Back to GetFilings.com
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD
FROM TO .
COMMISSION FILE NUMBER 1-9750.
SOTHEBY'S HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN 38-2478409
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
500 NORTH WOODWARD AVENUE, SUITE 100
BLOOMFIELD HILLS, MICHIGAN 48304
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (313) 646-2400
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Class A Limited Voting Common Stock, New York Stock Exchange
$0.10 Par Value London Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIODS THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS) AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES .....X.... NO ..........
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
As of March 11, 1994, the aggregate market value of the 35,295,196 shares of
Class A Limited Voting Common Stock held by non-affiliates of the registrant was
$648,549,000, based upon the closing price ($18 3/8) on the New York Stock
Exchange composite tape on such date. (For this computation, the registrant has
excluded the market value of all shares of its Class A Limited Voting Common
Stock reported as beneficially owned by executive officers and directors of the
registrant; such exclusion shall not be deemed to constitute an admission that
any such person is an "affiliate" of the registrant.) As of March 11, 1994,
there were outstanding 35,580,469 shares of Class A Limited Voting Common Stock
and 20,064,305 shares of Class B Common Stock, freely convertible into
20,064,305 shares of Class A Limited Voting Common Stock. There is no public
market for the registrant's Class B Common Stock, which is held by affiliates
and non-affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual shareholders report for the year ended December 31,
1993 are incorporated by reference into Parts I and II.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PART I
ITEM 1. BUSINESS
General
Sotheby's Holdings, Inc. (together with its subsidiaries, unless the
context otherwise requires, the "Company") is the world's leading fine art
auctioneer, specializing in paintings, jewelry, decorative art and a wide range
of other property. The worldwide auction business is conducted through a
division known as "Sotheby's" and consists of three principal operating units:
Sotheby's North and South America ("Sotheby's, Inc."), Sotheby's Europe and
Sotheby's Asia. In addition to auctioneering, the Company is engaged in two
other lines of business: art-related financing and marketing and brokering
luxury real estate.
The Company believes it is one of the world's leaders in art-related
financing. The Company lends money secured by consigned art to clients in order
to facilitate their bringing property to auction. In addition, a portion of the
Company's loan portfolio consists of loans to collectors, dealers and museums
secured by collections not presently intended for sale.
The Company, through its subsidiary, Sotheby's International Realty, Inc.,
is engaged in marketing and brokering luxury residential real estate.
The Company was incorporated in Michigan in August 1983. In October 1983,
the Company purchased Sotheby Parke Bernet Group Limited, which was then a
publicly held company listed on the International Stock Exchange of the United
Kingdom and the Republic of Ireland Limited (the "London Stock Exchange") and
which, through its predecessors, had been engaged in the auction business since
1744. In 1988, the Company sold shares of Class A Limited Voting Common Stock to
the public. The Class A Limited Voting Common Stock is listed on the New York
Stock Exchange and the London Stock Exchange.
Additional information relating to the Company's business segments and the
geographic areas in which the Company operates appears in Note C to the
Company's Consolidated Financial Statements in the Annual Shareholders Report
for the year ended December 31, 1993 (the "Annual Report"), which is
incorporated herein by reference.
THE AUCTION BUSINESS
Transactions in the world art market are effected through numerous dealers,
the two major auction houses and smaller auction houses and also directly
between collectors. Although dealers and smaller auction firms do not report
sales, the Company believes that dealers account for the majority of the volume
of transactions in the world art market.
The Company and Christies International Plc, a publicly held company in the
United Kingdom ("Christie's"), are the two largest art auction houses in the
world. The Company conducted aggregate auction sales in 1993 of $1.33 billion
(approximately B.P.888 million). Christie's aggregate auction sales in 1993 were
approximately $1.09 billion (B.P.728 million). The auction sales of the next
largest art auction house, Phillips Son & Neale, were approximately $123 million
(B.P.82 million) for the year ended December 31, 1993.
The Company auctions a wide variety of property, including fine art,
jewelry, decorative art and rare books. In an approximate breakdown of 1993
auction sales by type of property, fine art accounted for approximately $589
million, or 44%, of auction sales, decorative art accounted for approximately
$423 million, or 32%, of auction sales and jewelry, rare books and other
property accounted for approximately $313 million, or 24%, of auction sales.
1
Most of the objects auctioned by the Company are unique items, and their
value, therefore, can only be estimated prior to sale. The Company's principal
role as an auctioneer is to identify, evaluate and authenticate works of art
through its international staff of experts, to stimulate purchaser interest
through professional marketing techniques and to match sellers and buyers
through the auction process.
In its role as auctioneer, the Company normally functions as an agent
accepting property on consignment from its selling clients. The Company conducts
its auctions as agent of the consignor, billing the buyer for property
purchased, receiving payment from the buyer and remitting to the consignor the
consignor's portion of the buyer's payments. The Company frequently releases
property sold at auction to buyers, primarily dealers, before the Company
receives payment. In such event, the Company is liable to the seller for the net
sale proceeds even if the Company never receives payment from the buyer.
In addition, on certain occasions, the Company will assure the consignor a
minimum price in connection with the sale of property. The Company must perform
under its assurances only in the event that (a) the property fails to sell at
auction and (b) the consignor prefers to be paid the minimum price rather than
retain ownership of the unsold property. In such event, the Company purchases
the property at the minimum price.
Occasionally, the Company acts as a principal in connection with the sale
of property. For example, the Company acts as a principal through its
participation in Acquavella Modern Art (the "Partnership" or "AMA"), a
partnership consisting of a wholly-owned subsidiary of the Company and
Acquavella Contemporary Art, Inc. ("ACA"). The Company's investment in the
Partnership is the contribution of the inventory acquired through the purchase
of the common stock of the Pierre Matisse Gallery ("Matisse") for $153.1 million
in 1990. The primary purpose of the Partnership is to dispose of the inventory.
According to the terms of the Partnership agreement, each partner has a 50%
interest in the earnings of the Partnership and all cash available for
distribution is initially distributed to the Company until the Company receives
$270,339,390, together with a return equal to the prime rate (as defined).
Thereafter, cash distributions are made on a 50-50 basis. To the extent that the
Partnership requires working capital, the Company has agreed to lend the same to
the Partnership. Any amounts loaned to the Partnership by the Company would bear
interest, compounded monthly, at prime plus 1%. As of December 31, 1993, the
Company had received the $270,339,390 noted above and no amounts had been loaned
to the Partnership or advanced to ACA. Inventory in the amount of $89.1 million
had been sold through December 31, 1993, primarily through private sales. See
Note E to the Consolidated Financial Statements in the Annual Report.
All buyers pay a premium (known as the buyer's premium) to the Company on
auction purchases. Effective January 1, 1993, the buyer's premium in North
America was increased to 15% of the hammer price on all items sold for $50,000
or less, and 15% of the first $50,000 for items sold in excess of that amount
(10% on the remainder). Generally, similar structures were simultaneously
implemented throughout most of the rest of Sotheby's auction operations.
Previously the buyer's premium had been 10% in most locations. A selling
commission, which can vary depending on the sale location, type of seller (for
example, dealers) and the selling price of the property, is charged to the
seller. In situations involving major individual works of art, collections or
collectors, the selling commission tends to be negotiated to a level below that
which otherwise would apply.
The Company's operating revenues are significantly influenced by a number
of factors not within the Company's control, including the overall strength of
the international economy, in particular, the economies of the United States,
the United Kingdom, the major countries of continental Europe and Asia,
principally Japan and Hong Kong; political conditions in various nations; the
presence of export and exchange controls; taxation of sales of auctioned
property; competition and the amount of property being consigned to art auction
houses.
2
The Company's business is seasonal, with peak revenues and operating income
generally occurring in the second and fourth quarters of each year as a result
of the traditional spring and fall art auction seasons. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition--Seasonality" in the Annual Report, which is incorporated herein by
reference.
The Auction Market
Competition in the world art market is intense. A fundamental challenge
facing any auctioneer or dealer is to obtain high quality and valuable property
for sale. The Company's primary auction competitor is Christie's.
The owner of a work of art wishing to sell it has three options: sale or
consignment to, or private brokerage by, an art dealer; consignment to an
auction house; or private sale to a collector or museum without use of an
intermediary. The more valuable the property, the more likely it is that the
owner will consider more than one option and will solicit proposals from more
than one potential purchaser or agent, particularly if the seller is a fiduciary
representing an estate or trust.
A complex array of factors influences the seller's decision. These factors
include: the level of expertise of the dealer or auction house with respect to
the property; a prior relationship between the seller and the firm; the
reputation and historic level of achievement by a firm in attaining high sale
prices in the property's specialized category; the amount of cash offered by a
dealer or other purchaser to purchase the property outright compared with the
estimates given by auction houses; the time that will elapse before the seller
will receive sale proceeds; the desirability of a public auction in order to
achieve the maximum possible price (a particular concern for fiduciary sellers);
the amount of commission proposed by dealers or auction houses to sell a work on
consignment; the cost, style and extent of presale promotion to be undertaken by
a firm; recommendations by third parties consulted by the seller; personal
interaction between the seller and the firm's staff; and the availability and
extent of related services, such as a tax or insurance appraisal and short-term
financing. The Company's ability to obtain high quality and valuable property
for sale depends, in part, on the relationships that certain employees of the
Company, particularly its senior art experts, have established with potential
sellers.
It is not possible to measure the entire world art market or to reach any
conclusions regarding overall competition because dealers and smaller auction
firms do not report sales. Based on the reported sales of the Company and
Christie's during each of the last 10 years, the Company has been and remains
the world leader in auction sales.
Regulation
Regulation of the auction business varies from jurisdiction to
jurisdiction. Such regulations do not impose a material impediment to the
worldwide business of the Company.
In February 1990, certain members of the Assembly of the State of New York,
the jurisdiction where the Company's principal U.S. auctions are held, initiated
an inquiry with respect to the business practices of auction houses, museums and
art dealers, including the Company. In January 1991, and again in 1992 and 1993,
the Assemblymen reintroduced proposed legislation which, if enacted, would
substantially alter the manner in which the Company's auction business in New
York is conducted. To date, no legislation has been enacted by the State of New
York.
3
THE FINANCE BUSINESS
The Company arranges financing secured by works of art and other personal
property owned by its customers. The Company's finance operations are conducted
through its wholly-owned subsidiary, Sotheby's Financial Services, Inc.
The Company generally makes two types of art-related loans: (1) advances to
consignors who are contractually committed, in the near term, to sell property
at auction; and (2) term loans to collectors, museums or dealers secured by
property not intended for sale. The loans are generally made with full recourse
to the borrower. In certain instances, consignor advances are made with recourse
limited to the works of art consigned for sale and pledged as security for the
loan, or with recourse limited to the consigned works and to other works of art
owned by the consignor but not pledged as security. The consignor advance allows
a consignor to receive funds shortly after consignment for an auction that will
occur several weeks or months in the future, while preserving for the benefit of
the consignor the potential of the auction process. The term loan allows the
Company to establish or enhance a mutually beneficial relationship with major
dealers and collectors. Term loans generally have a maturity of one year. The
Company's loans generally are variable rate loans.
The Company reviews its loan portfolio on a quarterly basis. Each loan is
categorized based on the financial status of the borrower and the current
estimated realizable value of collateral securing the loan. When management
believes that the estimated realizable collateral value has fallen below the
principal amount of a loan or when the borrower is in default, the loan becomes
subject to more frequent monitoring. For financial statement purposes, the
Company establishes reserves for certain loans that the Company believes are
under-collateralized and with respect to which the shortfall may not be
collectible from the borrower. With respect to any such loan, the amount of the
applicable reserve is adjusted quarterly to reflect the portion of the loan that
the Company believes may become uncollectible. See Note D to the Consolidated
Financial Statements in the Annual Report.
The Company funds its finance operations through internally generated
funds, through the issuance of U.S. commercial paper and through its bank credit
lines, including its revolving credit facilities. See "Management's Discussion
and Analysis of Results of Operations and Financial Condition--Liquidity and
Capital Resources" and Note G to the Consolidated Financial Statements in the
Annual Report.
Competition
A considerable number of conventional lending sources offer loans at a
lower cost to borrowers than those offered by the Company. However, the Company
believes that, with the exception of Christie's, few other lenders are as
willing to accept works of art as collateral. The Company believes that its
financing alternatives are attractive to clients who wish to obtain liquidity
from their art assets for various reasons, despite the comparatively higher
interest rates charged by the Company.
THE LUXURY REAL ESTATE BUSINESS
Sotheby's International Realty, Inc. ("SIR") was founded in 1976 as an
outgrowth of Sotheby's auction activities and in response to the requests of
major clients to market estates and other real property that required exposure
beyond a local market. SIR responds to the needs of its clients by (a) acting as
an exclusive marketing agent providing services to licensed real estate
brokerage offices and (b) operating its own real estate brokerage offices in
certain locations.
4
Competition
SIR's primary competitors are small, local real estate brokerage firms that
deal exclusively with luxury real estate and the "distinctive property"
divisions of large regional and national real estate firms. Competition in the
luxury real estate business takes many forms, including competition in price,
marketing expertise and the provision of personalized service to sellers and
buyers.
Regulation
The real estate brokerage business is subject to regulation in most
jurisdictions in which SIR operates. Typically, individual real estate brokers
and brokerage firms are subject to licensing requirements. SIR is registered to
conduct business in 34 states and maintains real estate brokerage licenses in 12
states. In other jurisdictions, SIR acts as an exclusive marketing agent
providing services to licensed real estate brokers.
PERSONNEL
At December 31, 1993, the Company had 1,531 employees: 620 located in North
America; 644 in the United Kingdom and 267 in the rest of the world. The
following table provides a breakdown of employees by operational areas as of
December 31, 1993:
OPERATIONAL AREA NUMBER OF EMPLOYEES
- ---------------- --------------------
Auction..................................................... 1,388
Realty...................................................... 56
Other....................................................... 87
-------
Total.................................................. 1,531
-------
-------
The Company regards its relations with its employees as good.
ITEM 2. PROPERTIES
U.S. PROPERTIES
Sotheby's, Inc. and Sotheby's Financial Services, Inc. are headquartered at
1334 York Avenue, New York, New York (the "York Property"). The Company also
leases office and warehouse space in four other locations in the New York City
area, and leases office and exhibition space in several other major cities
throughout the United States, including Los Angeles, San Francisco, Chicago and
Palm Beach.
The Company currently leases the York Property, comprising approximately
160,500 square feet, from an unaffiliated party under a 30-year lease expiring
in 2009, which contains an option to extend the term for an additional 30 years
until July 31, 2039. The lease also grants the Company a right of first refusal
with respect to the sale of the York Property.
York Avenue Development, Inc. ("York"), a wholly-owned subsidiary of
Sotheby's, Inc., has the right to purchase the fee interest in the York Property
by exercising certain options available through January 31, 1999 and during the
months of August 1999, August 2004 and July 2009.
Since 1983, management of the Company has evaluated various alternatives
for the realization of the value of the right to purchase the fee interest in
the York Property. Additionally, the Company has studied how best to satisfy its
demand for additional office and auction space.
5
Under an agreement with Taubman York Avenue Associates, Inc.
("Associates"), Associates has agreed that it will assist York in developing and
financing a new, mixed-use tower (the "New Tower") over the existing four-story
building on the York Property, should a decision be made to proceed with such
development. Sotheby's, Inc. has structured the transaction to isolate the
financial exposure of the Company with respect to development of the New Tower
in one subsidiary, namely, York. A. Alfred Taubman, the Company's Chairman and
largest shareholder, is presently the sole shareholder of Associates. See Note I
to the Consolidated Financial Statements in the Annual Report.
Sotheby's, Inc. also assigned to York its rights and obligations under a
project services agreement dated November 8, 1985 (the "Project Services
Agreement") between Sotheby's, Inc. and The Taubman Company ("TTC"), which is an
affiliate of A. Alfred Taubman. Under the Project Services Agreement, TTC agreed
to develop the New Tower on behalf of Sotheby's, Inc. and to provide
consultation and advice to Sotheby's, Inc. in connection with the development of
the New Tower, should a decision be made to proceed with the development.
SIR leases approximately 10,900 square feet of office space at 980 Madison
Avenue, New York, New York, from unaffiliated parties under leases expiring in
1994 and 2001. SIR also leases satellite office space at a number of locations,
totalling another 11,200 square feet.
OVERSEAS PROPERTIES
The Company's U.K. operations are centered at New Bond Street, London,
where the main salesrooms and administrative offices of Sotheby's (U.K.) are
located. Additional salesrooms are located in proximity to New Bond Street. The
total net usable floor area amounts to approximately 124,000 square feet. The
Company owns or holds long-term leasehold interests in approximately 75% of
these properties by area, the balance being held on leases with remaining terms
of less than 20 years. In addition, 50,000 square feet of warehouse space is
leased at King's House in West London. The Company also owns a country estate in
Sussex where it conducts satellite auctions.
The Company also leases office space in various locations throughout
continental Europe, including Paris, Geneva, Zurich, Amsterdam, Frankfurt,
Munich, Milan and Madrid; in Asia, including Japan and Hong Kong; and in South
America.
In management's opinion, the Company's premises are generally adequate for
the current conduct of its business. However, the Company evaluates, on an
ongoing basis, the adequacy of its premises for the requirements of the present
and future conduct of its business, with particular focus on its major auction
locations.
ITEM 3. LEGAL PROCEEDINGS
The Company becomes involved from time to time in various claims and
lawsuits incidental to the ordinary course of its business. The Company does not
believe that the outcome of any such pending claims or proceedings will have a
material effect upon its business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of 1993.
6
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
AND RELATED SHAREHOLDER MATTERS
Market Information
The principal U.S. market for the Company's Class A Limited Voting Common
Stock, par value $0.10 per share (the "Class A Common Stock"), is the New York
Stock Exchange (symbol: BID). The Class A Common Stock is also traded on the
London Stock Exchange.
The Company also has a Class B Common Stock, par value $0.10 per share,
convertible on a share for share basis into Class A Common Stock. There is no
public market for the Class B Common Stock. Per share cash dividends are equal
for the Class A and Class B Common Stock.
The quarterly price ranges on the New York Stock Exchange of the Class A
Common Stock and dividends per share for 1993 and 1992 are shown in the
following schedules:
1993
---------------------- CASH DIVIDEND
QUARTER ENDED HIGH LOW DECLARED
- --------------------------------------------- ----------- --------- ---------------
March 31..................................... $ 14 1/4 $ 12 1/4 $ .15
June 30...................................... 14 7/8 11 3/8 .15
September 30................................. 13 1/8 10 3/4 .06
December 31.................................. 17 1/4 11 3/4 .06
1992
---------------------- CASH DIVIDEND
QUARTER ENDED HIGH LOW DECLARED
- --------------------------------------------- ----------- --------- ---------------
March 31..................................... $ 15 3/8 $ 10 3/4 $ .15
June 30...................................... 15 5/8 11 3/8 .15
September 30................................. 13 7/8 10 1/4 .15
December 31.................................. 12 3/8 9 5/8 .15
The number of holders of record of the Class A Common Stock as of March 11,
1994 was 1,483. The number of holders of record of the Class B Common Stock as
of March 11, 1994 was 44.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on page 17 of the Annual Report are incorporated
herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
Management's Discussion and Analysis of Results of Operations and Financial
Condition on pages 18 through 23 of the Annual Report is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements on pages 24 through 37 of the Annual
Report are incorporated herein by reference.
The Independent Auditors' Report on page 38 of the Annual Report is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
7
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
All directors of the Company are elected to hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. Officers of the Company are appointed by the Board of Directors and
serve at the discretion of the Board. As of March 25, 1994, the directors and
executive officers of the Company (including certain officers of certain
principal subsidiaries and divisions) are as follows:
NAME AGE PRESENT TITLE
---- --- -------------
A. Alfred Taubman......................... 69 Chairman and Director
Max M. Fisher............................. 85 Vice Chairman and Director
Viscount Blakenham........................ 56 Director
Lord Camoys............................... 53 Director
Walter J. P. Curley....................... 71 Director
The Rt. Hon. The Earl of Gowrie........... 54 Director
Leslie H. Wexner.......................... 56 Director
Michael L. Ainslie........................ 50 President, Chief Executive Officer and Director
George Bailey............................. 40 Managing Director, Sotheby's Europe
Kevin A. Bousquette....................... 36 Senior Vice President and Chief Financial Officer
Diana D. Brooks........................... 43 Director; President and Chief Executive Officer,
Sotheby's
Thomas F. Gannalo......................... 42 Vice President, Controller and Chief Accounting
Officer
Simon de Pury............................. 42 Chairman, Sotheby's Europe
William F. Ruprecht....................... 38 Managing Director, Sotheby's North and South America
R. Julian de la M. Thompson............... 52 Director; Chairman, Sotheby's Asia
Henry Wyndham............................. 40 Chairman, Sotheby's (U.K.)
Mitchell Zuckerman........................ 47 President, Sotheby's Financial Services, Inc.
Mr. Taubman is a private investor. Since 1983, Mr. Taubman has been the
largest shareholder, Chairman and a director of the Company. He is Chairman of
Taubman Centers, Inc., a company engaged in the regional retail shopping center
business. He is also a director of R. H. Macy & Co., Inc., which owns and
operates department stores throughout the United States. In January 1992, R.H.
Macy & Co. filed for bankruptcy protection under Chapter 11 of the U.S.
Bankruptcy Code. He is also Chairman of the Board of Woodward & Lothrop
Holdings, Inc. and a director of Woodward & Lothrop Incorporated, both of which
filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in
January 1994.
Mr. Fisher is a private investor and has been Vice Chairman of the Company
since 1986 and a director of the Company since 1983. He is a director of
Comerica Bank.
Lord Blakenham became a director of the Company in 1987. Since 1961, he has
served in various executive positions with Pearson plc, a British media company
that serves worldwide information, education and entertainment markets and which
has a substantial interest in the three Lazard investment banking firms. He has
been Executive Chairman of Pearson plc since 1983. He is a Managing Director of
Lazard Brothers & Co., Limited, an investment banking firm, and the non-
executive Chairman of MEPC, plc, a commercial real estate investment and
development company.
Lord Camoys became a director of the Company in October 1993. In addition,
he will assume the role of Deputy Chairman of the Company effective April 1,
1994. Since 1989 he has been Deputy Chairman of Barclays de Zoete Wedd Holdings
Limited, the international investment banking arm of
8
Barclays Group. He is a director of Barclays Bank PLC and 3i Group plc, an
investment group, and is Deputy Chairman of National Provident Institution.
Mr. Curley became a director of the Company in April 1993. From 1989 to
March 1993, Mr. Curley served as U.S. Ambassador to France. Prior to 1989, Mr.
Curley was U.S. Ambassador to Ireland, was a partner of J.H. Whitney & Co., and
was a principal in his own private venture capital investment firm, W.J.P.
Curley. Mr. Curley is a director of American Exploration Company, an oil and gas
exploration and development company, Coflexip S.A., a manufacturer of flexible
pipe for the petroleum industry, Fiduciary Trust International, a funds
management firm, and The France Growth Fund, a closed end investment company. He
is also a member of the International Advisory Committee of Compagnie Financiere
de Paribas, an international bank.
Lord Gowrie has been a director of the Company since 1985. He served as
Chairman of Sotheby's Europe from 1992 through 1993. From 1988 to 1991, Lord
Gowrie served as Chairman of Sotheby's (U.K.), which then encompassed the United
Kingdom, Europe, Asia and Australia. Lord Gowrie is a director of the Ladbroke
Group PLC, an entertainment and leisure company.
Mr. Wexner has been a director of the Company since 1983. Since 1963, he
has been President and Chairman of The Limited, Inc., which is one of the
leading women's apparel specialty stores and mail order retailers in the United
States. Mr. Wexner is a director and a member of the Executive Committee of Banc
One Corporation.
Mr. Ainslie has been the President, Chief Executive Officer and a director
of the Company since 1984. Mr. Ainslie has resigned as President and Chief
Executive Officer of the Company effective April 1, 1994. Mr. Ainslie is also
Chairman of SIR.
Mr. Bailey was appointed Managing Director of Sotheby's Europe in January
1994. From 1992 through 1993, he served as director of Business Development,
Sotheby's Europe. From 1987 to 1992, Mr. Bailey was the director of operations,
Sotheby's (U.K.). Mr. Bailey joined Sotheby's in 1979.
Mr. Bousquette has been Senior Vice President and Chief Financial Officer
since April 1993. From 1985 to 1992, Mr. Bousquette was an executive at Kohlberg
Kravis Roberts & Co., L.P., a merchant banking firm, and a limited partner of
KKR Associates, L.P.
Ms. Brooks became President and Chief Executive Officer of Sotheby's, the
Company's worldwide auction business, in March 1993. She became a director of
the Company in 1992. She was named Chief Executive Officer of Sotheby's, Inc. in
1990. In addition, she has been President of Sotheby's, Inc., responsible for
North and South American operations, since 1987. Effective April 1, 1994, Ms.
Brooks has been appointed President and Chief Executive Officer of the Company,
succeeding Mr. Ainslie.
Mr. Gannalo was appointed Vice President and Controller in April 1991, and
was also named Chief Accounting Officer in August 1992. He joined the Company in
1987 as Controller of Sotheby's, Inc.
Mr. de Pury was appointed Chairman of Sotheby's Europe in January 1994. He
served as Deputy Chairman of Sotheby's Europe from 1992 through 1993. From 1988
to 1991, he served as Deputy Chairman of Sotheby's (U.K.), directly responsible
for European development. He joined the Company in 1986 as Managing Director,
Sotheby's International, Inc., responsible for all continental European offices.
Mr. Ruprecht was appointed Executive Vice President and Managing Director
of Sotheby's, Inc. in February 1994. In 1992, he became Director of Marketing
for the Company worldwide, a position he continues to hold. From 1986 to 1992,
he served as director of marketing for Sotheby's, Inc. Mr. Ruprecht joined the
Company in 1980.
9
Mr. Thompson has been a director of the Company since 1983 and became
Chairman of Sotheby's Asia in January 1992, directly responsible for development
in Asia, India and Australia. From 1988 to 1991 he was Deputy Chairman of
Sotheby's (U.K.), directly responsible for development in Asia.
Mr. Wyndham became Chairman of Sotheby's (U.K.) in February 1994. Since
prior to 1989, he was partner of the St. James Art Group, an art dealing
business.
Mr. Zuckerman has been President of Sotheby's Financial Services, Inc.,
since 1988. From June 1986 until 1989, he served as Senior Vice President,
Corporate Development of the Company. From 1984 to 1988, he was Senior Vice
President, Business Development of Sotheby's, Inc.
Based on the Company's review of the filings made by the Company's
directors and executive officers under Section 16 of the Securities and Exchange
Act of 1934, all transactions in and beneficial ownership of the Company's
equity securities were reported in a timely manner, except that Mr. Fisher was
inadvertently three days late in reporting a sale of shares of Class A Common
Stock by a charitable foundation of which he is a director.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth all compensation paid to the Chief Executive
Officer and each of the four most highly compensated executive officers of the
Company during 1993 for each of the last three years.
SUMMARY COMPENSATION TABLE
ALL OTHER
LONG-TERM COMPENSATION
ANNUAL COMPENSATION COMPENSATION (15)
-------------------------------------------------- ------------- ---------------
OTHER ANNUAL STOCK OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (4) COMPENSATION (#)
- ---------------------------- --------- ----------- ----------- ------------- -------------
Michael L. Ainslie 1993 $ 430,000 $ $ 16,800(8) 75,000 19,708
President and Chief 1992 430,000 224,325(9) 26,500
Executive Officer 1991 430,000 101,000 20,250(10) 26,550
Diana D. Brooks 1993 $ 400,000 $ 233,000(5) $ 8,640(11) 250,000 34,250
President and Chief 1992 280,000 255,000(5) 23,000
Executive Officer, 1991 280,000 151,000 44,050
Sotheby's
Roger C. Faxon(1) 1993 $ 300,000 $ 225,000(6) $ 248,739(12) 25,000 25,000
Managing Director, 1992 300,000 200,000(6) 767,187(13) 22,978
Sotheby's Europe 1991 300,000 101,000 18,854(14) 75,000 6,300
Simon de Pury(2) 1993 $ 243,180 $ 190,000(7) $ 100,000 30,469
Chairman, Sotheby's Europe 1992 230,106 80,000 14,000 34,515
1991 222,600 39,000 26,467
Kevin A. Bousquette(3) 1993 $ 239,808 $ 70,000 $ 150,000 7,500
Senior Vice President and 1992
Chief Financial Officer 1991
- ---------------
(1) Mr. Faxon resigned from the Company effective December 31, 1993.
(2) Mr. de Pury served as Deputy Chairman of Sotheby's Europe in 1993. He
assumed the position of Chairman of Sotheby's Europe on January 1, 1994.
(3) Mr. Bousquette joined the Company in March 1993.
(4) The 1993 bonus amounts include cash paid in 1994 in respect of 1993
performance.
(Footnotes continued on following page)
10
(Footnotes continued from preceding page)
(5) The 1993 bonus amount includes a payment of $60,000, representing part of a
special payment awarded to senior officers to reflect the fact that
salaries had been frozen since January 1990, and the 1992 bonus amount
includes a payment of $30,000, representing part of the special payment.
The balance of the special payment will be paid to Ms. Brooks in 1994,
contingent on her continued employment. The 1993 bonus amount also includes
payment of a deferred bonus of $23,000 paid for services rendered in
connection with the acquisition of Matisse and the management of AMA. The
1992 bonus amount also includes payment of a deferred bonus of $75,000 paid
in connection with the acquisition of Matisse and the management of AMA.
(6) The 1993 bonus amount includes a special bonus of $25,000 paid to Mr. Faxon
in 1993 in respect of 1993 performance. The 1992 bonus amount reflects not
only performance-related payments but also inducements to relocate to
London to manage European operations.
(7) The 1993 bonus amount includes a payment of $60,000, representing part of a
special payment awarded to senior officers to reflect the fact that
salaries had been frozen since January 1990. The balance of the special
payment will be paid to Mr. de Pury in 1994, contingent on his continued
employment.
(8) Company car payment.
(9) Includes a company car payment and, in accordance with the terms of Mr.
Ainslie's employment agreement, a payment of $207,525 in respect of stock
options exercised in 1992 ($0.15 per share).
(10) Company car payment.
(11) Company car payment.
(12) This amount includes a housing allowance ($78,156), a utilities allowance,
a company car payment and moving expenses. This amount also includes a
$150,000 severance payment paid to Mr. Faxon in connection with his
resignation from the Company effective December 31, 1993. This amount does
not include amounts which will be paid to Mr. Faxon in respect of 1993 to
compensate him for the increased income tax for which he was liable as a
result of his relocation to London in 1992, which amounts have not yet been
finally calculated.
(13) Mr. Faxon relocated to London at the Company's request. This amount
reflects reimbursement for losses associated with a sale, controlled by the
Company, of his U.S. residence ($455,898) and the related tax reimbursement
($204,824), moving expenses, a housing allowance and an annual company car
payment. This amount does not include amounts which will be paid to Mr.
Faxon in respect of 1992 to compensate him for the increased income tax for
which he was liable as a result of his relocation to London, which amounts
have not yet been finally calculated.
(14) Moving expense associated with Mr. Faxon's relocation from Los Angeles to
New York.
(15) The amounts disclosed in this column for 1993 include:
(a) Company contributions of the following amounts under the Retirement
Savings Plan: $11,792 on behalf of Mr. Ainslie, $11,792 on behalf of
Ms. Brooks, $11,467 on behalf of Mr. Faxon and $5,171 on behalf of Mr.
Bousquette;
(b) Company contributions of the following amounts under benefit
equalization agreements: $7,916 on behalf of Mr. Ainslie, $22,458 on
behalf of Ms. Brooks, $13,533 on behalf of Mr. Faxon and $2,329 on
behalf of Mr. Bousquette; and
(c) a Company contribution under the Switzerland plan of $30,469 on behalf
of Mr. de Pury.
Stock Option Plan
In 1987, the Company instituted the 1987 Stock Option Plan, including its
U.K. Sub-Plan (the "Stock Option Plan" or "Plan"), for employees of the Company.
The purposes of the Plan are to provide employees with added incentives to
continue in the employ of the Company, to encourage proprietary interest in the
Company through the acquisition of its stock and to attract new employees with
outstanding qualifications. Options may be granted under the Plan until July 27,
1997, and the Plan expires for all purposes on July 27, 2007. The Board of
Directors may suspend, discontinue, revise or amend the Plan at any time with
respect to shares not subject to options at the time of the amendment,
11
except that, without the approval of the Company's shareholders, no such
revision or amendment may increase the number of shares subject to the Plan,
change the eligibility requirements or remove the restrictions regarding
amendment of the Plan.
The Audit and Compensation Committee of the Company's Board of Directors
(the "Committee"), in its discretion (based on each employee's performance and
expected future contribution to the Company), selects the employees eligible to
participate in the Plan. Under the U.K. Sub-Plan, options may only be granted to
a director or employee of the Company, or any of its subsidiaries, who is a U.K.
resident, and only if the resident devotes not less than 25 hours per week, in
the case of a director, or 20 hours per week, in the case of an employee who is
not a director, to his or her duties, subject to certain other limitations.
The Committee, in its discretion, determines the number of options to be
granted to an employee. Under the U.K. Sub-Plan, a U.K. resident may not receive
options for shares under the U.K. Sub-Plan with aggregate exercise prices
(converted to their pound sterling equivalent at the date of grant) exceeding
the greater of B.P.100,000 or four times relevant compensation during the
current or preceding year.
Only options on shares of Class B Common Stock can be granted under the
Plan, although, under certain circumstances, optionees may receive shares of
Class A Common Stock upon exercise. In July 1988, Rule 19c-4 (the "Rule")
adopted under the Securities Exchange Act of 1934 became effective. Although the
Rule has been vacated by a federal appellate court, the Rule has been adopted by
the New York Stock Exchange ("NYSE") as a NYSE rule. The NYSE's version of the
Rule, as currently interpreted and applied, prevents the continued listing of
the Class A Common Stock on the NYSE if the Company issues any additional shares
of Class B Common Stock other than in satisfaction of options granted under the
Plan prior to the Rule's effective date. The Company has received permission
from the NYSE to continue to grant options under the Plan subject to the
condition that each prospective optionee must agree that if the Company cannot
issue shares of Class B Common Stock to such optionee upon exercise and maintain
the listing of the Class A Common Stock on the NYSE, the optionee will receive
shares of Class A Common Stock instead of shares of Class B Common Stock. The
NYSE has proposed a change to its rules which would allow the Company to issue
additional shares of Class B Common Stock.
An optionee may exercise an option to the extent of one-third of the number
of shares subject to the option in each of the fourth, fifth and sixth years of
employment after the date of the grant of the option on a cumulative basis,
although the Committee has the discretion to accelerate the exercise dates of
options to a date, in the case of an option granted under the U.K. Sub-Plan
subsequent to July 3, 1991, not earlier than the third anniversary of the date
of grant and, in the case of any other option, not earlier than six months and
one day after the relevant date of grant.
Effective October 1992, the Committee approved a change in vesting for all
subsequent grants, such that an optionee, except those subject to the U.K.
Sub-Plan, may exercise an option to the extent of one-fifth of the number of
shares subject to the option in each of the second, third, fourth, fifth and
sixth years of employment after the date of the grant on a cumulative basis.
Under the U.K. Sub-Plan, optionees may exercise an option to the extent of
three-fifths of the number of shares subject to the option in the fourth year
and one-fifth in each of the fifth and sixth years of employment after the grant
date.
If an optionee terminates employment more than three years after the date
of grant for reasons other than death, disability, retirement or cause, the
option may be exercised to the extent it is vested and has not previously been
exercised at the time of termination of employment. If the termination is for
cause, which is defined as gross misconduct or unacceptable behavior as
determined by the Committee, the right to exercise the option is forfeited. If
the termination of employment is because of death, disability or retirement, the
option may be exercised in full. There are certain limitations on the timing
12
of exercise of the option after termination of employment. No option may be
exercised after ten years from the date of the initial grant.
Under the current provisions of the Internal Revenue Code of 1986, an
optionee who is a U.S. citizen or resident will not realize any income for
federal income tax purposes upon the grant of an option. The optionee will,
however, receive compensation income at the time of the exercise of the option
in the amount of the excess of the fair market value of the shares at the time
of exercise over the exercise price. In the United States, the Company will
receive a deduction at that time in the amount that the U.S. optionee includes
in income.
The aggregate number of shares of stock that may be issued upon exercise of
options is limited to 16,507,076 shares of authorized but unissued or reacquired
Class B Common Stock. As of December 31, 1993, options for 5,229,997 shares of
Class B Common Stock held by 410 employees of the Company were outstanding. Of
this total, options for 1,099,166 shares were held by executive officers of the
Company. At December 31, 1993, options for 4,809,433 shares of Class B Common
Stock were available for grant under the Plan.
The limitation on the number of shares, the number of shares covered by
each option and the exercise price for such shares will be adjusted
proportionately in the event of any increase or decrease in the number of issued
shares of Class A Common Stock or Class B Common Stock or both resulting from a
subdivision or consolidation of such shares, any payment of a stock dividend,
any reorganization, consolidation, dissolution, liquidation, merger, exchange of
shares, recapitalization, stock split, reverse stock split or any other increase
or decrease, without consideration, in the number of issued shares of either
Class A Common Stock or Class B Common Stock.
Participants in the Plan receive an annual statement regarding their option
activity. This statement includes date of grant, number of options granted,
exercise price and vesting dates. Participants also receive all information sent
to shareholders generally, including annual and quarterly reports and proxy
statements.
The exercise price of an option is determined by the Committee at the date
of grant, and may not be less than the fair market value of the underlying
shares as of the date of grant.
The following table sets forth information regarding option grants to the
named executive officers in 1993:
OPTION GRANTS IN 1993
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
----------------------------------------------------- --------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(1) 1993 SHARE DATE 5% 10%
- ----------------------------------- ----------- --------------- ----------- ---------- ------------ ------------
Michael L. Ainslie................. 75,000 3.19% $ 12.50 6/15/03 $ 589,589 $ 1,494,134
Kevin A. Bousquette................ 150,000 6.38% $ 12.50 6/15/03 $ 1,179,177 $ 2,988,267
Diana D. Brooks.................... 125,000 5.32% $ 13.38 1/26/03 $ 1,051,433 $ 2,664,538
Diana D. Brooks.................... 125,000 5.32% $ 12.50 6/15/03 $ 982,648 $ 2,490,223
Roger C. Faxon..................... 25,000 1.06% $ 13.38 3/31/94 $ 16,719 $ 33,438
Simon de Pury...................... 100,000 4.26% $ 13.38 1/26/03 $ 841,147 $ 2,131,631
- ---------------
(1) Each named executive officer's 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 anniversary of the date
of grant. None of the options granted to Mr. Faxon will vest before March
31, 1994, when such options expire.
(Footnotes continued on following page)
13
(Footnotes continued from preceding page)
(2) The actual value, if any, that may be realized by each individual will
depend on the closing price of the Class A Common Stock on the NYSE on the
day preceding the exercise date. The option term for these option grants is
ten years. 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.
The following table provides information on option exercises in 1993 by the
named executive officers and year-end option values for unexercised options held
by the named executive officers:
AGGREGATED OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT YEAR-END YEAR-END
ON EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ----------- ------------- ----------- -------------- ----------- --------------
Michael L. Ainslie......... 0 $ 0 0 75,000 $ 0 $ 215,625
Kevin A. Bousquette........ 0 $ 0 0 150,000 $ 0 $ 431,250
Diana D. Brooks............ 0 $ 0 42,000 286,000 $ 102,000 $ 660,375
Roger C. Faxon............. 0 $ 0 25,000 150,000 $ 0 $ 415,625
Simon de Pury.............. 0 $ 0 13,334 120,666 $ 42,502 $ 250,997
See Note J to the Consolidated Financial Statements in the Annual Report
for additional information about the Plan.
Retirement Savings Plan
The Company has a Retirement Savings Plan (the "Retirement Savings Plan")
for employees of the Company and its subsidiaries in the United States.
Effective May 1, 1993, there was a change in the eligibility requirements for
participation, such that employees are eligible to participate in the Retirement
Savings Plan as of the first day of the month following completion of a 90-day
waiting period commencing on the date of employment. Prior to May 1, 1993,
employees who had completed 1,000 hours of service during the 12-month period
commencing on the date of employment or during any calendar year thereafter were
eligible to participate in the Retirement Savings Plan as of the first day of
the month following completion of the service requirement.
The Company contributes 2% of each participant's compensation to the
Retirement Savings Plan on behalf of the participant. In addition, participants
may elect to save between 2% and 12% of their compensation, up to the maximum
amount allowable under the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder, on a pre-tax basis. Participants also
may elect to make after-tax contributions, subject to certain limits. Employee
pre-tax savings are matched by a Company contribution of up to an additional 3%
of the participant's compensation. The total amount of contributions for each
participant is subject to certain limitations under the Code, and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
For the purpose of determining contributions, compensation is defined as
aggregate earnings, including basic compensation, commissions, overtime,
premiums, sickness (other than long-term disability) and vacation pay and cash
bonuses, but specifically excludes other incentive compensation, severance pay,
contributions to other welfare and pension plans (except other plans qualifying
under Section 401(k) of the Code) and reimbursement of expenses.
Employees may direct the apportionment of their account balances between
four funds: a fixed income fund, an equity fund, a balanced fund and, subject to
certain limitations, a Company stock fund. Income taxes on savings,
contributions (other than after-tax contributions) and investment earnings are
deferred until benefits are paid out to the employee upon retirement, death or
earlier termination of employment or withdrawal. The receipt of benefits
attributable to the Company's contributions
14
(including the 2% Company contribution and matching contributions) is subject to
vesting and forfeiture provisions of the plan; other amounts are fully vested at
all times.
Participants may borrow from their Retirement Savings Plan accounts for any
purpose. The maximum amount which may be borrowed by any participant is the
lesser of $50,000 or one-half of the participant's vested account balance in the
plan.
Company contributions to the Retirement Savings Plan made on behalf of the
named executive officers have been included in the Summary Compensation Table.
Switzerland Plan
In accordance with the requirements of Swiss law, Sotheby's AG, the
Company's Swiss operating subsidiary, established in 1985 a fully insured
pension plan for its full-time employees whose salaries exceed 22,560 Swiss
francs ("SF"). There are two elements of the plan: a savings element (the
"Savings Plan") and a risk element (the "Risk Plan"). Employees are eligible to
join the Savings Plan as of the January 1 following attainment of age 24 and the
Risk Plan as of the January 1 following attainment of age 17.
Under the Savings Plan, an individual retirement account is established for
each participating employee. Each year, the account is credited with a
percentage of the employee's adjusted salary, which is the employee's annual
salary including bonuses and other allowances reduced by SF 22,560, with a
minimum adjusted salary of SF 2,820. Longer serving employees were made eligible
for additional Company contributions in respect of service with the Company
prior to 1985 and in respect of salary in excess of SF 112,800 for which no
contributions had been made prior to 1993. The percentage of adjusted salary
credited to the account ranges from 7% to 30%, depending on the employees' age,
sex and past service. The Company pays between 66% and 80% of this total
contribution, with the remainder paid by employees. The account is also credited
with interest at a rate fixed by the Federal Council.
At retirement age, which is age 65 for men and age 62 for women, the
employee's account is converted to a life annuity, with provisions for
contingent widow's pension of 60% of the retiree's benefit and immediate
pensions of 20% of the retiree's benefit for certain children of the retiree.
Participants may elect to receive their retirement benefits in a lump sum in
lieu of the annuity.
The Risk Plan provides disability and death benefits to employees, their
widows and certain of their children. Benefits are generally a percentage of the
amount credited to the employee's account, excluding interest. Benefits under
the Risk Plan are funded by insurance premiums, all of which are paid by the
Company.
Mr. de Pury is the only named executive officer who participates in the
plan. A total of SF 47,227 ($30,469) contributed in 1993 by the Company on
behalf of Mr. de Pury is included in the Summary Compensation Table.
Bonuses
The Company's officers are eligible to receive incentive bonuses. Bonuses
are recommended by management and approved by the Committee. Actual awards are a
function of the Company's after-tax worldwide profit and the individual's
performance.
In view of a 36-month salary freeze for senior officers of the Company,
supplemental compensation was approved in 1992 for selected officers as an
alternative to market-based salary adjustments. Once granted, these awards are
paid in four semiannual payments and are contingent upon continued employment.
Bonuses awarded to the named executives have been included in the Summary
Compensation Table.
15
Benefit Equalization Agreements
The total annual contributions to the Company's Retirement Savings Plan are
subject to certain limitations under the Code and ERISA for each participant.
Officers (generally senior vice presidents and above) of the Company and its
U.S. subsidiaries who are affected by such limitations may enter into agreements
pursuant to which their salaries will be reduced, and the Company will maintain
accounts on their behalf, in the amount of the difference between (i) the
aggregate amount of contributions that would have been made to the Retirement
Savings Plan in the absence of the limitations, and (ii) the aggregate amount of
contributions actually made to the plan. Amounts deferred in 1993 and subsequent
years will be credited with the same earnings yield credited to contributions
made to the fixed income fund maintained under the Retirement Savings Plan.
Benefits under these unfunded agreements will be paid at the same time and in
the same manner as benefits under the Company's Retirement Savings Plan. Amounts
deferred by named executives of the Company pursuant to benefit equalization
agreements in 1993 have been included in the Summary Compensation Table.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an executive officer of the Company
receives an annual fee of $15,000, plus a fee of $1,000 for each Board meeting
attended by such director, and a fee of $500 ($1,000 for the chairman of the
committee) for each committee meeting attended by such director, in addition to
reimbursement of expenses.
16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A and Class B Common Stock as of March 11, 1994
by its directors, named executive officers and 5% shareholders. The Company has
relied upon information supplied by its officers, directors 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, 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 officer,
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 and/or conversion.
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 NUMBER PERCENT NUMBER PERCENT
OFFICERS AND 5% SHAREHOLDERS OF SHARES OF CLASS OF SHARES OF CLASS
- -------------------------------------------------- ------------- ----------- ------------- -----------
A. Alfred Taubman................................. 13,199,616(1)(2) 27.1% 13,199,516(2) 65.8%
200 E. Long Lake Road
Bloomfield Hills, MI 48304
Max M. Fisher..................................... 1,932,821(3) 5.2% 1,840,921(4) 9.2%
2700 Fisher Building
Detroit, MI 48202
Leslie H. Wexner.................................. 1,140,216(5) 3.1% 993,316 5.0%
41 South High Street
Suite 3710
Columbus, OH 43215-6190
Lord Camoys....................................... 7,500 *
Barclays de Zoete Wedd
Ebbgate House, 2 Swan Lake
London EC4R 3TS, England
Michael L. Ainslie................................ 700,200(6) 1.9% 700,000 3.5%
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
Diana D. Brooks................................... 193,000(7) * 193,000(8) *
Sotheby's, Inc.
1334 York Avenue
New York, New York 10021
The Rt. Hon.
The Earl of Gowrie................................ 28,000(9) * 28,000(10) *
Sotheby's
34-35 New Bond Street
London W1 2AA England
R. Julian de la M. Thompson....................... 124,500(11) * 124,500(12) *
Sotheby's
34-35 New Bond Street
London W1 2AA England
Kevin A. Bousquette............................... 7,700 *
Sotheby's, Inc.
1334 York Avenue
New York, NY 10021
17
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- --------------------------
DIRECTORS, EXECUTIVE NUMBER PERCENT NUMBER PERCENT
OFFICERS AND 5% SHAREHOLDERS OF SHARES OF CLASS OF SHARES OF CLASS
- -------------------------------------------------- ------------- ----------- ------------- -----------
Simon de Pury..................................... 55,000(13) * 40,000(14) *
Sotheby's
13 Quai du Mont Blanc
CH-1201 Geneva, Switz.
Fidelity Management & Research Co................. 5,157,000 14.5%
82 Devonshire Street
Boston, MA 02109
GeoCapital Corporation............................ 2,298,850(15) 6.5%
767 Fifth Avenue
New York, NY 10153
State of Wisconsin Investment Board............... 2,407,300 6.8%
P.O. Box 7842
Madison, WI 53707
Directors and Executive Officers.................. 17,545,855(16) 33.2% 17,260,582(16) 84.5%(16)
as a Group
- ---------------
* Represents less than 1%.
(1) Mr. Taubman owns 100 shares of Class A Common Stock. This figure
includes 9,730,886 shares of Class A Common Stock that he has, or is deemed to
have, the right to acquire by converting shares of Class B Common Stock that Mr.
Taubman owns as trustee of his grantor trust and also includes 3,468,630 shares
of Class A Common Stock that he has the right to acquire by converting shares of
Class B Common Stock owned by Taubman Investments Limited Partnership, as to
which he has sole voting and dispositive control.
(2) This figure includes 3,468,630 shares of Class B Common Stock owned by
Taubman Investments Limited Partnership, as to which Mr. Taubman has sole voting
and dispositive control, and excludes shares owned by Judith Taubman. Mr.
Taubman disclaims beneficial ownership of the 792,830 shares of Class B Common
Stock owned by Judith Taubman, his wife. Mr. Taubman and Taubman Investments
Limited Partnership have pledged all of their shares of Class B Common Stock to
certain banks. If the banks were to foreclose on the pledges, a change in
control of the Company could take place under certain circumstances. In the
opinion of Mr. Taubman, the chances of a foreclosure on the pledges are remote.
(3) This figure includes 1,840,921 shares of Class A Common Stock that Mr.
Fisher has, or is deemed to have, the right to acquire by converting shares of
Class B Common Stock. See footnote 4 below. This figure also includes 91,900
shares of Class A Common Stock owned by a charitable foundation of which Mr.
Fisher is a director. Mr. Fisher disclaims beneficial ownership of all shares of
Class A Common Stock other than 1,830,161 shares relating to the shares of Class
B Common Stock held by him as trustee of his grantor trust. See footnote 4.
(4) This figure includes 10,760 shares of Class B Common Stock owned by
various family trusts of which Mr. Fisher is a co-trustee and 1,830,161 shares
of Class B Common Stock that Mr. Fisher holds as trustee of his grantor trust.
This figure excludes 668,624 shares owned by Martinique Hotel, Inc., a
corporation owned by Mr. Fisher's family. This figure also excludes 56,519
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.
(5) Mr. Wexner owns 146,900 shares of Class A Common Stock. This figure
includes 993,316 shares of Class A Common Stock that he has the right to acquire
by converting shares of Class B Common Stock.
(6) This figure includes 200 shares of Class A Common Stock owned by a
trust for Mr. Ainslie's son, of which Mr. Ainslie is a trustee, Mr. Ainslie
disclaims beneficial ownership of such shares. This figure also includes 700,000
shares of Class A Common Stock that he has the right to acquire by converting
shares of Class B Common Stock.
(7) This figure includes 100,000 shares of Class A Common Stock that Ms.
Brooks has the right to acquire by converting shares of Class B Common Stock and
93,000 shares of Class A Common Stock
(Footnotes continued on following page)
18
(Footnotes continued from preceding page)
that she has the right to acquire by exercising options for shares of Class B
Common Stock and converting those shares.
(8) This figure includes 93,000 shares of Class B Common Stock that Ms.
Brooks has the right to acquire by exercising options.
(9) This figure represents shares of Class A Common Stock that Lord Gowrie
has the right to acquire by exercising options for shares of Class B Common
Stock and converting those shares.
(10) This figure represents shares of Class B Common Stock that Lord Gowrie
has the right to acquire by exercising options.
(11) This figure includes 75,000 shares of Class A Common Stock that Mr.
Thompson has the right to acquire by converting shares of Class B Common Stock
and 49,500 shares of Class A Common Stock that he has the right to acquire by
exercising options for Class B Common Stock and converting those shares.
(12) This figure includes 49,500 shares of Class B Common Stock that Mr.
Thompson has the right to acquire by exercising options.
(13) Mr. de Pury owns 15,000 shares of Class A Common Stock. This figure
includes 40,000 shares of Class A Common Stock that Mr. de Pury has the right to
acquire by exercising options for shares of Class B Common Stock and converting
those shares.
(14) This figure represents shares of Class B Common Stock that Mr. de Pury
has the right to acquire by exercising options.
(15) This figure includes shares held in third parties' accounts over which
GeoCapital Corporation has investment discretion.
(16) See above notes.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Loan Programs
The Company has two loan programs that are available to certain U.S.
employees at the President's discretion. The first is a mortgage guarantee
program, whereby the employee borrows from a bank on a demand basis and pays an
annual interest rate equal to the prime rate. All of the repayment obligations
of the employee are guaranteed by the Company. Under the second program, the
Company lends money to certain employees to purchase a residence under term
notes bearing interest at an annual interest rate equal to the prime rate minus
1 - 2%. This program is available to employees at the Company's discretion. At
March 9, 1994, Mitchell Zuckerman, an executive officer, had borrowings
outstanding under the first program of $14,167 and borrowings outstanding under
the second program of $186,666. At March 9, 1994, William Ruprecht, another
executive officer, had borrowings outstanding under the first program of $68,333
and borrowings outstanding under the second program of $168,333.
In October 1993, Sotheby's (U.K.), a subsidiary of the Company, entered
into an agreement with Henry Wyndham Fine Art Ltd. ("Fine Art"), an art dealing
business in which Henry Wyndham, who has since become Chairman of Sotheby's
(U.K.), has a substantial equity interest. Under the agreement, Sotheby's (U.K.)
agreed to purchase from Fine Art various paintings outright, as well as Fine
Art's interest in another painting. Under the terms of the agreement, Sotheby's
(U.K.) paid Fine Art B.P.218,000 ($327,654) for a group of paintings in December
1993 and B.P.150,000 ($225,450) for a portion of its interest in another
painting in February 1994. Fine Art has the right to sell its remaining interest
in such painting to Sotheby's (U.K.) in February 1995 for B.P.180,000
($270,540). The original cost to Fine Art of its interest in such painting was
approximately B.P.300,000 ($450,900). However, the fair market value of such
interest is deemed by the Company to be in excess of the purchase price. The
various purchase prices were determined by the Company with reference to recent
sale prices of comparable property.
In addition to the above-described transactions, the Company has entered
into agreements with its largest shareholder and certain of his affiliates
regarding the proposed development of the York Property. See "Properties" and
Note I to the Consolidated Financial Statements in the Annual Report.
19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) and (2)--The response to this portion of Item 14 is submitted as a
separate section of this report.
(3) Listing of Exhibits--The information required by this item is included
in the response to Item 14(c).
(b) Reports on Form 8-K filed in the fourth quarter of 1993--None
(c) Exhibits--The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules--The response to this portion of Item 14
is submitted as a separate section of this report.
20
ANNUAL REPORT ON FORM 10-K
ITEM 14(A) (1) AND (2) AND (D)
YEAR ENDED DECEMBER 31, 1993
SOTHEBY'S HOLDINGS, INC.
BLOOMFIELD HILLS, MICHIGAN
21
FORM 10-K--ITEM 14(A) (1) AND (2)
SOTHEBY'S HOLDINGS, INC., AND SUBSIDIARIES
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of Sotheby's Holdings, Inc. and
subsidiaries, included in the annual report of the registrant to its
shareholders for the year ended December 31, 1993, are incorporated by reference
in Item 8:
Consolidated Balance Sheets--December 31, 1993 and 1992
Consolidated Statements of Income--Years ended December 31, 1993, 1992 and 1991
Consolidated Statement of Changes in Shareholders' Equity--Years ended December
31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows--Years ended December 31, 1993, 1992 and
1991
Notes to Consolidated Financial Statements--December 31, 1993
The following consolidated financial statement schedules of Sotheby's Holdings,
Inc. and subsidiaries and the Independent Auditors' Report are included in Item
14(d):
Independent Auditors' Report on Financial Statement Schedules
Schedule VIII--Valuation and Qualifying Accounts
Schedule IX--Short-Term Borrowings
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are not applicable, and therefore have been omitted.
22
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
Sotheby's Holdings, Inc.:
We have audited the consolidated financial statements of Sotheby's Holdings,
Inc. and subsidiaries as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993 and have issued our report
thereon dated February 28, 1994; such consolidated financial statements and
report are included in your 1993 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the consolidated
financial statement schedules of Sotheby's Holdings, Inc. and subsidiaries,
listed in Item 14. These consolidated financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such consolidated financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE
New York, New York
February 28, 1994
23
SCHEDULE VIII
SOTHEBY'S HOLDINGS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------ ----------- ----------- ----------- ----------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COST AND AT END
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------------------ ----------- ----------- ----------- ----------
(THOUSANDS OF DOLLARS)
Valuation reserve deducted in the balance sheet
from the asset to which it applies:
Accounts and notes receivable:
1993 Allowance for doubtful accounts................... $ 12,930 $ 5,499 $ 7,833 $ 10,596
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1992 Allowance for doubtful accounts................... $ 13,498 $ 3,836 $ 4,404 $ 12,930
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1991 Allowance for doubtful accounts................... $ 13,745 $ 5,787 $ 6,034 $ 13,498
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Inventory:
1993 Realizable value allowance........................ $ 18,637 $ 4,055 $ 8,358 $ 14,334
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1992 Realizable value allowance........................ $ 26,982 $ 2,311 $ 10,656 $ 18,637
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
1991 Realizable value allowance........................ $ 26,995 $ 4,975 $ 4,988 $ 26,982
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
24
SCHEDULE IX
SOTHEBY'S HOLDINGS, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ------------------------------------------------ --------- ----------- ----------- --------------- -------------
MAXIMUM WEIGHTED
WEIGHTED AMOUNT AVERAGE AMOUNT AVERAGE
BALANCE AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
CATEGORY OF AGGREGATE AT END INTEREST DURING THE DURING THE DURING THE
SHORT-TERM BORROWINGS OF PERIOD RATE PERIOD PERIOD PERIOD
- ------------------------------------------------ --------- ----------- ----------- --------------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
1993:
Revolving Credit Facilities................... -- -- 10,000 386 3.70
Other Bank Lines of Credit.................... 1,238 10.84 1,238 708 13.70
Overdrafts.................................... -- -- 97 49 10.50
1992:
Revolving Credit Facilities................... -- -- 10,500 447 4.42
Other Bank Lines of Credit.................... 1,293 9.39 15,075 8,487 10.63
Overdrafts.................................... 97 10.50 1,120 608 11.52
1991:
Euro Commercial Paper Borrowings.............. -- -- 37,000 4,389 6.12
Revolving Credit Facilities................... -- -- 59,500 5,359 6.32
Other Bank Lines of Credit.................... 11,051 10.19 45,720 31,578 11.54
Overdrafts.................................... 1,120 11.61 2,943 2,031 9.45
25
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SOTHEBY'S HOLDINGS, INC.
BY: /S/ MICHAEL L. AINSLIE
--------------------------
MICHAEL L. AINSLIE
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- --------------------
Chairman of the Board
* and Director March 28, 1994
--------------------------
A. ALFRED TAUBMAN
* Vice Chairman and Director March 28, 1994
--------------------------
MAX M. FISHER
President, Chief Executive
/s/MICHAEL L. AINSLIE Officer and Director March 28, 1994
--------------------------
MICHAEL L. AINSLIE
Senior Vice President and
/s/KEVIN A. BOUSQUETTE Chief Financial Officer March 28, 1994
--------------------------
KEVIN A. BOUSQUETTE
* Director March 28, 1994
--------------------------
VISCOUNT BLAKENHAM
* Director March 28, 1994
--------------------------
LORD CAMOYS
* Director March 28, 1994
--------------------------
WALTER J.P. CURLEY
* Director March 28, 1994
--------------------------
THE RT. HON. THE EARL OF GOWRIE
* Director March 28, 1994
--------------------------
LESLIE H. WEXNER
* Director March 28, 1994
--------------------------
DIANA D. BROOKS
* Director March 28, 1994
--------------------------
R. JULIAN DE LA M. THOMPSON
Vice President, Controller and
/s/ THOMAS F. GANNALO Chief Accounting Officer March 28, 1994
--------------------------
THOMAS F. GANNALO
*By: /s/ KEVIN A. BOUSQUETTE March 28, 1994
------------------------
KEVIN A. BOUSQUETTE
AS ATTORNEY-IN-FACT
26
ITEM 14(C) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
3(a) --Amended and Restated Articles of Incorporation of Sotheby's Holdings, Inc., as amended,
incorporated herein by reference to Exhibit 4(b) to Registration Statement No. 33-26008.
3(b) --Restated By-Laws of Sotheby's Holdings, Inc., as amended, incorporated herein by reference
to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the year ended December
31, 1988 (the "1988 Form 10-K").
4 --See Exhibits 3(a) and 3(b).
10(a) --Amendment No. 2 and Second Restatement, effective as of February 15, 1988 (with exhibits),
to Revolving Credit Agreement, dated as of October 23, 1986, among Sotheby's, Oatshare
Limited, Sotheby's, Inc., Sotheby's Holdings, Inc., Sotheby's Financial Services, Inc.,
Sotheby's International Realty, Inc., The Chase Manhattan Bank (National Association),
Chemical Bank, Manufacturers Hanover Trust Company and National Bank of Detroit (the
"Restated Revolving Credit Agreement"), incorporated herein by reference to Exhibit 10(cc)
to Registration Statement No. 33-17667, Amendment No 1, dated as of June 30, 1988, to the
Restated Revolving Credit Agreement, incorporated herein by reference to Exhibit 10(a) to
the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (the "1989
Form 10-K"), Second Amendment, dated as of March 30, 1990, to the Restated Revolving
Credit Agreement, incorporated herein by reference to Exhibit 10(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1990 (the "1990 Form 10-K") and
Third Amendment, dated November 1, 1991, filed herewith.
10(b) --Issuing and Paying Agency Agreement, dated February 15, 1989, between Sotheby's Inc. and
the Chase Manhattan Bank, N.A. relating to the issuance of short-term notes ("U.S. Notes")
in the U.S. Commercial Paper market, incorporated herein by reference to Exhibit 10(g) to
the 1988 Form 10-K.
10(c) --U.S. Commercial Paper Dealer Agreement, dated February 15, 1989, between Sotheby's, Inc.
and Chase Securities, Inc. relating to the issuance of the U.S. Notes, incorporated herein
by reference to Exhibit 10(h) to the 1988 Form 10-K.
10(d) --U.S. Commercial Paper Dealer Agreement, dated February 15, 1989, between Sotheby's, Inc.
and Merrill Lynch Money Markets, Inc. relating to the issuance of the U.S. Notes,
incorporated herein by reference to the Exhibit 10(i) of the 1988 Form 10-K.
10(e) --Letter Agreement, dated September 6, 1988, between Sotheby's, Inc. and John L. Marion
setting forth certain terms and agreements of his employment, incorporated herein by
reference to Exhibit 10(m) to the 1988 Form 10-K.
10(f) --Lease, dated as of July 25, 1979, among The Benenson Capital Company, Lawrence A.
Benenson, Raymond E. Benenson (collectively, "Benenson") to Sotheby Parke Bernet Inc., and
amendments thereto, all relating to 1334 York Avenue, New York, New York (the "York Avenue
Property"), incorporated herein by reference to Exhibit 10(g) to Registration Statement
No. 33-17667.
10(g) --Option Agreement with Form of Exchange Agreement, dated July 25, 1979, among Benenson and
089 Nosidam Corp. (as nominee of Sotheby Parke Bernet Inc.) assignments thereof and
amendments thereto, all relating to the York Avenue Property, incorporated herein by
reference to Exhibit 10(h) to Registration Statement No. 33-17667.
10(h) --Exchange Agreement, dated October 27, 1986, among Benenson and York Avenue Development,
Inc., and Letter, dated October 27, 1986, from Benenson to Sotheby's, Inc. and York Avenue
Development, Inc., concerning zoning matters and security relating to the York Avenue
Property, incorporated herein by reference to Exhibit 10(i) to Registration Statement No.
33-17667.
27
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
10(i) --Guarantee, made November 6, 1986, by A. Alfred Taubman in favor of Benenson relating to
the York Avenue Property (the "Taubman Guarantee"), incorporated herein by reference to
Exhibit 10(j) to Registration Statement No. 33-17667.
10(j) --Letter from Sotheby's, Inc. and York Avenue Development, Inc., dated October 27, 1986,
agreeing to indemnify A. Alfred Taubman from all liabilities, damages, losses and
judgments arising under the Taubman Guarantee, incorporated herein by reference to Exhibit
10(k) to Registration Statement No. 33-17667.
10(k) --Project Services Agreement (the "Project Agreement"), dated November 8, 1985, between
Sotheby's, Inc. and The Taubman Company, Inc. relating to the proposed development of the
York Avenue Property, incorporated herein by reference to Exhibit 10(1) to Registration
Statement No. 33-17667.
10(l) --Financing and Guaranty Agreement (with exhibits), dated as of October 1, 1987, among
Sotheby's Inc., York Avenue Development, Inc., and Taubman York Avenue Associates, Inc.,
relating to the proposed development of the York Avenue Property, incorporated herein by
reference to Exhibit 10(m) to Registration Statement No. 33-17667.
10(m) --Memorandum of Option Agreement, dated January 31, 1981, among Benenson and 089 Nosidam
Corp., relating to the York Avenue Property, incorporated herein by reference to Exhibit
10(hh) to Registration Statement No. 33-17667.
10(n) --Letter Agreement, dated October 27, 1986, among Benenson and York Avenue Development, Inc.
relating to the York Avenue Property, incorporated herein by reference to Exhibit 10(ii)
to Registration Statement No. 33-17667.
10(o) --Assignment, Assumption Agreement and Release, dated as of October 1, 1987, among Sotheby's
Inc., York Avenue Development, Inc. and the Taubman Company, Inc. relating to the
assignment of the Project Agreement, incorporated herein by reference to Exhibit 10(jj) to
Registration Statement No. 33-17667.
10(p)* --Sotheby's Inc. 1988 Benefit Equalization Plan, incorporated herein by reference to Exhibit
10(t) to Registration Statement No. 33-17667.
10(q)* --Sotheby's Holdings, Inc. 1987 Stock Option Plan and U.K. Sub-Plan, incorporated herein by
reference to Exhibit 10(aa) to the 1989 Form 10-K, and Amendment to Sotheby's Holdings,
Inc. 1987 Stock Option Plan and Amendment to U.K. Sub-Plan, both dated August 8, 1991 and
both incorporated herein by reference to Exhibit 10(w) to the 1991 Form 10-K, and
Amendment to Sotheby's Holdings, Inc. 1987 Stock Option Plan and Amendment to U.K. Sub-
Plan, both dated August 13, 1992 and both incorporated herein by reference to Exhibit
10(z) to the Company's Annual Report of Form 10-K for the year ended December 31, 1992
(the "1992 Form 10-K").
10(r) --Agreement of Partnership of Acquavella Modern Art, dated May 29, 1990, between Sotheby's
Nevada, Inc. and Acquavella Contemporary Art, Inc., incorporated herein by reference to
Exhibit 10(b) to the Form 8-K.
10(s) --Letter Agreement, dated as of June 1, 1990, between Sotheby's, Inc. and Credit Lyonnais
Cayman Island Branch, and Amendment No. 1 thereto, dated as of May 31, 1991, incorporated
herein by reference to Exhibit 10(gg) to the 1991 Form 10K and Amendment No. 2 thereto,
dated as of May 31, 1993, filed herewith.
10(t) --Revolving Credit Agreement, dated as of July 1, 1991, between Sotheby's Holdings, Inc. and
Sotheby's, Inc. and NBD Bank, N.A., incorporated herein by reference to Exhibit 10(hh) to
the 1991 Form 10K.
10(u) --Revolving Credit Agreement, dated as of December 31, 1993, among Sotheby's Holdings, Inc.,
Sotheby's, Inc. and Comerica Bank.
- ---------------
* A compensatory agreement or plan required to be filed pursuant to Item 14(c)
of Form 10-K.
28
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- --------- -------------------------------------------------------------------------------------------- ---------
10(v) --Revolving Credit Agreement, dated as of December 1, 1993, among Sotheby's Holdings, Inc.,
Sotheby's, Inc. and Credit Suisse.
10(w) --Amendment, dated as of April 19, 1991, between The Benenson Capital Company, Lawrence A.
Benenson and Raymond E. Benenson and York Avenue Development, Inc. to Amendment to Option
Agreement and to Related Agreements, incorporated herein by reference to Exhibit 10(kk) to
the 1991 Form 10K.
10(x) --Restated Mortgage Note, dated November 5, 1991, from Mitchell Zuckerman and Joanne
Zuckerman in favor of Sotheby's, Inc., incorporated herein by reference to Exhibit 10(ll)
to the 1991 Form 10K.
10(y) --Commitment Letter, dated April 5, 1989, from Sotheby's Inc. to William Ruprecht and
Elizabeth Ruprecht.
10(z) --Revolving Credit Agreement, dated as of November 1, 1992, between Sotheby's, Inc. and IBJ
Schroder Bank & Trust Company, incorporated herein by reference to Exhibit 10(mm) to the
1992 Form 10-K.
13 --Annual Report to Shareholders for the year ended December 31, 1993
21 --Subsidiaries of the Registrant
23 --Consent of Deloitte & Touche
24 --Powers of Attorney
29