation. A Section 162(m) Sub-Committee of the
Compensation Committee (the 'Section 162(m) Sub-Committee') also exists. During
2001, the Executive Committee consisted of Mr. Fisher, Mr. Kravis, Mr. Posner,
Mr. Ruprecht, Mr. Robert S. Taubman and Mr. Sovern; the Audit Committee
consisted of Lord Black, Lord Blakenham, Dr. Jarecki and Mrs. Rockefeller; the
Compensation Committee consisted of Mr. Blumenthal Mr. Fisher, Mr. Kravis and
Mr. Miro; the Special Committee consists of Mr. Dodge, Mrs. Rockefeller and
Mr. Sovern; and the Section 162(m) Sub-Committee consisted of Mr. Fisher ,
Mr. Kravis and Mr. Blumenthal. Except for Lord Black, Dr. Jarecki, Mr. Kravis
and Mr. Miro, 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.
10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth all compensation of the Chief Executive
Officer and each of the other four 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.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------- SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(4) OPTIONS(5) COMPENSATION(6)
--------------------------- ---- -------- -------- --------------- ------------ ---------------
William F. Ruprecht(1) ... 2001 $500,000 $650,000(3) $ 9,482 0 $ 76,709
President and Chief 2000 $500,000 $375,000 $25,722 500,000 $ 84,719
Executive Officer 1999 $369,583 $350,000 $10,812 245,000 $ 83,518
Robin Woodhead .......... 2001 $388,278 $130,000 $ 5,920 85,000 $135,514
Executive Vice President 2000 $383,598 $540,000 $ 6,064 100,000 $138,279
and Chief Executive, 1999 $405,000 $280,000 $ 6,767 100,000 $132,680
Sotheby's Europe and Asia
Donaldson C. Pillsbury ... 2001 $340,000 $145,000 $ 0 70,000 $ 45,305
Executive Vice President, 2000 $340,000 $510,000 $ 0 100,000 $ 43,283
General Counsel and 1999 $325,000 $178,750 $ 0 70,000 $ 37,344
Secretary
William S. Sheridan ..... 2001 $350,000 $170,000 $ 0 200,000 $ 47,732
Executive Vice President 2000 $350,000 $540,000 $ 0 75,000 $ 47,166
and Chief Financial 1999 $310,000 $192,500 $ 0 70,000 $ 33,316
Officer
Stuart N. Siegel ........ 2001 $330,000 $150,000 $12,178 40,000 $ 49,884
President and Chief 2000 $330,000 $750,000 $12,000 100,000 $ 31,817
Executive Officer, 1999 $300,000 $230,672 $12,000 47,000 $ 29,062
Sotheby's International
Realty, Inc.
------------------------
(1) Mr. Ruprecht became the President and Chief Executive Officer of the Company
in February 2000.
(2) Bonus amounts in each year include cash paid in the following year in
respect of the previous year's performance.
(3) Mr. Ruprecht received a bonus with respect to 2001 performance in the amount
of $250,000 and a signing bonus in the amount of $400,000 pursuant to the
terms of his employment agreement with the Company.
(4) Car allowance for Messrs. Ruprecht, Woodhead and Siegel.
(5) The number of shares underlying options refers to option grants under the
1997 Plan, certain of which are granted in the following year in respect of
the previous year's performance.
(6) The amounts disclosed in this column for 2001 consist of:
(a) Company contributions of the following amounts under the Company's
Retirement Savings Plan, a qualified defined contribution plan: $12,333
on behalf of Mr. Ruprecht; $13,600 on behalf of Mr. Pillsbury; $13,600
on behalf of Mr. Sheridan and $10,600 on behalf of Mr. Siegel.
(b) Company accruals of the following amounts under the Company's Benefit
Equalization Plan, a non-qualified plan: $57,776 on behalf of Mr.
Ruprecht; $30,400 on behalf of Mr. Pillsbury; $33,600 on behalf of Mr.
Sheridan and $38,600 on behalf of Mr. Siegel.
(c) Company contributions of $11,189 to the Company's U.K. Pension Plan and
$121,360 to a supplemental pension plan on behalf of Mr. Woodhead.
11
(d) Company payments of life insurance premiums: $960 on behalf of Mr.
Ruprecht; $2,965 on behalf of Mr. Woodhead; $1,305 on behalf of Mr.
Pillsbury; $532 on behalf of Mr. Sheridan and $684 on behalf of Mr.
Siegel.
(e) Financial planning services in the amount of $5,750 were provided to
Mr. Ruprecht.
U.K. Pension Plan
Sotheby's (U.K.) maintains a funded defined benefit pension plan for its
employees who are U.K. residents. Robin Woodhead is the only Named Executive
Officer who participates in the plan. Mr. Woodhead has four 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. Since April 7, 1997 and until March 31, 2002, 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.
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 4% of base salary (or 2% while the contribution reduction
described above continues). Current Inland Revenue regulations limit the
pensionable salary with respect to which pension benefits may be based to a
maximum of `L'95,800 for 2001 and 2002, respectively.
PENSION TABLE
YEARS OF SERVICE
REMUNERATION ------------------------------------------
`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
Bonuses
The Company's officers are eligible to receive incentive bonuses. Bonuses
are recommended by management and approved by the 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 Compensation Committee the discretion to address exceptional
performance and unusual circumstances.
Benefit Equalization Plan
United States. 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 imposed by the
Internal Revenue Code. Officers of the rank of senior vice president 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
12
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. Amounts
contributed by the Company on behalf of the Named Executive Officers of the
Company pursuant to benefit equalization agreements in 2001 have been included
in the Summary Compensation Table and are accrued for in the Company's balance
sheet.
United Kingdom. The total benefits that may be provided from the Company's
U.K. qualified defined benefit Pension Plan are subject to certain limitations
under applicable law for each participant. For Mr. Woodhead, an agreement has
been entered into whereby the maximum allowable benefit under the Plan will be
supplemented so as to provide a total pension of 2.667% of his salary for each
year of service, this pension being payable from age 60. Under the Company's
agreement with Mr. Woodhead, the intention is that one-third of this benefit
will be funded by Mr. Woodhead and two-thirds will be funded by the Company.
Retirement benefits before or after age 60, and other options that apply, will
be as far as possible identical to the normal terms of the U.K. qualified
pension plan.
The Company maintains a provision on its balance sheet in an amount
sufficient to account for the difference between the aggregate value of the
benefits that would have accrued in respect of Mr. Woodhead under the U.K.
qualified plan in the absence of the limitations mentioned above and the
aggregate value of the benefits actually available in respect of Mr. Woodhead
within the U.K. qualified plan.
Employment Agreements and Related Matters
The Company has entered into employment agreements with Messrs. Ruprecht and
Sheridan and a retention bonus agreement with Mr. Woodhead, which, in the case
of Mr. Woodhead, amended and restated certain prior employment arrangements with
the Company. Each agreement guarantees the payment of a minimum annual base
salary amount to the executive. Mr. Ruprecht is eligible for an annual bonus
having an annual incentive target of 100% of his then-current annual base
salary; Messrs. Woodhead and Sheridan are each eligible for an annual bonus,
having an annual incentive target of 60% of his then-current annual base salary
in the case of Mr. Woodhead and a minimum annual incentive target of $200,000 in
the case of Mr. Sheridan. Messrs. Woodhead's and Sheridan's bonuses are and will
be based on the general Company bonus standard for its executives consisting of
a 25% worldwide corporate financial performance target and a 75% individual
performance target. In addition, under their respective agreements or a bonus
program instituted by the Company with respect to certain executives, the
following persons were paid the listed amounts for remaining employed by the
Company in February 2002: Mr. Pillsbury, $550,000 (he elected to defer
receipt of this amount); Mr. Ruprecht, $500,000; Mr. Sheridan, $550,000;
Mr. Siegel, $550,000 and Mr. Woodhead, $630,000. Messrs. Pillsbury, Sheridan,
Siegel and Woodhead will each receive $350,000 if he continues to be employed
by the Company on September 30, 2002; Mr. Sheridan will receive an additional
$1,000,000 if he continues to be employed by the Company on December 31, 2002
and Mr. Woodhead will receive an additional $1,000,000 if he continues to be
employed by the Company on January 30, 2003. In partial consideration for such
payments, Messrs. Ruprecht, Sheridan and Woodhead have each agreed to be bound
by covenants not to compete with the Company in the auction business for the
earlier of (i) six (6) months after the end of their respective employment
terms or (ii) twelve (12) months after the termination of their respective
employment. Mr. Ruprecht did not participate in the retention programs adopted
by the Board of Directors of the Company in February and October 2000 and in
January 2001 and requested that the Board allocate to other key employees such
amounts as would otherwise have been available to him as retention payments
under these programs. In March 2002, Mr. Ruprecht's employment contract was
amended, and under his employment agreement as amended he will receive
retention payments in the amount of $500,000 if he continues to be employed
by the Company on September 30, 2002 and an additional $3,000,000 on each of
December 31, 2002 and December 31, 2003 if he continues to be employed by the
Company on such dates. Certain of the foregoing retention payments to Named
Executive Officers are payable prior to the specified dates upon termination
for good reason following a change of control of the Company or upon
termination without cause at any time. Mr. Pillsbury also has an agreement
pursuant to which in the event of termination of employment without cause he
will be paid an amount equal to the unvested portion of his accounts under
the Company's Retirement Savings Plan and Benefit Equalization Plan, which
totaled $29,893 at February 28, 2002.
13
STOCK OPTIONS
The following tables set forth information regarding option grants under the
Company's 1997 Plan, except as otherwise noted, to the Named Executive Officers
with respect to 2001.
OPTION GRANTS IN 2001
INDIVIDUAL GRANTS
--------------------------------------------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS FAIR MARKET
UNDERLYING GRANTED TO EXERCISE VALUE OF
OPTIONS EMPLOYEES IN PRICE UNDERLYING EXPIRATION
GRANTED(1) 2001(4) PER SHARE(5) SHARES DATE(6)
---------- ------- ------------ ------ -------
William F Ruprecht........... 0 0% $ 0 $ 0 N/A
Robin Woodhead............... 50,000(2) 2.6% $ 11.24 $ 11.24 9/28/11
35,000(3) 1.8% $ 13.69 $ 13.69 1/31/07(7)
Donaldson C. Pillsbury....... 50,000(2) 2.6% $ 11.24 $ 11.24 9/28/11
20,000(3) 1.1% $ 13.69 $ 13.69 1/31/07(7)
William S. Sheridan.......... 150,000(2) 7.9% $ 11.24 $ 11.24 9/28/11
50,000(3) 2.6% $ 13.69 $ 13.69 1/31/07(7)
Stuart N. Siegel............. 40,000(3) 2.1% $ 13.69 $ 13.69 1/31/07(7)
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERM(8)
---------------------------------
0% 5% 10%
-- -- ---
William F Ruprecht........... $0 $ 0 $ 0
Robin Woodhead............... $0 $309,846.46 $ 763,166.60
$0 $103,259.82 $ 222,373.52
Donaldson C. Pillsbury....... $0 $309,846.46 $ 763,166.60
$0 $ 59,005.61 $ 127,070.58
William S. Sheridan.......... $0 $929,539.37 $2,289,499.81
$0 $147,514.03 $ 317,676.45
Stuart N. Siegel............. $0 $118,011.22 $ 254,141.16
------------------------
(1) In addition to special grants from time to time, the Company normally grants
options to officers and employees once a year in connection with year-end
performance reviews. Under this policy, options were granted to certain
officers and employees in January 2002 by the Compensation Committee of the
Board of Directors. All grants made in or with respect to 2001 were made
under the 1997 Plan.
(2) These options 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 the grant. Messrs.
Woodhead and Sheridan received these grants pursuant to the terms of their
respective employment agreements.
(3) These options will vest and become exercisable on the earlier to occur of
(i) the date on which, for the immediately preceding ten (10) consecutive
trading days, the New York Stock Exchange ('NYSE') closing price for a share
of Class A Common Stock has equaled or exceeded $30 or (ii) January 30,
2003.
(4) This figure is calculated by dividing the total number of options granted
under the 1997 Plan to the individual by the total number of options granted
under that plan to all employees.
(5) 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. 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, 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.
(6) All options will vest immediately upon a 'change in control' (as defined in
the 1997 Plan). Generally, the exercise of awards made to executive officers
of the Company under the 1997 Plan with respect to 2001 and the continued
eligibility for such awards under the 1997 Plan, are subject to such
executive officer's agreement to provide six (6) months' notice of any
voluntary termination of employment, and not to compete with the Company in
the auction business for a period of six (6) months following the date of
termination. With respect to covenants not to compete for certain of the
Named Executive Officers, see 'Compensation of Executive
Officers -- Employment Agreements and Related Matters' above.
(7) The January 2002 options will expire on the earlier of (i) five (5) years
after the date of grant or (ii) six (6) months after the Company's Class A
Common Stock closes at or above thirty dollars ($30) per share for 10
consecutive trading days.
(8) 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. Except for the options described in note (7)
above, the option term is ten (10) years for options granted under the 1997
Plan to the Named Executive Officers, 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.
14
AGGREGATE OPTION EXERCISES IN 2001 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 UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
William F. Ruprecht....... 0(1) $0 221,000 669,000 $ 249,150 $ 0
0(2) $0 25,000 0 $ 415,250 $ 0
Robin Woodhead............ 0(1) $0 143,334 256,666 $ 0 $ 830,500
Donaldson C. Pillsbury.... 0(1) $0 98,834 221,166 $ 0 $ 830,500
William S. Sheridan....... 0(1) $0 99,000 273,000 $ 0 $ 2,491,500
Stuart N. Siegel.......... 0(1) $0 86,334 115,866 $ 86,372 $ 0
------------------------
(1) Information in this row concerns option grants under the 1987 Plan and the
1997 Plan only.
(2) Information in this row concerns option grants under the Performance Plan
only, which options are for the purchase of Class B Common Stock, which is
freely convertible into Class A Common Stock. These Performance Plan options
have a ten (10) year term, vested as a result of the fulfillment of time
vesting and performance target criteria and have an exercise price per
option of twenty five percent (25%) of the NYSE closing price per share of
the Class A Common Stock (as there is no public market in the Class B Common
Stock) on the last business day before the option grant. The actual value
that may be realized by Mr. Ruprecht will depend on the closing price of the
Class A Common Stock on the NYSE on the day preceding the exercise date.
Since 1998, the Company has discontinued granting options under the
Performance Plan because it became apparent that most of the granted
Performance Plan options would not meet the performance criteria for
vesting. The Company does not expect to grant any further options under the
Performance Plan. Information regarding the Performance Plan is included in
the Proxy Statement to describe the terms of the vested but unexercised
25,000 Performance Plan options owned by Mr. Ruprecht.
15
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible to the Board of Directors for
advising the Board with respect to compensation matters and employee benefit
plans of the Company. The Section 162(m) Sub-Committee was established for
purposes of granting options and administering performance criteria with respect
to Named Executive Officers under the 1997 Plan and the Performance Plan. The
Compensation Committee has authority to grant options under the 1997 Plan and
the Performance Plan to all individuals other than the Named Executive Officers.
As of December 31, 2001, except for the 1998 Stock Compensation Plan for
Non-Employee Directors, none of the members of the Compensation Committee or the
Section 162(m) Sub-Committee participated in any of the plans administered by
the committee or the sub-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 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)
historical compensation levels and stock option grants by the Company and (iv)
recommendations of management.
In addition to the listed factors, during what has recently been a
challenging period for the Company, the Compensation Committee has awarded
retention bonuses to key employees so that the Company may insure the continued
services and commitment of such employees to the Company.
COMPENSATION DEDUCTIBILITY
The 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 a Named
Executive Officer, the applicable requirements of Section 162(m) of the Code
('Section 162(m)') have been incorporated into the 1997 Plan and the Performance
Plan. With respect to the Named Executive Officers, the Section 162(m)
Sub-Committee, comprised solely of three outside directors (as defined in
Section 162(m)), establishes option grants and otherwise takes actions relating
to the Named Executive Officers under the 1997 Plan and the Performance Plan.
ANNUAL COMPENSATION
Salary
The Compensation Committee sets base salaries for executives that both
reflect the job responsibilities of each individual and are consistent with base
salaries paid for competitive positions in the market.
Annual Cash Incentives
The Company's bonus program for all bonus-eligible employees, including the
Chief Executive Officer ('CEO') and the other Named Executive Officers, is based
upon the achievement of both Company and individual objectives. Positions within
the Company have been separated into salary grades, with bonus opportunities
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
Compensation Committee with respect to all participants, and to the specific
approval of the Compensation Committee with regard to senior management. Targets
are set each year by senior management. Targets and bonus opportunities are
communicated to employees each year.
16
Every supervisor conducts an employee review. 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 Compensation Committee has the discretion to address
such circumstances.
For 2001, the Company did not achieve its worldwide performance target and
the portion of bonuses (generally 25% of such target) was not paid. In addition,
certain individuals 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, and the
1997 Plan, is to provide employees with long-term incentives that link their
interests with the interests of shareholders. In addition, the 1987 Plan's and
the 1997 Plan's vesting schedules encourage key employees to continue in the
employment of the Company. Since 1998, the Company has discontinued granting
options under the Performance Plan because it became apparent that most of the
granted Performance Plan options would not meet the performance criteria for
vesting. The Company does not expect to grant any further options under the
Performance Plan.
Stock option grants to the Named Executive Officers are based on each
individual's current and expected future contribution to the Company, as well as
competitive market practice and related factors listed above.
CEO COMPENSATION
The Section 162(m) Sub-Committee and the Compensation Committee meet,
independently of 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 COMPENSATION COMMITTEE
MAX M. FISHER, CHAIRMAN
GEORGE S. BLUMENTHAL
HENRY R. KRAVIS
JEFFREY H. MIRO
REPORT OF THE AUDIT COMMITTEE
The audit committee of the Board of Directors of the Company is composed of
four independent directors, each of whom meets the criteria for 'independence'
under New York Stock Exchange Rule 303.01, and operates under a written charter,
as amended, adopted by the Board of Directors, attached as Appendix A. The
Company's management is responsible for its internal accounting controls and for
preparing the Company's financial statements. The Company's independent
accountants, Deloitte & Touche, are responsible for performing an independent
audit of the Company's consolidated financial statements in accordance with
auditing standards generally accepted in the United States and to issue a report
thereon.
The audit committee has reviewed and discussed the Company's audited
consolidated financial statements with management. In addition, the audit
committee has discussed with the Company's independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
'Communications with Audit Committees.' The audit committee has received the
written disclosures and the letter from the independent accountants required by
Independence Standards Board Standard No.1, 'Independence Discussions with Audit
Committees,' and has discussed with the independent accountants their
independence.
17
Based on the audit committee's discussions with management and the
independent accountants and the audit committee's review of the report of the
independent accountants, the audit committee recommended to the Board of
Directors that the audited consolidated financial statements be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 for
filing with the SEC.
This report is respectfully submitted by the Audit Committee of the Board of
Directors.
MICHAEL BLAKENHAM (CHAIRMAN)
LORD BLACK OF CROSSHARBOUR PC(C), OC, KCSG
DR. HENRY G. JARECKI
SHARON PERCY ROCKEFELLER
18
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,
1996 to December 31, 2001) with the cumulative return of the Standard & Poor's
MidCap 400 Stock Index ('S&P Midcap 400') and the Company's Peer Group ('Peer
Group').
The Company and Christie's International ('Christie's') are the two largest
art auction houses in the world. Based on the unique nature of the international
art auction business, Christie's was historically deemed to be the Company's
most appropriate peer for Performance Graph purposes. However, during 1998
Christie's was taken private. As a result, in 1999, the Company created a new
peer group consisting of: The Neiman-Marcus Group, Inc.; Nordstrom, Inc.; Saks
Holdings, Inc.; and Tiffany & Co. The Company believes the members of this peer
group to be purveyors of luxury goods appealing to a segment of the population
consistent with the Company's own clientele.
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 the Company's Peer
Group, respectively, on December 31, 1996, and a reinvestment of dividends at
the average of the closing stock prices at the beginning and end of each
quarter.
FIVE YEAR CUMULATIVE TOTAL RETURN
OF SOTHEBY'S, PEER GROUP, AND THE S&P MIDCAP 400
[GRAPH]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Sotheby's.............................. $100 $102.94 $178.89 $169.23 $130.80 $93.70
Peer Group............................. $100 $116.42 $106.16 $179.50 $142.10 $139.01
S&P MidCap 400......................... $100 $132.28 $157.52 $180.75 $212.36 $211.14
19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of December 31, 2001, the Compensation Committee of the Company consisted
of Max M. Fisher, George S. Blumenthal, Henry R. Kravis, and Jeffrey H. Miro. In
2001, the Company retained, and continues to retain in 2002, the law firm of
Miro Weiner & Kramer, of which Mr. Miro is Chairman.
CERTAIN COMPENSATION ARRANGEMENTS
The Company is paying Mr. Sovern $310,000 for his third year of service as
Chairman of the Board and as a director of the Company. This amount is payable
in equal monthly installments, but will be paid in full in the event of a change
in control of the Company or his being terminated without cause prior to
February 21, 2002. See 'Compensation of Directors.' Mr. Sovern will also be paid
an additional $100,000 upon the earliest to occur of (i) the third anniversary
of his becoming Chairman of the Board of the Company, (ii) a change of control
of the Company or (iii) his being terminated without cause.
The Marquess of Hartington, the Deputy Chairman of the Company, provides
consulting services to the Company and is paid `L'65,000 per year for such
services.
The Company retains the law firm of Miro Weiner & Kramer, of which Jeffrey
H. Miro is Chairman, to provide legal services to the Company.
CERTAIN TRANSACTIONS
The Company maintains two U.S. bank loan programs, which are available on a
selective basis 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 $500,000 requires the approval of either
the 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, and all loans under both programs are repayable in full when an
employee leaves the Company. As of March 1, 2002, Stuart N. Siegel and Mitchell
Zuckerman, both executive officers, had borrowings outstanding under these loan
programs of $130,672 and $72,266 respectively.
A. Alfred Taubman, the controlling shareholder of the Company and the father
of Robert S. Taubman, a Company director, has guaranteed certain cash retention
incentive payments in the aggregate amount of approximately $13 million that
remain unpaid to date, for a number of key employees (other than Named
Executive Officers) and other officers that are payable to such persons on
several dates during 2002 and 2003.
A. Alfred Taubman has paid $156 million of the cash portion of a settlement
of the class action complaint alleging violations of federal antitrust laws
based upon alleged agreements between the Company and Christies, the Company's
principal competitor, regarding commission pricing for auctions in the United
States. See Item 3, 'Legal Proceedings' of the Company's Annual Report on
Form 10-K for the year ended December 31, 2001.
From time to time, officers, directors and principal shareholders of the
Company and members of their immediate families purchase or sell property
through the Company at public auction or in private transactions in the ordinary
course of business.
COMPENSATION OF DIRECTORS
During 2001, each non-employee director 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. All of the foregoing fees were paid in
cash. In addition, the members of the Special Committee were each paid an
initial $10,000 fee. Because Mr. Sovern receives compensation under his
contract, he is not paid customary board or committee fees, except with respect
to his membership on the Special Committee. Pursuant to the Sotheby's Holdings,
Inc. 1998 Stock Compensation Plan For Non-Employee Directors, with respect to
Board service during 2001, each non-employee director (other than Mr. Sovern)
received 2,260 shares of Class A Common Stock and/or deferred stock compensation
units equivalent to such shares, if so elected by a director, and will continue
to receive such stock compensation until the director terminates
20
service on the Company's Board. All deferred stock compensation units will
accrue dividend equivalents.
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 2002. 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.
The Company has paid the following amounts to Deloitte & Touche LLP with
respect to services for the fiscal year ended December 31, 2001:
Audit Fees: $997,934
Financial Information Systems Design and Implementation Fees: $0
All Other Fees:
Audit-Related Fees $ 21,000(a)
Other Fees 453,969(b)
-----------
Total All Other Fees: $474,969(c)
===========
------------------------
(a) Includes fee for the audit of the Company's defined contribution plan for
United States employees.
(b) Other fees related primarily to tax consulting services.
(c) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
PROPOSALS OF SECURITY HOLDERS
Any shareholder proposal intended to be presented for consideration at the
annual meeting to be held in 2003 must be received by the Company at 38500
Woodward Avenue, Suite 100, Bloomfield Hills, Michigan 48304 by the close of
business on November 29, 2002. 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.
DOCUMENTS INCORPORATED BY REFERENCE
Item 3, 'Legal Proceedings,' of the Company's Annual Report on Form 10-K for
the year ended December 31, 2001 is incorporated by reference herein where
indicated.
21
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE
OF
SOTHEBY'S HOLDINGS, INC.
(AS OF MARCH 21, 2002)
WHEREAS, the Board of Directors, pursuant to the provisions of the Company's
Amended and Restated Articles of Incorporation and Bylaws, and in compliance
with the rules and regulations for listed companies of the New York Stock
Exchange (the 'NYSE'), has appointed a committee of the Board of Directors to
serve as the Company's Audit Committee;
WHEREAS, the members of the Audit Committee are those directors selected by
the Board of Directors to serve as such in accordance with the Company's Bylaws;
WHEREAS, the Securities Exchange Commission (the 'SEC') has adopted
amendments to its rules and regulations promulgated under the Securities
Exchange Act of 1934 (the 'Exchange Act') and in particular the rules relating
to financial disclosure and proxy requirements for registered companies, which
amendments are intended to improve the disclosure related to the functioning of
corporate audit committees and to enhance the reliability and credibility of
financial statements of registered companies;
WHEREAS, the NYSE, on which the Company is listed, has adopted certain
corporate governance standards requiring each listed company to have a qualified
audit committee and has set forth certain requirements as to the composition,
structure, responsibilities and reports required of each listed company's audit
committee; and
WHEREAS, in view of the requirements of the SEC and NYSE and recent
developments relating to accounting practices and procedures, the Board of
Directors has determined that it is in the best interests of the Company to
amend and restate the Company's existing written charter in order to more fully
set forth (i) the scope of the Audit Committee's responsibilities and the
procedures for carrying out those responsibilities (which include without
limitation, advising the Board regarding the selection of the Company's outside
auditor and managing the relationship between the Company and its outside
auditor) and (ii) the structure and membership requirements of the Audit
Committee.
NOW THEREFORE, the Board of Directors adopts the following as the charter
for the Audit Committee.
I. SCOPE OF THE AUDIT COMMITTEE'S DUTIES AND RESPONSIBILITIES
Through the activities set forth in this Charter, the Audit Committee shall
assist the Board of Directors in fulfilling its responsibilities by providing
oversight review of the Company's auditing, accounting, financial reporting and
compliance programs and processes. In so doing, the Committee shall serve as an
independent and objective body to provide an open avenue of communication among
the independent accountants, management, the compliance department, and the
internal auditing department, and the Committee and Board of Directors.
The Committee's role is one of overview and it recognizes that the Company's
management is responsible for preparing the company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management, as
well as the outside auditors, have more time, knowledge and more detailed
information on the Company than do Committee members; consequently, in carrying
out its overview responsibilities, the Committee is not providing any expert or
special assurance as to the Company's financial statements or any professional
certification as to the outside auditor's work.
The Committee shall periodically review its scope, policies and procedures,
including, on an annual basis, a review and reassessment of the adequacy of this
Charter.
A-1
II. MEMBERSHIP ON THE AUDIT COMMITTEE
The Committee shall consist of at least three directors as determined by the
Board, each of whom shall be independent. 'Independent' shall mean (i) that the
individual is free from any relationship with the Company that, in the opinion
of the Board, may interfere with the exercise of his or her independence from
management and the Company and (ii) subject to the proviso set forth in the
immediately succeeding paragraph, the individual does not have a Restricted
Relationship. 'Restricted Relationship' shall include any of the following
relationships and any other restricted or prohibited relationships set forth
from time to time in the NYSE Listed Company Manual, as the same may be amended
or restated:
1. A director who is, or who any time during the last three years has
been, an employee (including non-employee executive officers) of the
Company, any of its affiliates or of any entity which at any time during the
last three years was a former parent or predecessor of the Company.
2. A director (i) who is, or any time during the last three years was, a
partner, controlling shareholder, or executive officer of an organization
that has a business relationship with the Company, or (ii) who has, or any
time during the last three years had, a direct business relationship with
the Company (e.g., a consultant), unless, in each case, the Company's Board
of Directors determines in its business judgment that the relationship does
not interfere with the director's exercise of independent judgment. In
making a determination regarding the independence of a director pursuant to
this paragraph, the Board of Directors should consider, among other things,
the materiality of the relationship to the Company, to the director, and, if
applicable, to the organization with which the director is affiliated.
3. A director who is employed as an executive of another entity where
any of the Company's executives serves on the other entity's compensation
committee.
4. A director who is an immediate family member of an individual who is,
or any time during the last three years was, an executive officer of the
Company or any of its affiliates.
Each director serving on the Audit Committee shall be 'financially
literate,' as such qualification is interpreted by the Board of Directors in its
business judgment or must become financially literate within a reasonable period
of time after his or her appointment to the Audit Committee. At least one member
of the Audit Committee shall have accounting or related financial management
expertise, as the Board of Directors interprets such qualification in its
business judgment.
Members shall also have such qualification(s) and/or experience as may from
time to time be required by the applicable rules and standards of the SEC and/or
the primary exchange upon which the Company's shares are traded (the 'Applicable
Rules and Standards').
The Chairman of the Committee shall be selected by the Board or, in the
absence of such selection, by the Committee.
III. MEETINGS OF AND WITH THE AUDIT COMMITTEE; QUORUM AND AUDIT COMMITTEE ACTION
The Committee shall meet at least four times a year, or more frequently as
circumstances require. Consistent with its duty to provide an open avenue of
communication, the Committee may ask members of management or others to attend
any meeting, and shall meet at least annually with the internal auditor(s), the
worldwide director of compliance, the independent accountants and management in
separate executive sessions to discuss any matters the Committee or these groups
believe should be discussed privately with the Committee.
The Committee shall obtain confirmation that the independent accountants and
the internal auditor(s) and the worldwide director of compliance will
communicate directly and on a timely basis with the Committee or the Chairman of
the Committee if such communication is warranted, and the Chairman of the
Committee shall promptly report any such communication made to him to the full
Committee if he judges the matter to be material.
Two members of the Committee present in person or by telephone shall
constitute a quorum, and action of the Committee shall be by no less than two
members of the Committee; provided, however, if
A-2
this Charter or the Committee or the Board so provides, the Chairman of the
Committee may act on behalf of or represent the Committee.
IV. RESPONSIBILITIES AND POWERS OF THE AUDIT COMMITTEE
The following functions and activities are set forth as a guide for the
Committee in carrying out its overview responsibility. These functions are set
forth as a guide, with the understanding that the Committee may diverge from
this guide as appropriate given the circumstances.
A. General
1. The Committee shall report Committee actions to the Board and may
make appropriate recommendations to the Board concerning matters within the
Committee's scope of responsibilities.
2. The Committee shall have the power to conduct or authorize
investigations into matters within the Committee's scope of
responsibilities. The Committee is authorized to retain independent counsel,
accountants and others to assist in an investigation and to arrange and
commit the Company with respect to compensation for such independent
counsel, accountants and others.
3. The Committee may perform any activities consistent with this
Charter, the Articles of Incorporation and Bylaws and applicable law
(including the Applicable Rules and Standards) as the Committee or the Board
deems advisable.
B. Engagement of Independent Accountants
1. The independent accountants shall be ultimately accountable to the
Audit Committee as well as to the Board, and, accordingly, the Audit
Committee and the Board shall have the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the independent
accountants or nominate them for shareholder approval. Consistent with the
foregoing, the Committee shall recommend to the Board for selection (or the
replacement of) the independent accountants for Company audits. The
Committee shall review and approve the fees and other compensation to be
paid to the independent accountants.
2. The Committee shall obtain annually a formal written statement from
the independent public accountants delineating all relationships between the
accountants and the Company, actively engage in a dialogue with the
accountants with respect to any disclosed relationships or services that may
impact the objectivity and independence of the independent public
accountants and recommend that the Board of Directors take appropriate
action in response to the report of the independent public accounts to
satisfy itself of the outside auditors' independence.
3. The Committee shall review, in consultation with management and the
independent accountants, the scope of each audit to be made by the
independent accountants.
4. The Company's independent accountants are precluded from providing
consulting services to the Company other than accounting, tax or benefits
related services.
5. The Committee shall obtain confirmation that the independent
accountants will provide the Committee with all communications required of
the independent accountants, including a timely analysis of significant
financial reporting issues.
6. The Committee shall obtain confirmation that the independent
accountants will be available to the shareholders at the annual meeting and,
upon request, to the Committee and the Board.
C. Responsibilities for Review
1. The Committee shall review any significant findings and
recommendations made by the independent accountants together with
management's responses to them.
2. The Committee shall review with management and the independent
accountants all such matters as they deem appropriate, and as required by
Applicable Rules and Standards, including, but not limited to, the
following:
a) The Company's (including the unconsolidated subsidiaries', if
applicable) annual financial statements and related footnotes;
A-3
b) The independent accountants' audit of and report on the financial
statements;
c) Any material issues raised by management, the independent
accountants or the Chairman of the Committee in his review of the
Company's (including the unconsolidated subsidiaries', if applicable)
interim financial statements, if any, pursuant to paragraph IV.C.4. of
this Charter;
d) Management's significant judgements that have affected the
financial statements, including without limitation, any adjustments
recommended by the independent accountants and management's responses,
including any decision as to whether or not to make any such adjustment;
e) The independent accountants' judgments of: 1) the quality, not
just the acceptability, of the Company's accounting principles as applied
in its financial reporting, 2) the adequacy of the Company's internal
controls and procedures, 3) the clarity of the Company's financial
disclosures, and 4) the degree of aggressiveness or conservatism of the
Company's accounting principles and underlying estimates and other
significant decisions that were made by management and reviewed by the
independent accountants; and
f) Any serious difficulties or significant disagreements with
management or the internal auditing department encountered during the
course of the audit, including any restrictions on the scope of their
work or access to required information.
3. The Committee shall review with management and the internal
auditor(s) and the worldwide director of compliance all such matters as they
deem appropriate, and as required by Applicable Rules and Standards or the
Company's code of conduct (including Compliance Policies), including, but
not limited to, the following:
a) Any significant findings during the year and management's
responses to them.
b) Any serious difficulties the internal auditor(s) or the compliance
department encountered while conducting their audits, including any
restrictions on the scope of his or her (their) work or access to
required information.
c) The audit plan and the compliance audit plan, including each such
plan's scope and any changes or additions the Committee thinks advisable.
d) The level of staffing and qualifications of the internal audit
department and of the compliance department.
e) The Company's independent accountants are precluded from providing
any internal audit services the Company.
4. The Committee or, if the other members of the Committee shall not be
available, the Chairman of the Committee shall meet (in person or by
telephone) with the independent accountants and financial and/or senior
management quarterly to review the interim financial results to be included
in the Company's Quarterly Reports on Form 10-Q prior to their filing with
the SEC and prior to the release of earnings.
5. The Committee shall review with management and the independent
accountants and, as appropriate, the internal auditor(s) any significant
changes in the Company's accounting principles and practices brought to the
attention of the Committee.
6. The Committee shall communicate its decision to the Board of
Directors whether or not to recommend that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
preceding fiscal year for filing with the SEC.
7. The Committee shall review with management and the worldwide director
of compliance the programs and procedures to promote compliance with laws
and regulations, Company policy and the Company's code of conduct (including
Compliance Policies) and amend or recommend to the Board to amend, as
appropriate, Company policy or the Company's code of conduct (including
Compliance Policies) as the Committee determines necessary to ensure their
effectiveness.
A-4
V. CONTINUING EFFECT OF INDEMNIFICATION AND EXCULPATION PROVISIONS OF THE
COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS
The members of the Audit Committee as Directors and, in fulfilling their
responsibilities hereunder, shall continue to be fully covered by the
exculpation and indemnification provisions applicable to the Company's directors
and officers, as set forth in the Company's Articles of Incorporation and Bylaws
and such provisions are adopted by reference herein. Nothing contained herein,
in the Applicable Rules and Standards or in any other document shall abrogate or
supersede the protective exculpation and indemnification provisions set forth in
the Company's Articles of Incorporation and Bylaws.
A-5
Appendix 1
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 23, 2002
The undersigned hereby appoints each of MICHAEL I. SOVERN and WILLIAM
F. RUPRECHT, with full power of substitution, to represent the undersigned at
the annual meeting of shareholders of Sotheby's Holdings, Inc., on Tuesday,
April 23, 2002, at the office of Sotheby's, Inc., 1334 York Avenue, New York,
New York at 10:00 o'clock a.m., 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 judgment 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 Proposals 1 and 2. If no direction Please mark [X]
is given, the shares will be voted for Proposals 1 and 2. your votes as
Such shares will be voted in the proxies' discretion upon such other business indicated in
as may properly come before the meeting. this example
1. Election of Directors
FOR all Nominees WITHHOLD Election by Holders of Class A Limited Voting Common Stock of 01
listed (except as AUTHORITY George S.Blumenthal, 02 Steven B. Dodge, 03 Dr. Henry G. Jarecki,
marked to the to vote for all and 04 Brian S. Posner as directors.
contrary at right) Nominees
[ ] [ ] To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below
-----------------------------------------------------------------
2. Ratification of the appointment of Deloitte &
Touche LLP as independent auditors for 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as name appears hereon and date. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in full partnership name by authorized
person.
________________________________________________________________
Signature
________________________________________________________________
Signature if held jointly
Dated: __________________________________________________, 2002
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 2002 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 your vote is important to us. We look forward to hearing from you.
Appendix 2
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 23, 2002
The undersigned hereby appoints each of MICHAEL I. SOVERN and WILLIAM
F. RUPRECHT, with full power of substitution, to represent the undersigned at
the annual meeting of shareholders of Sotheby's Holdings, Inc., on Tuesday,
April 23, 2002, at the office of Sotheby's, Inc., 1334 York Avenue, New York,
New York, at 10:00 o'clock a.m., 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 judgment 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 Proposals 1 and 2. If no direction Please mark [X]
is given, the shares will be voted for Proposals 1 and 2. Such shares will be your votes as
voted in the proxies' discretion upon such other business as may properly come indicated in
before the meeting. this example
1. Election of Directors
FOR all Nominees WITHHOLD Election by Holders of Class B Common Stock of 01 Lord Black of Crossharbour
listed (except as AUTHORITY PC(C), OC, KCSG, 02 Michael Blakenham, 03 Max M. Fisher, 04 The Marquess of
marked to the to vote for all Hartington, 05 Henry R. Kravis, 06 Jeffrey H. Miro, 07 Sharon Percy Rockefeller,
contrary at right) Nominees 08 William F. Ruprecht, 09 Michael I. Sovern, 10 Robert S. Taubman and 11 Robin
[ ] [ ] Woodhead as directors.
To withhold authority to vote for any individual nominee, write that nominee's
name on the space provided below
---------------------------------------------------------------------------
2. Ratification of the appointment of Deloitte &
Touche LLP as independent auditors for 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Please sign exactly as name appears hereon and date. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in full partnership name by authorized
person.
________________________________________________________________
Signature
________________________________________________________________
Signature if held jointly
Dated: ___________________________________________________, 2002
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 2002 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 your vote is important to us. We look forward to hearing from you.
STATEMENT OF DIFFERENCES
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The British pound sterling sign shall be expressed as.................. 'L'