This presentation explains the Corporate Governance at Martha Stewart Living Omnimedia. It also gives us a glimpse of the personality of Martha Stewart.

1. Corporate Governance at Martha Stewart
Living Omnimedia:
Not “A Good Thing”
GROUP 4
Abhimanu Singh - 15020841004
Ashita Negi - 15020841014
Jayasuryaa H - 15020841024
Nainika Jain - 15020841035
Rohan Bharaj – 15020841046
Tushar Bengani - 15020841056

2. Early Life
• Born on August 3, 1941 in New Jersey
• She grew up in a Polish American household where the traditional arts of
cooking, sewing, canning and preserving, housekeeping, and gardening
were practiced
• Quest for perfection
• Worked part-time as a model in high school
• Worked as a stockbroker at Wall Street after graduation from 1965-72
• Married Andy Stewart in 1961
• Completed a degree in history and architectural history from Barnard
College, Manhattan.

3. At age 32, Martha
opened her first
catering business
with her partner,
Norma Collier
‘Uncatered Affair’
Famous books
published
1982-Entertaining
1987-Weddings
Signed on with
Time Inc. to
produce her own
magazine,
“Martha Stewart
Living.”
Circulation
reached about 1.2
million.
RISE
MARTHA
OF
STEWART

4. Birth of MSO
• In 1997, she acquired control of her business from Time Inc. and formed
Martha Stewart Living Omnimedia and named herself the Chairman and
CEO.
• Signed a deal with Kmart, then the second largest retailer in USA and
created a line of “Everyday” products for the retail chain raking in millions
of dollars.
• Compared to the likes of Calvin Klein, Tommy Hilfiger and Ralph
Lauren
• Listed on NYSE in 1999 making her the first self-made female billionaire

6. Competitors

7. Vision
• Management strategic vision was called synergia
• Unite all the businesses under one umbrella
• Plans to sell more multimedia packages, develop
new T.V shows
• Strengthen their online business platform

8. A Crippling Blow
2002- Insider trading in ImClone Systems Inc.( Samuel D. Waksal) as her broker
Peter Bacanovic, tipped her off that ImClone was about to drop.
Stewart sold about $230,000 in ImClone shares on December 27, 2001, a day
before the announcement of the FDA decision on Erbitux, an
experimental monoclonal antibody drug.
Stewart's involvement would have never come to light had Doug Faneuil,
Bacanovic's assistant, not disclosed it to investigators.
Although Stewart maintained her innocence, she was found guilty and
sentenced on July 16, 2004 to five months in prison, five months of home
confinement, and two years probation for lying about a stock sale, conspiracy,
and obstruction of justice.

9. Consequences of the Scandal
Cable channels
dropped her
shows
63% drop in ad
pages at
Martha Stewart
Living
Patrick layed off
40% MSO’s
employees &
slashed 60%
product
offerings
Profits sank,
and by 2003 the
company was
under loss.

10. Efforts made to distance the
company from Stewart
MSO launched non-Martha magazine (Everyday Food) and a TV
show featuring pet expert Mark Marrone.
Company also bought Body + Soul Magazine & Dr. Andrew’s
Self healing newsletter for their new “natural living” brand of
lifestyle.
Size of Stewart’s name on the magazine cover was reduced and
few directors also considered changing the name of the
company.

11. Restructuring of the Board of Directors
• Chairman- Jeffery Ubben, 2nd largest shareholder
• Ubben recruited 2 new directors- Thomas Siekman,
counsel at Compaq & Bradley Singer, CFO of
American Tower Corp.
• Former Sears CEO Arthur Martinez was promoted to
lead director.

12. • To regain the control & rights of 94% shares,
on advice of Koppelman, Stewart began
remaking the board.
Susan Lyne, head
of Walt Disney’s
ABC Entertainment
Wenda Harris
Millard, Chief Sales
officer at Yahoo!
Rick Boyko, co-president
and creative officer at
Ogilvy & Mather-assigned
to compensation
committee
Former Sears CEO
Martinez, stepped
down.
Ubben also left the
board.

13. Managing Losses
• Newly constituted board renewed Stewart’s employment
contract. Her base salary continues to be $900,000, with a
bonus of up to 150% of salary. Her pay was withheld while she
was in prison.
• Reduced the fees for use of Stewart’s home and image from
$2.5 million to $750,000.
• When Patrick reported losses in Oct 2004 and predicted a
further steep in next quarter, she was fired. Lyne replaced her.

14. Stewart assumed the title of “Founder”
• Prison rules didn’t allow her to take management decisions for the
company but still Lyne & Koppelman used to update her as to what
was going in MSO.
• Also she was barred from serving as a director as part of settlement
with the SEC, so she assumed the title of founder and could work
48 hours a week during her home confinement.
• Kmart’s purchase by Sears spread the rumor that Martha Stewart
products would be sold at Sears stores, shot the share price to a
new high.
• Half the American women supported Stewart and In June 2005
Koppelman was declared as the chairman to the board.

15. New association with NBC
Two major associations:-
1. The Apprentice: Martha Stewart- A
prime time reality TV show on NBC
from Mark Burnett
2. A new syndicated daytime TV show
hosted by Stewart.

16. Glimmers of Hope
BLUEPRINT

17. Web Platform
MarthaStewart.com(Relaunched in 2007)
MSO Revenues rose 54% between 2005-2007 to
$327.9 Million
Lost Competitive Advantage in Merchandising
Meredith Corp- Walmart
MSO-Kmart

18. 2008 recession hit MSO Market
Dispute over Stewart’s compensation
Lyne’s Resignation

19. In 2009:
MSO Loss-14.6 Million
Stewart’s Compensation: 9.8
Million
From 2009-2012
MSO total loss: 96 Million
Stewart’s Compensation: 27 Million

20. Narrowing Options
Co-CEO Wenda
Millard resigned.
Co-CEO, Robin
Marino returned as
Head of
Merchandising.
Koppelman became
Executive Chairman
and Principal
Executive Office.
Stewart took a new
title: Chief Editorial,
Media and Content
Officer.
MSO shares dropped
to a new low of $1.60.
Appointed Stewart’s
sister-in-law as
senior vice president.
Brother-in-law as
Property manager.
Sister as a Blogger.

21. A Turning Point
• The ban on Stewart’s serving as corporate officer expired
• Management wanted the company to go private but Stewart
did not liked the valuation
• Recruited Lisa Gersh, as president
• Gersh transformed the company
• Conflict in the Penny agreement

22. Crossroads
Marthastewart.com traffic among young do-it-yourself customers rose
Martha published her 79th book and landed cameo roles in popular TV shows
Resurgence of popularity and revival of cult media status

23. Crossroads
The magazine Martha Stewart living barely kept pace with rest of the
competition
The CEO job of MSO remained open well into 2013
Martha took a pay cut which was more or less an eyewash
Lost brand equity and brand identity by wandering into product lines that
damaged its image.

24. MYERS BRIGGS
PERSONALITY
TYPE
Strengths Weaknesses
Dedicated and Strong-willed Inflexible and Stubborn
Direct and Honest Uncomfortable with unconventional situations
Loyal Patient and Reliable Too focused on Social Status
Enjoy creating order Difficulty expressing emotion
Excellent Organizer Judgmental
Extraverted Sensing
Thinking Judging

25. Key Takeaways
• Unethical Leadership leads to employees and
customers lose trust in the capacity of the
organization
• Losing employees’ trust and confidence results in
less productivity
• Brands built intimately close to a single personality
will suffer when the individual’s popularity suffers

26. Ethical Learnings
• A corporation is lot bigger than any individual, stakeholders
and shareholders are more important for sustainability.
• Nepotism has no room in a public corporation.
• Unethical corporations caught in public scrutiny takes a lot of
time to stabilize and earn back public trust that drives
revenues.
• Corporate governance should extend to scrutiny of the pay of
top management for unfair practices.

27. THANK YOU