Martha Stewart Living Omnimedia laid off about 10 percent of its 600-person workforce this week, according to Ad Age, but that is the least of the company's problems.
Martha Stewart the company is in full-scale collapse, according to its own disclosures to the SEC, and yet Martha Stewart the person is still compensated like a sultan, and that includes salaries and stipends for friends and family of the company's management.
In Q3 2012, revenues at MSO -- mostly from advertising or other marketing partnerships -- declined 17 percent to $43.5 million, the company reported today.
It's part of a yearslong downward spiral for the diva of home style. Here's a chart of MSO's annual revenues:
Magazine revenue and merchandising revenue are well on their way to being half what they were five years ago. That's partly because MSO screwed up two deals it had with Macy's and JC Penney, leading to injunctions that now prevent Stewart from selling in Penney. And sales within both chains were in decline even before the injunction took effect.
With a performance this lousy, you'd expect to see Stewart's compensation take a hit. In fact it has. In 2009, she earned $9.8 million in total compensation; in 2011 she got just $5.5 million.
But it's never that simple with CEO compensation. She did lose her bonus payments, but during the same period her base salary rose from $1.7 million to $2 million and her perks stayed flat at $3.3 million.
Perks, it turns out, are a huge part of Martha Stewart's life. Here's a breakdown:
- $289,653 in TV union talent fees.
- $612,249 for "security services."
- $83,327 for what appears to be Stewart's personal assistant, but the the company uses a bunch of legal mumbo jumbo to obscure what the payment is specifically for.
- $73,230 for a "weekend driver."
- A personal trainer
- Her charitable contributions
- And free swag in the form of "vendor/advertiser supplied samples/products, and utilities and telecommunication services with no incremental cost to the Company."
If you read that last item closely you'll notice that Stewart doesn't even pay her own cellphone bill.
It doesn't stop there.
Friends and family at the Stewart empire get sweet deals too:
- Margaret Christiansen, Stewart’s sister-in-law, is a Senior Vice President of the Company and received approximately $179,317 in compensation in 2011, inclusive of equity-based compensation.
- Alexis Stewart, Ms. Stewart’s daughter, served as a co-host of a company television show and a company radio show. She received approximately $230,769 in 2011.
- Jennifer Koppelman Hutt, the daughter of former executive chairman Charles Koppelman, received approximately $300,500 in 2011, for co-hosting with Alexis. (Hutt’s employment with MSO ended in December 2011.)
It has been this way for years. In 2010, Martha's personal trainer cost shareholders $30,000.
As a result of a 2009 contract, Stewart received a $3 million retention fee simply for agreeing to remain the boss of her own company, which she founded, and which is named after her, according to MSO's SEC filings (see page 41).
And that's a separate fee from the $2 million annual licensing fee her company gives her for permission to use her name.
Add it all up and Martha has received something like $30 million in compensation and fees since 2009, even though her company hasn't made a profit since 2007 and is hemorrhaging red ink, and only remained cashflow positive in 2011 because it sold stock and investments, according to its annual report.
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