Martha stewart seeds kmart

CASE 11: Corporate Governance at Martha Stewart Living Omnimedia: Not “A Good Thing”

James B. Shein

Northwestern University

Going to prison usually ends the career of an executive—unless the executive is Martha Stewart.

Stewart’s five-month stay in an American prison in 2005 put an unsightly smudge on her highly polished image as doyenne of the domestic arts. She resigned as chairman and CEO of the company she founded and controlled, Martha Stewart Living Omnimedia (MSO), after her 2004 conviction related to an insider-trading 1 investigation, but her personal image was so closely intertwined with her company that revenues and share prices still plummeted.

When she returned to MSO after her release, advertisers and broadcasters were quick to forgive the tall, blonde celebrity; they flocked back to her namesake magazine and even signed her to star in two new TV shows. Under the leadership of a new CEO backed by Stewart and her allies on the board, MSO seemed by 2006 to be headed for a recovery.

But new technology was undermining the company’s business model and serious threats loomed from competitors. It would be Stewart herself—a former model and caterer whose devotion to domestic perfection and luxury had made her a brand icon—that would be the central player in the outcome.

A Brief History of Martha Stewart Living Omnimedia

The seeds of Martha Stewart’s larger-than-life career were planted in early childhood. Born Martha Kostyra, the second of six children of Polish immigrant parents, she inherited her mother’s passion for cooking and sewing and her father’s love of gardening. Her father instilled in her “the quest for perfection, with any task,” she once told a reporter. “If I was laying a cobblestone path for him in the garden, it had to be lined up straight with a string. The stones had to have the exact same amount of space between them.” 2 To her father, and to Martha, perfection in form and detail was synonymous with enduring value.

Stewart worked part-time as a model in high school and college and took a job as a stockbroker after graduation. A former boss said she was “fabulously successful.” But when the stock market crashed in 1974, she quit. According to her former boss, she couldn’t bear seeing people lose money on her advice. 3 After marrying Andy Stewart (a lawyer and publisher of art books) in 1961, she returned to Barnard College and completed a degree in history and architectural history.

Stewart’s talent for decorating became apparent when she and her husband bought and restored an old farmhouse. She also built a successful catering business in her basement with a friend from her modeling days. When she catered a book release party for her husband, Stewart met Alan Mirken, head of Crown Publishing Group, who later contacted her to develop a cookbook. The result was her 1982 bookEntertaining, a celebration of stylish party giving. Several more books and television appearances followed. Her 1987 book Weddings ignited a trend toward lavish wedding ceremonies and receptions in the United States. Mothers of the bride were soon toting the $50 volume around under their arms.