New York, NY, Jun. 5--Martha Stewart said on Wednesday she was quitting as chairman and chief executive of her company, hours after she was indicted on obstruction of justice charges.
She will remain on the company's board of directors and has been named to the position of chief creative officer. The changes are effective immediately, the company said.
"I am stepping aside as chairman and CEO because it is the right thing to do," Stewart said in a statement.
Her company, Martha Stewart Living Omnimedia Inc., said board member Jeffrey Ubben, head of a private investment firm and the largest shareholder after Stewart herself, will serve as chairman, and company president Sharon Patrick will become CEO.
Earlier on Wednesday, Stewart and her former stockbroker were charged with interfering with a government investigation into her suspiciously timed sale of ImClone Systems Inc. stock a day before the company's cancer drug Erbitux received a devastating ruling from the U.S. Food and Drug Administration.
Stewart and the broker, Peter Bacanovic, both pleaded not guilty to all charges against them.
The U.S. Securities and Exchange Commission also filed civil fraud charges against Stewart and her former stockbroker.
Stewart's move "allows the company to go forward and allows the person to focus on the most important task, which is defending from criminal charges," said Walter Brown, a partner at San Francisco-based litigation firm Gray Cary.
"I think it's probably viewed as a benefit for the company," he said. "She'll still have her imprint on the company even though she's not officially serving in the capacity."
Patrick, who met Stewart while the two were climbing Tanzania's Mt. Kilimanjaro in 1993, has been president and chief operating officer of Martha Stewart Living since 1997.
Before that, the Stanford graduate served as a consultant to the multimedia company while she was president of her own strategic consulting firm. She formerly headed the media and entertainment practice at global consulting company McKinsey.
Patrick steered Martha Stewart Living through many milestones. She helped rewrite Stewart's contracts with Time Inc. and KMart, and engineered the company's successful 1999 initial public offering.
Patrick held 11.1 percent of the company's Class A common stock as of March 31, according to Martha Stewart Living's latest proxy statement. In 2002, Patrick earned $844,369 in salary and a bonus of $680,600.
Ubben, whose investment firm owns 22 percent of the company's Class A common stock, became a director at Martha Stewart Living last year.
