8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
______________

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

April 28, 2009
(Date of report)

April 27, 2009
(Date of earliest event reported)

SOTHEBY’S

(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of Incorporation)

1-9750	38-2478409
(Commission File Number)	(IRS Employer Identification No.)

1334 York Avenue
New York, NY 10021
(Address of principal executive offices)

(212) 606-7000
(Registrant’s telephone number, including area code)

No Change
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

     o   Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.05Costs Associated with Exit or Disposal Activities

As reported in a Current Report on Form 8-K dated December 4, 2008 and its Annual Report on Form 10-K for the year ended December 31, 2008, Sotheby’s (or the “Company”) reported that, due to the downturn in the global economy and international art market, its Board of Directors had approved restructuring plans in the fourth quarter of 2008 and first quarter of 2009 impacting its Auction segment in North America, the United Kingdom (the “U.K.”) and Continental Europe, as well as certain corporate departments. These restructuring plans (collectively, the “2008 Restructuring Plan”) are the result of a strategic review of the Company’s operations initiated by management in the fourth quarter of 2008. The 2008 Restructuring Plan is resulting in a 15% decrease in global headcount, the reduction in Sotheby’s selling activities in Amsterdam and the vacating of certain premises in connection with a reorganization of Sotheby’s European sourcing network.

In March 2009, in response to the continuing downturn in the global economy and the international art market, management initiated a further strategic review of its operations and on April 27, 2009, the Executive Committee of Sotheby’s Board of Directors approved another restructuring plan (the “2009 Restructuring Plan”) impacting all areas of the Company’s global operations with the goal of additional significant cost reductions to be achieved through a further 5% reduction in global headcount. The 2009 Restructuring Plan will result in employee-related restructuring charges of approximately $5 million, which will be recognized primarily in the second quarter of 2009. In total, the headcount reductions associated with the 2008 Restructuring Plan and 2009 Restructuring Plan will result in aggregate annual cost savings of approximately $24 million, with approximately $15 million expected to be realized in 2009.

In addition to the 2008 Restructuring Plan and 2009 Restructuring Plan, management is implementing a number of other cost savings initiatives impacting all areas of expense. For example, management is implementing pay reductions for certain senior staff, unpaid furloughs for employees in most operating locations and a reduction in U.S. pension contributions. As a result of management’s cost savings initiatives (including the 2008 Restructuring Plan and the 2009 Restructuring Plan), management expects to achieve aggregate cost savings of approximately $160 million in 2009 versus 2008, to be achieved in direct costs of services, marketing expenses, salaries and related costs and general and administrative expenses. A portion of the expected savings is the result of favorable changes in foreign exchange rates versus 2008 and a lower expected volume of auction sales. The current $160 million in targeted savings represents a $60 million increase from the level of targeted savings disclosed by Sotheby’s in its Annual Report on Form 10-K for the year ended December 31, 2008.

See statement on Forward Looking Statements.

Item 5.02Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

As reported in a Current Report on Form 8-K dated March 23, 2009, effective May 1, 2009, as part of the Company’s ongoing cost reduction initiatives, the Compensation Committee of the Board of Directors determined that the annual base salaries of each of the Company’s Named Executive Officers, or NEOs, who are named in the Company’s 2009 Proxy Statement, would be reduced by at least 10%. Certain of these NEOs have existing severance or other compensation agreements with the Company that were amended on March 23, 2009, as reported in a Form 8-K filed on that date, and April 27, 2009 to effect these salary reductions. Additionally, the Company has confirmed salary reduction arrangements with NEOs who do not have existing severance or other compensation agreements.

See the agreements in “Item 9.01 Financial Statements and Exhibits” below.

Item 8.01 Other Events

On April 27, 2009, the Executive Committee of Sotheby’s Board of Directors decided to reduce the Company’s indicated annual dividend rate from $0.60 per share to $0.20 per share, a 67% reduction. The revised rate is expected to apply to the next regularly-scheduled quarterly dividend. As a result of this reduction, on an annualized basis, dividend payments are expected to decrease from approximately $41 million to approximately $14 million. Management believes that this is an appropriate decision in response to the current economic environment. Management will continue to assess the Company’s quarterly dividend based upon future operating results and capital requirements.

Item 9.01 Financial Statements and Exhibits

(c)	Exhibits
	10.1	Letter Agreement between Sotheby’s and William S. Sheridan, dated April 27, 2009.
	10.2	Letter Agreement between Sotheby’s and Robin Woodhead, dated April 27, 2009.
	10.3	Letter Agreement between Sotheby’s and Bruno Vinciguerra, dated April 27, 2009.
	10.4	Letter Agreement between Sotheby’s and Mitchell Zuckerman, dated April 27, 2009.

FORWARD LOOKING STATEMENTS

This Form 8-K contains certain forward looking statements; as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, relating to future events and the financial performance of the Company. Such statements are only predictions and involve risks and uncertainties, resulting in the possibility that the actual events or performance will differ materially from such predictions.

SIGNATURE

SOTHEBY'S

By:/s/ Kevin M. Delaney

        Kevin M. Delaney
        Senior Vice President, Corporate
        Controller and Chief
        Accounting Officer

Date:April 28, 2009

EX-10.1

EXHIBIT 10.1

April 27, 2009

Mr. William S. Sheridan
Chief Financial Officer, Executive Vice President
Sotheby’s
1334 York Avenue
New York, New York 10021

Re:       Amendment to Severance Agreement

Dear Bill:

     I write further to your conversation with Bill Ruprecht earlier this month to confirm what we have agreed with you in relation to your remuneration going forward in response to current challenges facing Sotheby’s business in a difficult economy. As you are aware, Sotheby’s highly compensated executive employees are being asked to have their salary reduced as part of the Company’s initiatives to best position the organization to address these challenges. Accordingly, upon your execution of this amendment to your Severance Agreement, which is dated as of August 3, 2006, as amended March 7, 2008 (the “Agreement”), your base salary will be reduced from $600,000 to $540,000 effective May 1, 2009. This amendment is as follows:

Waivers

     The Agreement permits you to terminate your employment with the Company for “Good Reason” (as defined in Exhibit A to the Agreement) for the following pertinent or potentially pertinent reasons (i) “failure by the Company to pay you a base salary of not less than $600,000”…or (ii) “any action by the Company that results in a material diminution in your position without your express consent. . .”. You agree to waive irrevocably the right to terminate the Agreement and assert a separation for “Good Reason” along with any other rights you may have under the Agreement as a result of this salary reduction. You further agree that no portion of the salary reduction is being deferred to any future date.

Amendments

You agree that:
1.	The definition of “Good Reason” stated in Exhibit A to the Agreement in clause (a), as amended on March 7, 2008, shall be deleted and replaced with the following:

	“failure by the Company to pay you a base salary of not less than $540,000, reduction of your annual cash incentive bonus target below $350,000 under the Company’s annual incentive compensation program or reduction of your annual restricted stock unit incentive bonus target under the Company’s annual restricted stock unit incentive program below $350,000, with any such stock units awarded subject to the terms and conditions of the Sotheby’s Amended and Restated Stock Unit Plan (or successor plan);”
2.	The definition of “Good Reason” stated in Exhibit A to the Agreement will be amended to add in a separate paragraph after, “Provided, however, that the Company shall have thirty (30) days following receipt of notice from you of circumstances constituting Good Reason to correct such circumstances.”:
	“’Good Reason’ specifically shall not include the impact of any period of unpaid vacation that is mutually agreed upon by the parties, in their discretion.”
3.	Paragraph 1(a) subsection (a) of the Agreement shall be amended so that “base salary” shall mean your former salary of $600,000 for purposes of calculating the amount due to you from the date of notification by you to the Company that you are terminating employment for Good Cause (provided the Company does not cure such circumstances with the thirty day period) or the date of notification by the Company that it is terminating you without cause until the actual termination date.
4.	Paragraph 1(a) of the Agreement shall be amended so that if you become eligible for severance under the Sotheby’s, Inc. Severance Plan, “base salary” for purposes of determining any amount due to you upon termination of employment, shall be calculated using your former base salary amount of $600,000.

     The Company will review these salary reductions in twelve months with the Compensation Committee of the Board of Directors to determine if business conditions warrant the reinstatement of all or part of the salary decrease.

     The Company is making arrangements with most of its benefits providers (other than worker’s compensation, short term disability, the Company’s 401(k) plan and the Company’s Deferred Compensation plan) so that your level of benefits will remain commensurate with the amount of your former base salary of $600,000.

     Except as amended hereby, the Agreement remains in full force and effect in accordance with its terms.

     We greatly appreciate that you are accepting a reduction in compensation during this period of retrenchment for the company’s business in a difficult worldwide economic environment.

     If this letter agreement correctly states the terms of your waivers and the amendments to the Agreement, please acknowledge where indicated below.

SOTHEBY’S

By: /s/ Susan Alexander
           Susan Alexander,
           Executive Vice President
           and Worldwide Head
           of Human Resources

AGREED AND ACCEPTED AS OF
THE DATE OF THIS LETTER:

/s/ William S. Sheridan_____________________________
WILLIAM S. SHERIDAN

EX-10.2

EXHIBIT 10.2

SOTHEBY’S

27 April 2009

Mr Robin Woodhead
Sotheby’s
34-35 New Bond Street
London
W1A 2AA

Re: Amendment to Employment Agreement

Dear Robin

I write further to your conversation with Patrick Van Maris earlier this month to confirm what we have agreed with you in relation to your remuneration going forward in response to the current challenges facing Sotheby’s business in this difficult economy. As you are aware, Sotheby’s highly compensated executive employees are being asked to agree to have their salary reduced effective 1 May 2009 as part of the Company’s initiatives to best position the organisation to address these challenges.

Your employment agreement dated 15 August 2006, as amended 7 March 2008, (“the Agreement”) is therefore further amended with effect from 1 May 2009 as follows:

1	Your basic salary will be reduced from GBP £300,000 to £250,000;
2	Your current salary of £300,000 will be used as the basis for calculating any amounts owed to you under the following paragraphs of the Agreement: 2.1 (Notice – but only if the Company gives you notice and not if you give the Company notice), 7.1, 7.2, (Benefits), 11.2 (Garden Leave), and 14 (Severance);
3	Should you be entitled to any company redundancy payment, this will be based on your salary of £300,000. For the avoidance of doubt, should you become entitled to benefits under the US Severance Plan, these are instead of and not in addition to any UK severance benefits you may be entitled to and are inclusive of any statutory redundancy payment; and
4	Under the terms of the UK pension scheme, your contributions and benefits will be based on your reduced salary, and will be subject to any Earnings Cap from time to time in force.

We are also considering the possibility of requiring all members of staff to take a period of unpaid leave. This is subject to consultation with a wider population and we will write to you again when and if we do go down that route.

Except as amended hereby, the Agreement remains in full force and effect in accordance with its terms.

We will review these reductions to salaries in twelve months with the Compensation Committee of the Board of Directors to determine if business conditions warrant the reinstatement of all or part of the salary decrease.

We greatly appreciate that you are accepting a reduction in compensation during this period of retrenchment for the Company’s business in a difficult word-wide economic environment.

If the above accurately sets out the understanding I should be grateful if you would sign below and return to me the enclosed copy of this letter.

Yours sincerely

For and on behalf of Sotheby’s

A company registered in England and Wales

By:

William S Sheridan, Director

Read, accepted and agreed on:

Date: 27. 04. 09

/s/ Robin Woodhead
Robin Woodhead

EX-10.3

EXHIBIT 10.3

April 27, 2009

Bruno Vinciguerra
Executive Vice President
Sotheby’s
1334 York Avenue
New York, New York 10021

Dear Bruno:

     As you are aware, business conditions in this unprecedented economic environment are requiring Sotheby’s to take an unprecedented step. We are asking our most highly paid executive employees around the world to agree to a salary reduction. This decision is essential to best position the organization at this difficult time and it will help us to save jobs that we would otherwise not be able to retain. But it is one we make with great reluctance. We wish it were not necessary and fully recognize this will be a financial sacrifice for you.

     Effective May 1, 2009, your annual base salary will be reduced from $550,000 to $495,000. We will review these salary reductions in twelve months (on or about April 1, 2010) with the Compensation Committee of the Board of Directors to determine if any changes can be made.

     We are also making arrangements with most of our benefit providers, so that your level of benefits will remain commensurate with the amount of your former base salary of $550,000. Further, in the event that, while you are receiving this reduced salary, you become eligible for payment of insurance, severance, notice (from the Company) or other benefits, such benefits to the extent their calculation depends on your base salary will be calculated using your former higher, base salary amount of $550,000. However, workers’ compensation, short term disability, the Company’s 401(k) plan and the Company’s Deferred Compensation plan and notice from you of your intent to resign will need to be based on your reduced salary.

     Nothing herein modifies the “at will” nature of your employment subject to the terms of your Notice and Non-Compete Agreement.

     Your support during this challenging period for our business is very important to Sotheby’s and is greatly appreciated. It is this effort that will help us to save jobs that otherwise we would not be able to retain.

Sincerely,
SOTHEBY’S
By: /s/ Susan Alexander
Name:	Susan Alexander
Title:	Executive Vice President and Worldwide Head of Human Resources

ACCEPTED AND AGREED TO:

/s/ Bruno Vinciguerra________________________
Bruno Vinciguerra

2

EX-10.4

EXHIBIT 10.4

April 27, 2009

Mitchell Zuckerman
Chairman, SFS
Sotheby’s
1334 York Avenue
New York, New York 10021

Dear Mitchell:

     As you are aware, business conditions in this unprecedented economic environment are requiring Sotheby’s to take an unprecedented step. We are asking our most highly paid executive employees around the world to agree to a salary reduction. This decision is essential to best position the organization at this difficult time and it will help us to save jobs that we would otherwise not be able to retain. But it is one we make with great reluctance. We wish it were not necessary and fully recognize this will be a financial sacrifice for you.

     Effective May 1, 2009, your annual base salary will be reduced from $535,000 to $481,500. We will review these salary reductions in twelve months (on or about April 1, 2010) with the Compensation Committee of the Board of Directors to determine if any changes can be made.

     We are also making arrangements with most of our benefit providers, so that your level of benefits will remain commensurate with the amount of your former base salary of $535,000. Further, in the event that, while you are receiving this reduced salary, you become eligible for payment of insurance, severance, notice (from the Company) or other benefits, such benefits to the extent their calculation depends on your base salary will be calculated using your former higher, base salary amount of $535,000. However, workers’ compensation, short term disability, the Company’s 401(k) plan and the Company’s Deferred Compensation plan and notice from you of your intent to resign will need to be based on your reduced salary.

     Nothing herein modifies the “at will” nature of your employment subject to the terms of your Notice and Non-Compete Agreement.

     Your support during this challenging period for our business is very important to Sotheby’s and is greatly appreciated. It is this effort that will help us to save jobs that otherwise we would not be able to retain.

.

Sincerely,
SOTHEBY’S
By: /s/ Susan Alexander
Name:	Susan Alexander
Title:	Executive Vice President and Worldwide Head of Human Resources

ACCEPTED AND AGREED TO:

/s/ Mitchell Zuckerman________________________
Mitchell Zuckerman

2