Martha Stewart Steps Down

Martha Stewart announced she will relinquish her responsibilities as chairwoman and ceo of Martha Stewart Living Omnimedia Inc. (New York), the company she founded, after being indicted on charges of conspiracy, obstruction of justice and securities fraud, all linked to a personal stock trade she made in 2001.

She pleaded not guilty and pledged to fight the charges. She will continue as a director and is expected to remain a force as the company's “chief creative officer.”

Sharon Patrick, the president, will succeed Stewart as ceo. Jeffrey Ubben will be chairman. His company, Value Act Capital Partners, is an investment partnership that owns 22 percent of the company's class A common stock.

Arthur Martinez, former chairman and ceo of Sears Roebuck and Co. (Hoffman Estates, Ill.) and a member of the Martha Stewart Living Omnimedia board of directors since January 2001, will serve as lead director.

The indictment depicted Stewart as going out of her way to conceal the circumstances of the sale of nearly 4000 shares of ImClone Systems, a transaction that investigators say she made after learning that her friend, Samuel D. Waksal, the company's founder, and his daughter were selling their own stock. According to the indictment, Stewart lied to investigators by telling them that she and her stockbroker had previously agreed to sell the shares if their market value fell below a certain price, and altered a phone message from the broker in her assistant's computer “immediately following a lengthy conversation with her attorney.”

Martha Stewart Living Omnimedia Inc. is organized into four business segments — publishing, television, merchandising and internet/direct commerce. Its merchandising division is one of the primary brand suppliers of Kmart Corp. (Troy, Mich.), which has been going through its own dramas in the past year, including declaration of bankruptcy, investigation of internal accounting practices, management changes, store closings and most recently emergency from bankruptcy.