Corporate Governance Guidelines

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SOTHEBY'S
CORPORATE GOVERNANCE GUIDELINES
February 26, 2010



The following constitute the corporate governance guidelines of Sotheby's. (the "Company") established by the Company's Board of Directors (the "Board"). The Board will review and, if appropriate, revise these guidelines from time to time.
Director Responsibilities
The business and affairs of the Corporation shall be managed by or under the direction of the Board, except as otherwise required by law or by the Company's Certificate of Incorporation.

Directors shall represent the best interests of the Company's shareholders in maintaining and enhancing the success of the Company's business, including optimizing long-term returns to increase shareholder value.

The Board shall select and evaluate the Chief Executive Officer ("CEO") and provide general advice and counsel to the Company's CEO and other senior executives.

The Board shall adopt and oversee compliance with the Company's Code of Business Conduct and Ethics.

The Board shall hold regularly scheduled executive sessions of non-management Directors, at which the Chairman of the Board shall preside, and shall formally evaluate the performance of the CEO each year in executive session.

Directors are expected to attend Board meetings and meetings of the Committees on which they serve, and to be prepared for such meetings by becoming familiar with materials distributed to them prior to the meetings.

In discharging the duties of a Director, including duties as a Committee member, each Director shall act: (a) in good faith; (b) with the care that an ordinarily prudent person in a like position would exercise under similar circumstances and (c) in a manner he or she reasonably believes to be in the best interests of the Company.
Director Qualification Standards
The Nominating and Corporate Governance Committee is responsible for overseeing the identification and evaluation of candidates for service as Directors. The Nominating and Corporate Governance Committee does not solicit Director nominations, but will consider recommendations sent on a timely basis to the attention of the Secretary of the Company.

In connection with the selection process, the Nominating and Corporate Governance Committee shall consider the specific experience, qualifications, attributes or skills that qualify the nominee to serve as a Director, and shall take into account the current Board members and the specific needs of the Company and the Board. The Nominating and Corporate Governance Committee will look for individuals who have displayed high ethical standards, integrity, and sound business judgment. The process is designed to ensure that the Board includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to the business of the Company.

Independent Directors must comprise a majority of the Board. No Director will qualify as "independent" unless the Board affirmatively determines that, pursuant to the Rules of the New York Stock Exchange, the Director has no material relationship with the Company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. In making a determination regarding a proposed Director's independence, the Board shall consider all relevant facts and circumstances, including the Director's commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, and such other criteria as the Board may determine from time to time to be appropriate. The Board may adopt categorical standards setting forth relationships between a Director and the Company that are deemed not to be material.

All members of the Audit Committee must, in addition to being determined by the Board to be independent as provided above, meet the following requirements:

An Audit Committee member may not receive consulting, advisory or other compensatory fees from the Company (other than in his or her capacity as a member of the Audit Committee, the Board of Directors or any other committee of the Board); and
No member of the Audit Committee may be an "affiliated person" of the Company or any subsidiary of the Company, as such term is defined by the Securities and Exchange Commission.
No member of the Audit Committee may serve on the audit committee of more than three public companies, including the Company, unless the Board of Directors has determined that such simultaneous service would not impair the ability of such member to effectively serve on the Committee.
All members of the Audit Committee must be “financially literate” and at least one member of the Audit Committee must have “accounting or related financial management expertise” within the meaning of the corporate governance listing standards of the New York Stock Exchange, as determined by the Board of Directors.
At least one member of the Audit Committee must be a “financial expert” within the meaning of the Sarbanes-Oxley Act of 2002, as determined by the Board of Directors.
If a Director’s principal occupation or business association changes significantly from the principal occupation or business association that the Director held when the Director joined the Board, the Director shall tender his or her resignation from the Board to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee will recommend to the Board whether or not the resignation should be accepted and the Board will decide whether or not to accept the resignation.

The Board recommends that, except in unusual circumstances, if a Director is employed full-time by a public company, such Director limit the number of boards on which he or she sits to the boards of two other public companies (in addition to the Board of Sotheby’s and that of his or her employer). If the Director is not employed full-time by a public company, the Board recommends that, except in unusual circumstances, he or she sit on the boards of no more than four other public companies (in addition to Board of Sotheby’s). The Nominating and Corporate Governance Committee reviews on a case-by-case basis situations concerning significant involvement by a Director in non-profit or charitable organizations.

Any further substantive qualification requirements for membership on the Board, including policies regarding Director tenure, retirement and succession, shall be determined from time to time as deemed appropriate by the Board.

Board Committees
The Board shall at all times have an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and an Executive Committee. The Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee shall be comprised solely of independent Directors.

The Board shall from time to time determine whether additional committees are appropriate under the circumstances.
Director Compensation
Non-employee Directors, committee members and committee chairs shall receive reasonable compensation for their services, as may be determined from time to time by the Board upon recommendation of the Nominating and Corporate Governance Committee. Compensation for non-employee Directors, committee members and committee chairs shall be consistent with the market practices of other similarly situated companies. The Board should be particularly sensitive to questions relating to a Directors' objectivity or independence that could be raised with regard to excessive fees or benefits, charitable contributions to organizations with which the Director is affiliated, consulting or other arrangements with the Director and, generally, any interested party or conflict of interest transactions. The Board shall review Director compensation and benefits annually.

Directors who are employees shall receive no additional compensation for serving as Directors.

Directors who are members of the Audit Committee may receive no compensation from the Company other than the fees they receive for serving as Directors and committee members.

The Company’s compensation arrangements for non-employee directors provide for an annual cash retainer and an annual grant of common stock, which may be taken in the form of Deferred Stock Units. The Chairman of the Board receives an additional cash retainer for service in that capacity. In addition to the cash retainer and stock grant, non-management Directors receive meeting fees and may receive a retainer for service as Chair of a Board Committee.

Common stock granted to a Director may not be sold until the earlier of three years from date of issuance and termination of such Director’s service on the Board. Deferred Stock Units may not be sold until termination of a Director’s service on the Board.
Director Stock Ownership Guideline
The Board has adopted a stock ownership guideline for non-employee Directors requiring them to own common stock of the Company or Deferred Stock Units having a value equal to or greater than five times the annual cash retainer for Directors. Directors have five years from the February 27, 2007 adoption of the guideline to achieve the required ownership level, or five years from the date of their election to the Board, if later.
Director Access to Management and Independent Advisors
The Board shall have direct access to management. Directors are also authorized to consult with independent advisors, as is necessary and appropriate, without management.
Director Orientation and Continuing Education
The Board shall implement and maintain an orientation program for newly elected Directors.

The Board shall assure that there is a continuing process for orientation of Board members to the changing aspects of the Company's business and industry. Continuing education shall also be provided with regard to evolving corporate governance practices.
Management Succession and CEO Compensation
The Board 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.

Annually, the CEO shall review with the Board his assessment of the Company's senior officers and their potential to succeed him or her.

The Compensation Committee is responsible for making recommendations to the Board concerning annual and long-term performance goals for the CEO and for evaluating his or her performance against such goals.
Annual Performance Evaluation of the Board
The Board and its Committees will conduct a self-evaluation at least annually to determine whether it and its Committees are functioning effectively.