Martha Quits Martha Inc. Board

Martha Stewart Omnimedia Living
CBS/AP
Martha Stewart is stepping down from the board and as chief creative officer of the company she founded, a little more than a week after she was convicted of lying to federal investigators related to a 2001 stock sale.

The self-made queen of domestic arts will remain affiliated with Martha Stewart Living Omnimedia with the new title of founding editorial director.

In that role, Stewart, 62, will continue to provide creative inspiration for new product design and development; pen two pending books, Homekeeping and Baking; and provide input on the continuing evolution of the company and its brand and strategic issues.

Stewart will report to chief executive officer Sharon Patrick.

"Everyone at MSO recognizes the seriousness of Martha's situation and is deeply saddened," said Patrick in a statement. "However, all of us also believe that the company and our constituencies benefit most if we are able to continue to take advantage of Martha's creative inspiration and capitalize on her prodigious skills and experience in the domestic arts."

There has been speculation that the board may opt to change the name of the company to position away from Stewart, but there was no indication of that in today's statement.

Stewart retains a majority of the company's shares and more than 90 percent of its voting power.

In a statement of her own, Stewart said that Monday's action was "in the best interest" of the company.

"I am heartsick about my personal legal situation — and deeply sorry for the pain and difficulties it has caused our employees," she said. "I look forward to continuing to collaborate on a wide range of creative ideas with the amazing, talented and hard-working people at this very special company."

Stewart was convicted March 5, along with stockbroker Peter Bacanovic, of lying about why she sold 3,298 shares of ImClone Systems stock on Dec. 27, 2001, just before it plunged on a negative report from government regulators.

Stewart was convicted of conspiracy, making false statements and obstruction of justice. Bacanovic was convicted of conspiracy, false statements, obstruction and perjury — but cleared of falsifying a document.

A more serious charge against Stewart — the allegation she committeed securities fraud by professing her innocence to MSO stockholders — was dropped before the case went to the jury.

Both are expected to get 10 to 16 months in prison when they are sentenced June 17. Both have said they will appeal.

It may prove difficult for MSO to separate its business from Stewart. Besides the obvious connection through its name, the company features images of the convicted felon on its Web site. On a link labeled "About Martha," there is no mention of her indictment, trial or conviction — instead there is information on her birthday, pets and the fragrance she uses.