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Martha quits company board
Stewart also quitting as chief creative officer but will keep editorial role at company she founded.
March 15, 2004: 4:22 PM EST

NEW YORK (CNN/Money) - Martha Stewart resigned from the board of the home decor and media empire that she founded, the company said Monday, just 10 days after she was convicted of obstructing an investigation into a well-timed stock sale.

Martha Stewart Living Omnimedia said Stewart has given up the posts of director and chief creative officer, but will retain a role as "founding editorial director" at the New York-based company.

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A jury convicted Stewart March 5 of obstructing justice, conspiracy and lying to investigators about her sale of nearly 4,000 shares of ImClone Systems stock in December 2001 -- a day before bad news about that company sent its shares tumbling.

The company was not accused of any wrongdoing in the government's case against Stewart, but its business has suffered because of her legal problems, with advertisers fleeing from her flagship magazine and viewership down for her TV programs.

Analysts have expressed doubts about the future of the company, whose businesses include magazines, books, TV programs and household products sold at Kmart stores.

Stewart faces up to 20 years in prison for the four-count conviction, although any sentence is likely to be much shorter, perhaps a year or two, legal experts say. Sentencing is scheduled for June 17.

"I am taking this action today because it is in the best interests of MSO and because I think it's the right thing to do," the 62-year-old Stewart said in the statement.

"I am heartsick about my personal legal situation -- and deeply sorry for the pain and difficulties it has caused our employees."

Martha Stewart Living Omnimedia, known as MSO, said Stewart's new responsibilities include providing inspiration for new products, authoring two books, assisting as a contributing editor and on TV assignments, and providing input on corporate strategy.

CEO Sharon Patrick, who succeeded Stewart last year, said the company wanted to continue to take advantage of the founder's talents in the home decoration field.

"Everyone at MSO recognizes the seriousness of Martha's situation and is deeply saddened," Patrick said in the statement.

But she added: "Wherever and whenever possible, we believe that MSO and our consumers should not be deprived of Martha's unique gifts."

Much is riding on Stewart's ongoing involvement in the brand -- retail sales of Martha Stewart products reached $1.5 billion last year.

The company said Stewart will have input on her replacement to the board, who will be chosen in what was described as "the normal course of such matters."

Martha Stewart Living (MSO: down $0.36 to $9.97, Research, Estimates) stock sank about 2.5 percent after Monday's announcement.

The stock plunged nearly 23 percent after her conviction March 5.

The company pledged at the time that it would survive, but retail industry analysts and brand experts said the verdict presented a serious -- and perhaps insurmountable -- threat to the Stewart brand name. (For more on the company's outlook, click here).

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Related Link
Stewart's Employment Agreement

Stewart had quit as chairman and CEO of Martha Stewart Living after she was indicted last summer but had stayed on as chief creative officer and as a director -- the posts she relinquished Monday.

Stewart's lawyer has said she would appeal, as did a lawyer for her co-defendant and ex-stockbroker, Peter Bacanovic, who was convicted on four of the five charges against him.

Separately, the company apparently was already working on a possible plan to rebrand products even while Stewart was still on trial, according to a published report Monday.

Trade publication Advertising Age said MSO applied to trademark the moniker "Everyday Living" for a magazine with the U.S. Patent and Trademark Office in January, shortly after Stewart's trial began.

Several industry watchers have said the Martha Stewart brand might not survive, especially if she goes to jail.

Patents, Copyright and Trademarks
Martha Stewart
Corporate Governance
Martha Stewart Living Omnimedia Incorporated

Patrick has said the company had a contingency plan in place if Stewart was found guilty.

The report cited an MSO spokeswoman as saying that "Everyday Living" was one of many trademark applications put forth by [the company], adding that the timing "could be coincidental."

She declined to say whether the trademark application was made with an eye toward changing the name of the company's flagship magazine, Martha Stewart Living.  Top of page

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