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It's Good to Be Martha


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August 07, 2006

It's Good to Be Martha

Justin Hibbard

So Martha Stewart will pay a lousy $195K to settle civil insider trading charges. That will hardly put a dent in the early Christmas present that Martha Stewart Living Omnimedia Inc. (Nasdaq: MSO) will give her next month when it pays a 50 cents/share special dividend, over half of which will go straight to the company's largest shareholder, Stewart. All told, Stewart will pocket about $14.5 million from the one-time payout, which will come on top of an extraordinarily generous annual compensation package that she gets for having helped the company remain profit-free for the past three years. Mad props to my tipster for digging these figures out of the latest MSO proxy...

MSO payments to Martha Stewart in the last year:

One-time stock dividend: $14,503,173

Salary: $900,000

Guaranteed Bonus: $495,000

"The Apprentice: Martha Stewart" work: $500,000

MARTHA TV show: $200,000

Computer network and telecommunications system: $177,000

Personal transportation: $17,777

Business expenses: undisclosed

Guaranteed automobile and driver: undisclosed

"Non-accountable" expenses: $100,000

Use of properties for filming and photography: $750,000

Lawyer bills: $2,800,000

Total: $20,442,950

But that's not all...

Optional Bonus: $855,000

MARTHA reruns: 10% of adjusted gross revenues

Sister-in-law's employment: $160,000

Brother-in-law's employment: $146,000

Daughter Alexis' employment: $131,000

Sister's "editorial consulting fee": $70,000

MSO losses in the last year: $30,722,705

MSO cumulative losses in the last four years: $145,099,712

Now, the Street seems to have no problem with this goody package or with the special dividend. In fact, shares of MSO jumped 12% last Wednesday when the company announced the dividend and a second-quarter loss of $1.17 million, or 2 cents/share, which was smaller than analysts had expected. Seems investors believe the results signal a turnaround. Maybe so, but the company still expects to lose $6 million to $8 million this year and hasn't reported positive annual net income or cash flow since 2002. Investors who think they're buying a cheap turnaround story in MSO today must have iron stomachs.

I know Martha Stewart gets unfairly blamed for a lot these days. Just ask this guy. But is taking $14.5 million out of a money-losing company an effective way to win back sympathy?

01:30 PM

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I really wish that everybody would just lay off Martha. I have know of people with much smaller companys taking a whole lot more out of it. After all it is HER company with HER name in the title. The last time they toned down the MARTHA part of MARTHA STEWART LIVING, they really ticked a lot of people off. I do realize that I am very one sided on my opinion, because I adore Martha and I am one of her biggest fans. But again what happened legally did nothing to anybody but herself, unlike Ken Lay and many others. Let her move on, she did the time, now get over it!

Posted by: Claudine at August 8, 2006 11:06 AM

It's Good to Be Martha...hummm, 6 months in jail aint "good" at all Justin, no sir!

I'll take a pass...

Posted by: OhioOrrin at August 8, 2006 01:15 PM

Do I detect a note of resentment?!?!?

Why are the other high-rollers--gates, buffet, grasso, et al, exempt from your disdain?

Posted by: zulu at August 8, 2006 05:06 PM

Great. She deserves all of it. She is a creative and business genius. No Martha, no company.

Posted by: Vallory at August 11, 2006 05:34 PM


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