Martha Stewart’s contract made us do it….
Note to the Martha fans: We like Martha. We really do. Those heart-shaped, hand-written notes she adds to tea bags for her guests? Very thoughtful. And the Sweet-Heart arrangement she created with red tulips and cinnamon candies? Lovely! Especially for Valentine’s Day.
So – with that acknowledgment out of the way, and the fact that some fans (presumably non-investors) think that Martha is “worth every penny” she makes – we can’t help but poke at the 8-K that Martha Stewart Omnimedia (MSO) filed yesterday The filing may be a good thing for Martha, but it’s not exactly good for employee morale and investor confidence.
Here’s the passage that caught our attention:
…On February 6, 2008, the Compensation Committee of the Board of Directors of Martha Stewart Living Omnimedia, Inc. (the “Company”) determined that, other than the guaranteed minimum bonus payable to Ms. Stewart pursuant to her contract, no named executive officer of the Company would receive a cash bonus of more than 15% of such employee’s target cash bonus award (equal in amount to the amount advanced in December 2008).
Under the terms of the proxy filed last April, Martha will receive a guaranteed bonus of $495,000 on top of her $2-plus million dollars in compensation and another $2 million that she receives for letting her company film her television show at one of her homes (as we footnoted here last August).
The other named executive officers — including Co-CEOs Wenda Harris Millard and Robin Marino — presumably got the “no more than 15%” get nothing since their contracts don’t use the word guaranteed.
While the company won’t announce its fourth-quarter results for another two weeks, the company’s performance last year was underwhelming. The third-quarter results were disappointing, and this article notes that in 2008, the company laid off 100 employees. And the stock has been trading at under $5 a share since mid-November. Given that environment, one might have expected Martha to be a bit more magnanimous here, perhaps spreading her guaranteed bonus around. AT&T’s (T) CEO, Randall Stephenson declined a bonus after the company’s fourth-quarter earnings fell 23%. The company also announced that no managers or executives would receive pay raises in 2009 in order to try and save as many employees’ jobs as possible.
A “guaranteed” bonus doesn’t mean that the recipient has to accept the money. She could, in fact, share the money with her colleagues or laid-off former employees, or she could decline it altogether with a very polite (and hand-written) thank-you note.
Image Source: Pacific Coast News
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Posted in Tags: 8Ks, celebrities, employment agreements |
 8 Comments » |
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February 13th, 2009 at 11:06 am
awesome find!
February 13th, 2009 at 12:25 pm
I don’t read it as that. I read it as saying that Wenda Harris Millard and Robin Marino will get 15% of what they were advanced in December, while Martha Stewart will get her guaranteed minimum.
February 13th, 2009 at 12:39 pm
When is a bonus not a bonus? I guess when it is a “guaranteed bonus”; but really if it is guaranteed then isn’t it just salary? I assume that a bonus must be called that because of accounting practices. But, do you have any insight about the shades of meaning between “guaranteed bonus” and salary?
February 13th, 2009 at 1:11 pm
Randall Stephenson was a poor example. AT&T made billions in profits last year. In 2007, Mr. Stephenson received just under $22 million in compensation. While AT&T made a profit, he has frozen his managers’ pay, which usually results in an annual increase from one to three percent, he has also has forced them not to schedule vacations or days off after April, when the union contract exires. Apparently, Mr. Stephenson thinks this is the way to motivate and reward his managers. Look for a “blue” flu to hit AT&T this April.
February 13th, 2009 at 1:26 pm
@ Felix: You’re right. I was editing Sonya’s post this morning and it was my mistake — not hers. Instead of nothing, I should have said they would receive up to the 15% advanced back in December.
@ W. Burl Evans: I believe it has to do with tax and retirement planning rules, but perhaps one of the many attorneys or CPAs who reads footnoted can provide some additional clarity.
@TLG: Thanks for the additional perspective on the situation at AT&T.
February 13th, 2009 at 6:06 pm
Another reader pointed out that the date in the filing for the comp committee meeting — Feb. 6, 2008 — has to be a typo. Otherwise, the company would be in violation of SEC rules that require an 8K be filed within four business days. So we’ll assume that the meeting was on Feb. 6, 2009.
February 15th, 2009 at 8:21 pm
I’ll be looking forward to Martha’s upcoming segment on Alpo pâté.
February 17th, 2009 at 10:58 am
I like how she is paid by her company to record her show in her house. I wish I could have been in on that deal.