Sample%20News%20Brief-2 - Corporate Governance Ch 4 The...

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Corporate Governance Ch 4 The Board of Directors December 24, 2010 Document URL: Martha Struggles to Craft Profits Because Martha Stewart Living Omnimedia has a dual class stock structure, founder Martha Stewart owns 51% of the stock and carries 91% of the voting control. Her place on the board alongside family and friends is a comfortable one, even in times of stress within the company. Martha’s and the board’s extremely inflated and regularly increasing compensation does not mirror the reality in which the brand and her popularity is declining. Shareholders in MSL Omnimedia have almost no ability to affect or monitor the actions of the board. While the profits fall and investor confidence is shaky, business as usual on the board of directors is threatening the long term health of the company. Neglecting their fiduciary duties and duties of care, this highly insider (even inside family) Board of Directors is clearly not working in the best interest of their nearly anonymous stockholders. When investors feel that they have such little importance for their shares, it is only a matter of time before a large shareholder steps in on behalf of them all and challenges the board, or they walk away. Clearly with Martha herself eliminating any chance of a large enough shareholder hero to emerge, this already old-
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This note was uploaded on 06/12/2011 for the course ECON 101 taught by Professor Bengoa during the Spring '11 term at CUNY Baruch.

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Sample%20News%20Brief-2 - Corporate Governance Ch 4 The...

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