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•	An assessment of Sotheby’s historical performance through the art market cycle;

•	An evaluation of Sotheby’s current and optimal capital structure;

•	An identification of the capital required to support Sotheby’s business;

•	An analysis and review of Sotheby’s real estate holdings;

•	A consideration of the funding requirements for Sotheby’s strategic initiatives; and

•	The development of alternatives for the return of capital to shareholders.

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Debt Financing of Finance Segment Loan Portfolio—Following the initial implementation of the CAR, management expects that the Finance segment will have approximately $400 million to $450 million in liquidity, comprised of assumed initial revolving credit facility borrowings of approximately $170 million and approximately $230 million-$280 million of unused revolving credit facility capacity (see “Credit Facility Amendment” below). With this liquidity, management expects that the Finance segment will repay approximately $146 million in intercompany debt owed to the Agency segment and, over the next 12 to 24 months, will debt finance new loans as the book of existing loans matures, which management estimates may yield additional capital of $150 million to $200 million to be returned to shareholders, assuming the loan portfolio remains at current levels. (See statement on Forward Looking Statements.)

•	Real Estate—Management initiated a review of Sotheby’s real estate holdings in 2013, including a review of its headquarters building at 1334 York Avenue in New York (the "York Property") that began in the second quarter and a review of its New Bond Street premises in London that began in the third quarter.

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•	General and Administrative Expenses—Management expects to reduce professional fees by approximately $9 million, or 15%, in 2014, principally as a result of negotiated reductions in rates and a reduced scope of services. Management also expects spending reductions of approximately $4 million across other categories of general and administrative expenses.

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Direct Costs of Auction Services—Management expects to reduce direct costs of auction services as a percentage of Net Auction Sales by approximately 10 basis points in 2014 as a result of increased efficiencies and enhanced spending controls that will be implemented across all categories of spending. A reduction in the rate of spending of this magnitude would equate to approximately $5 million in savings, assuming a similar level of Net Auction Sales as 2013.

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Marketing Expenses—Management expects to reduce marketing expenses by approximately $4 million, or 17%, in 2014, reflecting a more targeted approach to spending on Sotheby’s core strategic priorities, including initiatives to engage its most important clients, outreach programs to clients in China and other new markets, museum sponsorships, and other donations. In addition, less strategic components of marketing expenses will be dramatically reduced or eliminated entirely.

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Exhibit No.	Description