Martha Stewart gave the phrase “home for the holidays” a whole new twist Thursday when the well-compensated chairwoman of Martha Stewart Living Omnimedia axed about 100 employees.
The layoffs, coming only a week an a half before Christmas, unnerved employees, many of whom left in tears, carrying their belongings in Martha Stewart bags.
The layoffs were the first moves unveiled by former scrap metal executive Daniel Dienst, a former MSO board member who was hired as the new CEO in October.
Dienst is a media outsider, and based on his experience trying to salvage rust belt companies in the metals industry, many expected radical retrenchments. Those predictions came to fruition on Thursday.
Stewart seemed content to follow his advice. She spent last week in Miami at Art Basel, the winter playground of the beautiful people, where dozens of private jets landed to party and peruse the international art market.
The cutbacks are estimated to save the company about $10 million next year.
Last year, according to corporate filings, Stewart received total compensation of $5.5 million — including a $2 million base salary.
In comparison, The new CEO of Time Inc., Joe Ripp, is receiving a base salary of $1 million to run the nation’s biggest magazine empire.
Stewart is down to a single magazine and numerous lines of merchandise.
The merchandise lines have been the subject of contentious lawsuits pitting her retailing partners Macy’s and JCPenney against one another, damaging her brand with both partners.
Last year, the diva’s Martha Stewart Living lost $56.4 million on revenues of $197.6 million.
Things have not improved this year, in which publishing has continued to struggle. Through the nine months ending Sept. 30, the company racked up losses of $7.8 million on revenue of $113.3 million.
Stewart, who went to jail in 2005 for lying to federal investigators in regard to the ImClone stock scandal, has not altered her high-flying ways.
“She still runs the company as if it was the 1990s,” said one former insider. Since 2002, the company has had only one profitable year, 2007.
Among the perks that were reimbursed to Martha by the company in 2012: $393,000 for a portion of her personal assistant costs; $128,000 for a weekend driver also used during the week for non-business needs; $168,000 related to personal fitness, wellness, beauty and wardrobe; $88,000 as talent on TV shows and $640,000 for security, according to SEC documents.
The cuts unveiled Thursday represent about 20 percent of the overall workforce that was believed to be around 500 people. Security guards escorted many of the axed employees out of the building immediately.
Dienst’s contract calls for a base pay of $775,000, but is heavily incentivized with stock options tied to a rising stock price. He is eligible for a bonus of up to $1.5 million next year. And his stock options start kicking in as the stock price hits $3 a share and he reaps additional stock grants if the stock rises to $4, $5, $6, $8, $10 and up to $12 — so long as they trade at that price for 30 days.
The stock, which had once traded over $37 a share at its peak, was trading under $3 a share for most of December but began rising after nypost.com broke the news Thursday that cutbacks were under way. At the market close the stock had jumped 32 cents to close at $3.26, up 10.9 percent.
“This is a significant change in direction for the company,” said “Buzz” Zaino at Royce & Asscoaites, which has 1.8 million shares of MSLO common stock.
“Her name generates revenues and it ought to be exploited in a better way than it is currently,” he said.
But he said the company has yet to communicate with analysts what the latest moves mean. “It will be interesting to hear what they have to say,” he said
Among those heading to the exit were some very high-level executives, including Daniel Taitz, who is an executive vice president and chief administrative officer and had run the company as interim CEO after Lisa Gersh was forced out and before Dienst was given the title on Oct. 28.
Also laid off: Chief Revenue Officer Joseph Lagani; Martha Stewart Publisher Peter Medwid; Managing Editor Carl Germann; VP of Integrated Sales Lara Pasternak; and the head of digital sales, Jess Hollander.
Erik Pike, the design director of Martha Stewart Living who was made editor-in-chief when Condè Nast raided Pilar Guzman to be editor-in-chief of Condé Nast Traveler, survived, but was not communicating with us.
“I am not allowed to talk to reporters,” Pike said, when reached Thursday. He then hung up the phone.
Nobody from the Martha Stewart public relations staff returned calls — although Media Ink did receive a Christmas card from the incommunicado communications staff that arrived at our desk on Thursday, shortly after news of the firings began to leak.
Martha Stewart herself did not return calls or emails.