| Stewart: Hasty exit (Reuters)
NewYork, Oct. 4: Martha Stewart, under ever-increasing scrutiny over the trading of her ImClone Systems shares, resigned on Thursday from the board of the New York Stock Exchange — immediately prompting questions from analysts about whether she will also step down as chief executive of Martha Stewart Living Omnimedia.
Stewart’s resignation arrived in a note, and was presented at a regular meeting of the 27-person board, along with that of Michael Carpenter of Citigroup, who was ousted as head of the company’s investment bank, Salomon Smith Barney.
Carpenter could not serve because he no longer led a major company; Stewart’s resignation was “voluntary”, said the chairman of the stock exchange, Richard A. Grasso.
“Her resignation was accepted; there was no discussion,” he said at a news conference after the meeting.
Analysts said that after Douglas Faneuil, the assistant to Stewart’s stock broker at Merrill Lynch, pleaded guilty on Wednesday to lying about her ImClone trades, she had little choice but to quit.
“As a board member, she had fiduciary responsibility,” said Charles Elson, the director for the Center of Corporate Governance at the University of Delaware. “The Exchange must be run on trust and integrity, and the role of a director is to contribute to public confidence.”
Stewart, in a news release issued late Thursday, said she quit because she did not want “the media attention currently surrounding me to distract from the important work of the NYSE and thus I felt it was appropriate to resign.”
After the announcement, shares of Martha Stewart Living Omnimedia fell, closing down more than 8 per cent, to $ 6.21, the lowest price ever.
Sources inside the exchange said that Grasso had long stood by Stewart, who was made a member of the board last June, only a few days before the ImClone insider trading scandal broke. Even after the story broke, the sources say, Stewart personally assured Grasso she was innocent — and on Thursday, legal experts emphasised that Stewart has not been charged with any crime.