Martha Stewart Agrees to Pay Cut as Namesake Company Eyes Profitability
To return Martha Stewart Living Omnimedia to profitability, the homemaking icon's direct company payouts are reduced by $500,000 as part of employment contract changes.
Martha Stewart Living Omnimedia said Wednesday that founder and non-executive chairman Martha Stewart and the lifestyle media company's board have agreed to reduce her base salary and other financial elements of her employment agreement.
In a regulatory filing, MSLO said the agreement, which reduces her direct annual payouts by the company by $500,000, was "consistent with their plan to return Martha Stewart Living Omnimedia to profitability."
Under an amended employment agreement that will continue to be in effect until June 30, 2017, Stewart's annual base salary will be reduced by $200,000 to $1.8 million, the filing shows. Her salary amounted to $1.7 million in 2009 before rising to $2 million in the following years.
The parties also agreed that an annual license fee payment -- that covers the company's rights to "the intangible asset consisting of Martha Stewart’s lifestyle" =- will be reduced by $300,000 to $1.7 million, effective Sept. 15, which is the date at which the next annual payment is due.
Stewart and the company also agreed that for productions funded by non-affiliated third parties that require "a significant on-going commitment" from Stewart, the company will now receive one-third of any talent fees payable, with the remainder going to Stewart. "Additionally, Ms. Stewart and the company reaffirmed the current arrangement that no additional payments will be due for productions financed by the company until her services exceed the commitment previously required with respect to The Martha Stewart Show,” according to the filing.
The new arrangement further stipulates that "payment or reimbursement of business and certain other expenses will be made in accordance with a new expense policy adopted by the board," the filing said without detailing how much that could affect Stewart.
The media company built by the homemaking icon has struggled financially, particularly at its publishing and broadcast divisions. Last year, it said it would scale back those businesses further to focus more on digital and video opportunities in moves that could save up to $35 million annually, in part due to job reductions.