News & Press
Weng Fine Art submits counter-proposals to the composition of the Board of Directors at the Annual General Meeting of Artnet AG
27 Juli 2022 / Pressemitteilungen
Artnet AG (Artnet) is one of the leading marketplaces, media and data business companies in the global art market. Together with its founder Rüdiger K. Weng, Weng Fine Art AG (WFA) holds more than 26% of all Artnet shares and keeps negative control of this company. Alongside Galerie Neuendorf AG, WFA is Artnet’s largest shareholder. WFA is currently planning to further expand its stake in Artnet, which it has already announced.
WFA considers Artnet’s assets (brand name, website-traffic, data-protection, online auction-tool) to be very valuable in today’s art market if all this is monetized by an experienced management team in the best interests of the company. WFA’s goal with its investment in Artnet is to create a comprehensive and mutually beneficial cooperation between both companies.
Following WFA’s request, Artnet will hold its Annual General Meeting for the Fiscal Year 2021 on August, 26th 2022. At this AGM, the Board of Directors has to be reelected. To WFA’s surprise, Hans Neuendorf, who would be 88 years old at the end of his mandate, was nominated again by the Artnet management as a candidate for the Board of Directors.
It is WFA’s opinion that the incumbent Board of Directors, especially Hans Neuendorf, was not able to fulfill his management duties and control in an unbiased or objective way. For more than ten years, the father (as Chairman or member of the Board of Directors) “controlled” his son (CEO), while at the same time being employed (and highly remunerated) as a consultant by Artnet. Amongst other things, this conflict of interest had affected Artnet’s economic ability to develop further and grow in the way that the business model should allow.
Overall, Artnet carries forward a consolidated loss of almost 53m USD which has mounted since going public in 1999. Consequently, the company could not distribute any dividends to its shareholders for 23 years. Since the IPO in 1999, the Artnet share – which initially was offered for 46 EUR – has fallen by more than 80% and is now valued at only appr. 8.50 EUR. Over the last two decades, the Artnet management has destroyed shareholders' value instead of increasing it.
Artnet has recently published (with delay) their Annual Report for the Fiscal Year 2021 and its First Quarter 2022 interim earnings report. Thanks to government support received from the USA in 2020, Artnet reported a consolidated profit of 2.193k USD in 2020, but in 2021, a consolidated loss of 941k USD had to be shown. In the First Quarter 2022 alone, the loss already amounted to 786k USD. WFA expects that the results will continue to deteriorate during the second quarter.
Artnet’s practices of awarding key roles in the company only to family members is excessive and not based on merit nor performance. Furthermore, despite his already above average remuneration as a member of the Board of Directors, Hans Neuendorf has received a “consultant fee” amounting to appr. 3m EUR during the period of 2012 - 2022. In addition, he got paid more than 400,000 EUR in Board of Directors fees during this period while at the same time the Artnet shareholders didn’t receive 1 EUR in dividend payments.
In the interest of its shareholders, WFA has submitted a countermotion to the Artnet shareholder meeting and proposes Mr. Rüdiger K. Weng, as a member of the Board of Directors to Artnet instead of Hans Neuendorf, in order to ensure the operational efficiency, stop the outflow of capital and awarding of roles to unqualified family members. Moreover, Mr. Patrick Kiss will be named as a substitute member for the Board of Directors. Mr. Weng and Mr. Kiss’s focus over the last decades with WFA have been on optimizing shareholder value and improving the transparency of the business, whilst not losing sight of the long-term goals of the company.
After his eventual election to the Artnet Board of Directors, Rüdiger K. Weng would immediately support discussions on the reorganization and financing of Artnet. Following analysis by WFA, Artnet will be able to overcome increased challenges and become profitable only through the help of financially strong partners and an experienced management team. It is also very important for WFA that Artnet complies with the principles of "good governance" and the management team follows its corporate governance in the best interest of all shareholders and not exclusively in the interests and well-being of the Neuendorf family.
WFA is hoping for broad support from the Artnet shareholders for the reorganization of their company, and that as many shareholders as possible will join the AGM and vote in favor of this countermotion by Weng Fine Art.