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Companies and Brands

Reality Bites: Martha Stewart Edition

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By Paul Ausick Updated Published
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Blueberry Pie

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Martha Stewart Omnimedia Inc. (NYSE: MSO) said in a filing today that it has changed its employment agreement between the company and Martha Stewart, the company’s namesake and public persona. We suggested back in April that perhaps she was being overpaid, and it now looks like the company’s board of directors agrees and has worked up the gumption to tell her so.

According to the filing, Stewart’s base salary has been reduced by 10%, from $2 million to $1.8 million. The agreement regarding reimbursement of business and certain other expenses also has been changed, presumably cutting back on some of Stewart’s perks, such as chauffeured limos for personal use on weekends. The effective date of this change was July 1, and the contract runs through June 30, 2017.

Stewart will also take a 15% cut in the annual licensing fee she collects from MSO for the use of her name. The new fee totals $1.7 million, down from $2 million. This change becomes effective in September and expires in September 2017.

The company also will get one-third of any talent fees paid to Stewart by nonaffiliated third parties and that require a “significant on-going commitment” from Stewart.

MSO’s board said the changes to Stewart’s contracts are “consistent with their plan” to return the company to profitability. Shareholders like the deal, pushing the stock price up 1.7% this morning, to $2.38 in a 52-week range of $2.28 to $3.41.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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