Sotheby’s tapped Madison Square Garden Company’s CEO Tad Smith on Monday to join the art auction house as its next CEO.
Smith, 49, is succeeding Bill Ruprecht, who announced his retirement in November after 35 years at Sotheby’s. He will begin March 31.
Since 2013, Sotheby’s has been under pressure by activist investor Daniel Loeb, the founder of hedge fund Third Point LLC. Loeb, who previously called the company “an old master painting in desperate need of restoration,” had been pushing for leadership change.
We’ve heard that Loeb is super psyched about Sotheby’s decision to hire Smith.
The view is that this is a real shift for the company going from old school to having a dynamic, young and accomplished brand builder. Smith is also seen as someone who can bring in new energy.
Loeb, who owns a 9.6% stake in Sotheby’s and is on the board, could not be reached for comment.
The board’s decision to hire Smith was unanimous.
One thing that stands out, though, especially to the shorts, is that Smith doesn’t come from the art world. The press release only mentions that he has “a passion for art and collectibles.”
Smith worked at MSG for a year as president and CEO. In that role, he oversaw the company’s strategy and day-to-day operations of MSG Sports, MSG Media and MSG Entertainment. Before that, he worked for Cablevision Systems Corporation, where he most had most recently served as president of Local Media.
In a conference call on Monday morning, Smith said he plans to develop a five-year plan. He didn’t get into much detail, but said that he has a “number of ideas” that he plans to test.
Later on the call, Smith said he plans to immerse himself by meeting with employees, clients and investors so he can understand what Sotheby’s does well and what the company needs to work on.
During the Q&A portion of the call, Smith also laid out his “four key priorities” plan for Sotheby’s (develop and implement a growth strategy, adopt new technologies in the business, allocate capital effectively, and build the processes, people and shape the organisation in a way that reinforce 1-3).
Some investors, though, feel that talk is just talk until shareholders can observe actual improvements — capital being returned, revenue growth, clear improvement in expense discipline, etc. Those investors will be looking at how meaningful and how fast the improvements are.
Shares of Sotheby’s closed up 45 cents, or 1.11%, to end at $US40.98.
Here’s a chart of how the stock has traded since August 2013 when Loeb disclosed his activist stake: