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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: NOVEMBER 16, 2004
DATE OF EARLIEST EVENT REPORTED: NOVEMBER 11, 2004
MARTHA STEWART LIVING OMNIMEDIA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-15395 52-2187059
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
11 WEST 42ND STREET
NEW YORK, NY 10036
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 827-8000
Item 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On November 11, 2004, Martha Stewart Living Omnimedia, Inc. (the "Company")
entered into an employment agreement with Susan Lyne, pursuant to which Ms.
Lyne will serve as President and Chief Executive Officer of the Company.
The following summary is qualified in its entirety by reference to the text
of the employment agreement, a copy of which is filed as an exhibit to this
report. The agreement is for a term expiring December 31, 2007, subject to
automatic one year extensions if neither the Company nor Ms. Lyne gives
notice to the other of an intention not to renew the employment agreement
on or prior to 6 months prior to the then scheduled expiration date. Ms.
Lyne will receive a base salary of $900,000 per year, subject to annual
review by the Board of Directors and increase in the Board's discretion.
Ms. Lyne will be entitled to an annual bonus in an amount determined by the
Compensation Committee of the Board based on the achievement of performance
goals established by the Compensation Committee for each calendar year,
with a target annual bonus equal to 100% of base salary and a maximum
annual bonus equal to 150% of base salary.
Ms. Lyne will be entitled to participate in the employee benefit plans,
policies, programs, perquisites and arrangements that are provided
generally to similarly situated employees of the Company (excluding for
this purpose Martha Stewart) to the extent she meets the eligibility
requirements for any such plan, policy, program, perquisite or arrangement.
The Company will reimburse Ms. Lyne for all reasonable business expenses
incurred in carrying out her duties, including first class transportation
or travel on a private plane of the Company to the extent that such private
plane is available.
Concurrently with the execution of the employment agreement, the Company
paid to Ms. Lyne $447,120 to compensate her for the forfeiture of certain
equity compensation awards relating to her prior employment with The Walt
Disney Company resulting from her execution and performance of the
employment agreement.
Contemporaneously with the execution and delivery of the employment
agreement, the Company granted to Ms. Lyne 200,000 shares of restricted
Class A common stock, par value $0.01 per share, of the Company, pursuant
to the restricted stock agreement, a copy of which is filed as an exhibit
to this report. 50,000 shares of restricted stock will vest on each of the
first, second and third anniversaries of the date of the agreement. The
remaining 50,000 shares of restricted stock will vest on the seventh
anniversary of the date of the agreement, provided that 25,000 of such
shares will vest if the closing price of the Class A common stock has been
at least $22.50 for 20 consecutive trading days, and the balance will vest
if the closing price of the Class A common stock has been at least $25.00
per share for 20 consecutive trading days. In addition, the Company granted
Ms. Lyne options to purchase 400,000 shares of Class A common stock at an
exercise price of $18.57 per share, pursuant to the stock option agreement,
a copy of which is filed as an exhibit to this report. The options vest in
equal installments on each of the first, second and third anniversaries of
the date of the agreement.
Under the employment agreement, if Ms. Lyne's employment is terminated by
the Company without Cause (as defined in the agreement) or by Ms. Lyne for
Good Reason (as defined in the agreement), (i) outstanding equity awards
held by Ms. Lyne will vest and/or become exercisable (with outstanding options
remaining exercisable for five years following the date of termination (but
not beyond the original term)), the Company will pay Ms. Lyne a lump-sum
cash payment equal to (i) if the termination occurs on or prior to the
first anniversary of the effective date of the agreement, three times her
base salary and (ii) if the termination occurs after the first anniversary
of the effective date of the agreement, four times her base salary. In
addition, the Company will provide Ms. Lyne with continued medical coverage
at active-employee rates for two years or, if earlier, until she receives
subsequent employer-provided coverage. Notwithstanding clause (i) above, if
Ms. Lyne is terminated by the Company without Cause or terminates her
employment for Good Reason during the 6-month period prior to, or the
2-year period following, a Change in Control (as defined in the agreement),
she will receive the severance benefits described in clause (ii) above. In
addition, Ms. Lyne will be entitled to a gross-up for any excise taxes
imposed by Section 4999 of the Internal Revenue Code in the event of a
Change in Control.
The employment agreement contains customary confidentiality,
non-competition, non-solicitation and indemnification provisions.
Item 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS
On November 11, 2004, Sharon L. Patrick resigned as President and Chief
Executive Officer of the Company and was replaced by Susan Lyne. A copy of
the press release issued by the Company announcing the resignation of Ms.
Patrick and the appointment of Ms. Lyne is attached as an exhibit to this
report.
Item 9.01 EXHIBITS
99.1 Employment Agreement dated as of November 11, 2004, between Martha
Stewart Living Omnimedia, Inc. and Susan Lyne
99.2 Restricted Stock Agreement dated as of November 11, 2004, between
Martha Stewart Living Omnimedia, Inc. and Susan Lyne
99.3 Stock Option Agreement dated as of November 11, 2004, between Martha
Stewart Living Omnimedia, Inc. and Susan Lyne
99.4 Press release issued November 11, 2004
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
Dated: November 16, 2004
MARTHA STEWART LIVING OMNIMEDIA, INC.
By: /s/ James Follo
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James Follo
Executive Vice President, Chief
Financial and Administrative Officer
Index of Exhibits
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Exhibit No. Description
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99.1 Employment Agreement dated as of November 11, 2004, between
Martha Stewart Living Omnimedia, Inc. and Susan Lyne
99.2 Restricted Stock Agreement dated as of November 11, 2004, between
Martha Stewart Living Omnimedia, Inc. and Susan Lyne
99.3 Stock Option Agreement dated as of November 11, 2004, between
Martha Stewart Living Omnimedia, Inc. and Susan Lyne
99.4 Press release issued November 11, 2004