martha stewart final
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TRANSCRIPT
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CORPORATE GOVERNANCE IN COMPARISON
Corporate Governance
Dr. Sandra Dow
01/19/2010
Presented by
Ashkin Merrikh,
Lee Eisenberg
and Rizayel Mukashev
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OUTLINE
Financial and Key Ratios
Board of Directors (size, gender diversity, director compensation, composition)
Ownership, CEO compensations, Incentive Pay
Conclusions
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FINANCIAL COMPARISONS
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ALTMAN’S Z-SCORE under 1.8 -- Bankrupt over 3 -- Great 1.8-2.7 --Fair 1.7 - 2.99 is "zone of ignorance“
2008 2007 2006
MSO MDP MSO MDP MSO MDP
1.20 0.62 1.86 1.17 1.43 1.25
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BOARD OF DIRECTORS COMPARISON
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SIZE
1. Charles Koppelman (2008)
2. Charlotte Beers (2008)
3. Todd Slotkin (2008)
4. William Roskin (2008)
5. Michael Goldstein (2008)
6. Arlen Kantarian (2009)
7. Frederic Fekkai (2009)
1. Mary Sue Coleman (1997)
2. James R. Craigie (2006)
3. Alfred H. Drewes (2007)
4. D. Mell Meredith Frazier (2000)
5. Frederick B. Henry (1969)
6. Joel W. Johnson (1994)
7. William T. Kerr (1994)
8. Stephen M. Lacy (2004)
9. Philip A. Marineau (1998)
10. Elizabeth E. Tallett (2008)
Martha Stewart Meredith Corp.
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GENDER DIVERSITY
The Board of Directors
includes:1 – Woman6 - Men
The Board of Directors
includes:3 – Women7 - Men
Martha Stewart Meredith Corp.
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BOARD COMPOSITION (INDEPENDENT&CAPTURED INVESTORS)
Martha Stewart Meredith Corp.
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DIRECTORS’ COMPENSATION
1.Charles Koppelman – $ 3 951 223
2.Charlotte Beers – $ 75 812
3.Todd Slotkin - $ 159 254
4.William Roskin - $ 30 414
5.Michael Goldstein - $ 129 959
6.Arlen Kantarian – N/A
7.Frederic Fekkai – N/A
1. Mary Sue Coleman - $ 144 067
2. James R. Craigie - $ 124 152
3. Alfred H. Drewes - $ 138 736
4. D. Mell Meredith Frazier – $ 152 036
5. Frederick B. Henry - $ 142 036
6. Joel W. Johnson - $ 167 062
7. William T. Kerr - $ 462 906
8. Stephen M. Lacy – N/A
9. Philip A. Marineau - $ 152 036
10. Elizabeth E. Tallett – N/A
Martha Stewart Meredith Corp.
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Incentives, Ownership, andStreet Talk
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EXECUTIVE COMPENSATION BY CATEGORY
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DUAL SHARES
Each share of Class A – 1 vote
Each share of Class B – 10 votes
Each share of Common Stock – 1 vote
Each share of Class B – 10 votes
Martha StewartMeredith Corp.
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OWNERSHIP DATA
Class A Common
Stock Class B Common Stock
Name Shares Voting% Shares Voting
%
Total VotingPower
Martha Stewart 28,295,949 51.3 % 26,690,125 100.0 90.9 %
Alexis Stewart 28,224,244 51.2 % 26,690,125 100.0 90.9 %
Martha Stewart Family Limited Partnership 27,090,125 49.4 % 26,690,125 100.0 90.6 %
Charles Koppelman 1,086,882 3.8 % — — * Charlotte Beers 14,705 * — — * Michael Goldstein 58,945 * — — * Arlen Kantarian 19,132 * William Roskin 8,063 * — — * Todd Slotkin 10,286 * — — * Susan Lyne 611,916 2.1 % — — * Howard Hochhauser 22,009 * — — * Wenda Harris Millard 194,949 * — — * Robin Marino 131,332 * — — * Gael Towey 176,253 * — — * Gregory Barton 22,480 * — — * All directors and executive officersas a group (12 persons) 1,736,662 6.0 % — — *
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OWNERSHIP DATA
A Common Stock Owned Class B Common Stock Owned
Name
Sole Votingor
InvestmentPower
SharedVoting or
InvestmentPower
% ofClass
Sole Votingor
InvestmentPower
SharedVoting or
InvestmentPower
% ofClass
Beneficial owners of more than 5% Katherine C. Meredithc/o Marilyn Dillivan
19,200 92,412 11.47 4,484,144 92,412 49.85
E. T. Meredith, IVc/o Marilyn Dillivan
0 92,412 6.05 1,546,545 692,412 24.39
D. Mell Meredith Frazier, Director
20,232 92,412 5.91 1,467,866 692,412 23.53
Anna K. Meredith Endowment Trust
0 0 1.63 0 600,000 6.53
Select Equity Group, Select Offshore Advisors, LLC, and George S. Loening
5,618,742 0 15.17 0 0 0
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WHAT ANALYSIS SAY
Current Month Last Month Two Months Ago
Three Months Ago
MSO MDP MSO MDP MSO MDP MSO MDP
Strong Buy 0 0 0 1 0 1 0 1
Buy 0 0 2 1 2 1 0 0
Hold 0 0 3 5 3 5 3 5
Underperform 0 0 0 0 0 0 2 0
Sell 0 0 0 0 0 0 0 0
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CGQ RATINGS
Compared to:News Corp (FOX, WSJ) 74.4% of Media CompaniesTime Warner 99.2% of Media CompaniesWalt Disney 100 % of Media Companies
Martha Stewart Living Omnimedia Inc.'s Corporate Governance Quotient (CGQ®) as of 3-Jan-10 is better than 69.5% of Russell 3000 companies and 78.3% of Media companies
Meredith Corp.'s Corporate Governance Quotient (CGQ®) as of 3-Jan-10 is better than 3.7% of S&P 500 companies and 52.7% of Media companies.
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Conclusion
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MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE - FINANCIAL
Goal? Long-term share-holder wealth maximization
Martha Stewarts Financial Condition: Current Assets substantiate Current Liabilities Net Income Down 2 of 3 years Debt ratio is on edge, but is better than
competitor Altman Z score is not favorable, but better than
MDP Negative Earning Surprises
-100%, 50%, -38.46%, and -88.89% in last 4 quarters
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MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE – BOARD
Board Considerations: Newer Members -- Shows high turnover A good size, even and small Met 16 times in 2008, committees met 29
timesNominating is also “Corporate Governance” Committee >75% attendance
Questions about Chair and CPO, and their compensation ($3.59M)
All Independent
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MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE – GOOD OR BAD?
Family had vast majority of voting rights. Same for MDP, to some extent
Executives had strong financial incentives to perform, with handsome stock awards and options.
Better than perceived Lasting impact of Insider Trading Scandal
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QUESTIONS