Martha Stewart‘s return to the board of her own company, Martha Stewart Living Omnimedia, has been delayed until late September, and the odds of her becoming chairman again — even though she is the majority stockholder — appear to be fading.
Outgoing Executive Chairman Charles Koppelman yesterday signaled his support for Martha to the chairman’s job once she is legally allowed back inside the boardroom.
The company said it expected her to return to the board “in the third quarter,” and it was originally thought that it would happen by mid-August.
“She can’t join the board until the end of September,” Koppelman disclosed yesterday.
Her original agreement with the Securities and Exchange Commission, which banned her from holding a board seat on a public company for five years following her conviction on obstruction of justice charges in the ImClone stock sale, was announced in the first week of August 2006.
But apparently the paperwork was not formally filed for several more weeks back then, delaying the Martha return until late next month. Asked if he thought that Stewart, who is still the majority stockholder, would return to her old job as chairman, Koppelman said, “Sure, there is a chance and personally, I would welcome it, but that doesn’t mean it is going to happen.”
Martha’s return to the board has already been approved, but her ascension to chairman would have to be approved by the board. Robert Routh, an analyst with Phoenix Partners Group, said he doesn’t expect a Martha return to the top job. “I don’t believe the investment community believes that is her skill set,” he said.
Koppelman, who had earlier told Media Ink that he didn’t expect to leave before his contract expired, nevertheless reversed himself. On Friday, the company revealed in a filing with the Securities and Exchange Commission that it is paying him $1.46 million to throw in the towel a year earlier than planned.
Back in January, when Media Ink asked him about industry rumors that he and the demanding founder were experiencing friction that would lead to his departure later this year, Koppelman said, “Not true. I have a contract for another two years.”
Routh said he believes the Koppelman exit was revealed because efforts to form a new strategic partnership could be coming to a head. “Sounds to me like they might have a deal done by then,” he said.
Koppelman will remain in his job as the executive chairman of the board and principal executive officer — i.e., the de facto CEO — until year-end, when he will exit, according to the SEC filing.
Lisa Gersh was already brought on board as the president and chief operating officer with the officially stated goal of becoming CEO at some point up to and including June 2012.
“I plan to help Lisa fit into her role,” Koppelman said.
Koppelman will still be a board member and will stay on with a lucrative and yet-to-be-disclosed consulting deal starting next year.
Stewart is the subject of a blistering report in the latest issue of New York magazine, which said essentially that the company has floundered since she was released from jail and returned to day-to-day involvement in company affairs eight years ago.
During that time period, it said the company has reported only one profitable year. Other than a short-term stock rise, there has been very little news on the company’s hiring of the Blackstone Group to “explore strategic partnerships.”
“The Blackstone initiative is moving along,” insisted Koppelman yesterday.
One stock analyst, Michael Kupinski at Noble Financial Capital Markets, said he thought the imminent departure of Koppelman helped to “streamline management,” and save the company about $2.2 million in management costs.
“In our opinion, the move highlights the prospect of sale of the company by eliminating expensive, long-term management contracts,” he said. Kupinski said he does not expect Martha to become CEO or chairman.
Routh at Phoenix said, “The company could get sold, go private or a private-equity firm could take all the publicly traded stock. I think they are smart enough to realize it’s not worth being public.”
But they have a lot of value in the brand that hasn’t been tapped yet,” he said. Merchan dising deals with Home Depot, Pet Smart, Macy’s and Michaels will eventually prove a lot more lucrative than the old merchandising deals with Kmart. “And they’ve barely scratched the surface internationally. It’s worth a lot more than $180 million.”