Charter of the Compensation Committee

(As of February 25, 2016)


The purpose of the Compensation Committee (the “Committee”) is to:  (i) review, approve and evaluate the compensation of the Chief Executive Officer (the “CEO”) and other senior management of Sotheby’s (the “Company”); (ii) oversee generally the Company’s employee compensation and benefit plans, policies and programs; and (iii) to engage in succession planning for the CEO position and oversee such planning for other senior management positions.  In this role, the Committee assists the Board of Directors (the “Board”) in the Board’s overall responsibilities concerning Company executive compensation.

Membership and Qualifications

The Committee will consist of at least three directors appointed by the Board based on the recommendation of the Company’s Nominating and Corporate Governance Committee.  Each Committee member must meet the then applicable independence requirements of the New York Stock Exchange (“NYSE”), including consideration of whether a director’s affiliate relationship with the Company, its subsidiaries or their affiliates or a director’s compensation from any source would impair the director’s ability to make independent judgments about Company executive compensation.  Unless otherwise approved by the Board or the Nominating and Corporate Governance Committee, each Committee member must qualify as a “non-employee director” pursuant to the rules promulgated under Section 16 of the Securities Exchange Act of 1934 and as an “outside director” pursuant to the regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986.  The Board or the Nominating and Corporate Governance Committee may also from time to time require other qualifications and experience for Committee membership as either body deems appropriate.  

Committee members will be selected annually by the Board for one-year terms, or until their successors are duly selected and qualified.  The Chairman of the Committee shall be elected by the Board.  Committee members may be replaced, and the Chairman may be changed, by the Board from time to time.

Duties, Powers and Responsibilities


The Committee has direct responsibility to review, and, as appropriate, act on behalf of the Board or make recommendations to the Board concerning employee compensation and benefits for the Company.  The Committee adopts and oversees the administration of equity and non-equity incentive compensation plans, including stock option plans and restricted stock plans, pension or other retirement plans, severance plans, employment agreements, notice and non-compete agreements and any other plans and programs related to these matters as it deems reasonable and appropriate to serve the interests of the Company and its shareholders and to create appropriate incentives for individual and Company performance.  Specifically, the Committee is authorized to approve (i) the aggregate bonus pool available for annual awards under the Company’s incentive compensation plans and (ii) all grants of stock options or restricted stock and to perform such other functions as may be delegated to it under the Company’s Stock Option Plan, Restricted Stock Unit Plan, Executive Bonus Plan or any other equity-based compensation plan.  Notwithstanding the foregoing, the Committee may delegate to the Chief Executive Officer its authority to make equity grants as “sign-on” awards to new employees who are not deemed to be “executive officers” for purposes of Section 16 of the Securities Exchange Act of 1934.  

The Committee will periodically review its policies and procedures and the scope of its activities and will, at least on an annual basis, review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.  The Committee will also annually review its own performance.

The Committee will consider annually whether any of the Company’s compensation and other benefit plans, policies and programs creates risks that are likely to have a material adverse effect on the Company. Additionally, the Committee will annually consider the results of the most recent stockholder vote on executive compensation.

Pursuant to applicable Securities and Exchange Commission rules, the Committee will prepare the Compensation Committee Report and review the Compensation Discussion and Analysis, and, as appropriate, related disclosure, required to be included in the Company’s annual Proxy Statement.

The Committee may form, and delegate authority to, subcommittees as it deems appropriate.

The Committee will make regular reports to the Board.

The Committee will perform such other duties and responsibilities as may be assigned to the Committee from time to time by the Board.

Review and Approval of CEO and Senior Management Compensation

Consistent with the provisions of any applicable employment agreement, the Committee will annually review and approve corporate goals and objectives relevant to the compensation of the CEO and senior management, and evaluate the performance of the CEO and senior management in light of those goals and objectives, and set the compensation levels of the CEO and senior management based on this evaluation.  In determining the long-term incentive component of CEO and senior management compensation, the Committee will consider the Company’s performance and shareholder return, similar incentive awards to CEOs at comparable companies and the awards given to the CEO and senior management in past years as well as any other factors deemed relevant by the Committee.  The Committee will consult with the full Board of Directors in connection with its annual review of the CEO’s and senior management’s performance.

Consistent with the provisions of any applicable employment agreement, the Committee will annually review and approve for the CEO and the Company’s senior management and other senior personnel: (i) their annual base salaries and incentive compensation awards, including awards under the Company’s Stock Option Plan, Restricted Stock Unit Plan or Executive Bonus Plan, as, when and if appropriate, (ii) employment agreements, severance agreements, notice and non-compete agreements and change in control agreements/provisions, in each case, as, when and if appropriate, and (iii) any special or supplemental benefits, as, when and if appropriate. 

Use of Advisors

If the Committee chooses to employ a compensation consulting firm to assist in the evaluation of CEO or other senior executive compensation, the Committee will have the sole authority to retain and terminate the consulting firm and the sole authority to approve the firm’s fees and other retention terms.  Any consulting firm retained by the Committee may only perform other services for the Company with the consent of the Committee or its Chairman.

In its sole discretion, the Committee may also obtain advice and assistance from internal or external legal, accounting or other advisors.  The Committee will have the exclusive right to retain on those terms it deems appropriate any such external advisors as well as terminate any such external advisors at any time.  The Company will provide the Committee with funding and other resources that the Committee deems appropriate for payment of reasonable compensation to any such external advisors.

Under applicable Securities and Exchange Commission and New York Stock Exchange rules, the Committee will consider the independence of all advisers to the Committee from management (other than internal legal counsel or any other exception under those rules) before retaining, or obtaining advice from, any such advisor.

CEO Succession Planning

The Committee is responsible for developing plans for the succession to the position of CEO, including policies regarding succession in the event of an emergency or the retirement of the CEO, and implementing appropriate oversight of the leadership talent development and succession planning for the other senior officers of the Company.


The Committee will meet regularly, in person or by telephone, at such times as the Chairman or any of its members deems necessary.  Meetings may be called by the Chairman of the Committee, the Chairman of the Board, or the CEO.  All meetings of the Committee will be held pursuant to and in accordance with the Company’s By-laws.  The Committee may also act by unanimous written consent pursuant to and in accordance with the Company’s By-laws.