NEW YORK (AP) -- Activist investor Daniel Loeb pushed Sotheby's Chairman and CEO William Ruprecht to resign in a scathing letter Wednesday, calling the New York auction house "an old master painting in desperate need of restoration."
Loeb's Third Point LLC, the hedge fund he founded and runs, also disclosed Wednesday in a federal filing that it increased its stake in Sotheby's to 9.3%, making it the company's biggest shareholder.
In the letter, which was addressed to Ruprecht, Loeb said Sotheby's has a "lack of leadership and strategic vision" and is losing major works of art to rival Christie's. He said that Ruprecht doesn't understand the modern art market.
"We do not see evidence that you are the right person to repair the company," Loeb said.
Sotheby's said in a statement that it would not comment on the letter. "Rather than debating incendiary and baseless comments, we are focused on serving our clients' needs during this critical autumn sales season," Sotheby's said.
Sotheby's reported net income of $91.7 million during the second quarter, up 7% from the same quarter a year ago. Its revenue was practically flat at $305 million. Shares of Sotheby's have more than tripled since Ruprecht was named CEO in February 2000.
Loeb blasted Ruprecht's compensation, which was $6.3 million last year, and his perks, which he said include a car allowance and reimbursement for country club membership fees. "What example does this set for Sotheby's hard-working employees, who see leaders at the top collecting guaranteed perks rather than rewards delivered for growing earnings?" Loeb wrote.
He said that an investigation into the company's business practices found that Sotheby's senior management held an offsite meeting at a "famous 'farm-to-table' New York area restaurant" that cost shareholders "multiple hundreds of thousands of dollars."
Loeb said that he was willing to join the company's board and help recruit new directors, and that he has already identified two internal candidates for the CEO position and talked with some outside candidates.
Loeb did write a few positive words about Ruprecht. He said that the CEO was able to lead the company through a price fixing scandal in 2000 and the financial crisis in 2008. But, he added, "Unfortunately, you have not led the business forward in today's art market."
The Motley Fool recommends Sotheby's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.