Martha Stewart Quits NYSE BoardOct 4, 2002 | Newsday Plagued by insider-trading allegations and a blazing media spotlight, style guru Martha Stewart resigned Thursday from the board of the New York Stock Exchange.
Stewart's resignation came a day after federal prosecutors first outlined a potential insider-trading case against her as part of their indictment of Merrill Lynch broker assistant Douglas Faneuil. He pleaded guilty to a misdemeanor charge for concealing from investigators what he knew about Stewart's sale of ImClone Systems Inc. stock last December.
In her resignation letter, Stewart cited the "rigors of my own very busy and demanding corporate life" as reasons for stepping down. A statement released later went further: "I did not want the media attention currently surrounding me to distract from the important work of the NYSE," said Stewart, herself the chief executive of a large Manhattan-based media company, Martha Stewart Living Omnimedia.
NYSE chairman and chief executive Richard Grasso said Stewart's resignation was "voluntary."
Citigroup Inc.'s Michael Carpenter, who was recently reassigned as head of the company's Salomon Smith Barney investment banking division, also resigned from the board Thursday. Salomon is also the target of ongoing government investigations.
Wall Street analysts and other experts said there was little question Stewart's resignation was tied to the ongoing insider trading investigation.
"If you have a lot of stuff going on, and it could be distracting, I just don't think you're of any value being on the board," said consumer analyst Kathleen Heaney.
The Magazine Publishers of America confirmed Thursday that Stewart remains a board member "in good standing." Revlon Inc., where Stewart is also a director, did not return calls for comment.
Martha Stewart Living released a statement saying Stewart's resignation was a "personal" decision.
Analysts said Stewart's personal problems have a direct impact on the company. "The company's reason for being is extremely closely tied to her name and her reputation," said stock analyst T.K. MacKay, with Morningstar Inc. "Anything short of complete exoneration is damaging."