A lot of Martha Stewart Living Omnimedia investors believe that they were shortchanged by the $353 million price the company negotiated to sell itself to Sequential Brands. Several law firms are exploring the possibility of filing suits on their behalf.
But Martha Stewert has no reason to complain based on the sweet, and remarkably detailed, contract terms her company disclosed today in an SEC filing.
The domestic diva’s contract runs through 2020, with six weeks of vacation per year. It guarantees her a $500,000 base salary, discretionary bonus, and a $1.3 million annual “guaranteed payment.” In addition, she stands to receive “incentive” payments equal to 10% of her branded merchandise’s gross licensing revenues once they exceed $46 million.
Stewart’s entitled to up to $100,000 a year in expenses. That doesn’t include any “promotional services” where the company will pay for first class travel and hotel as well as “hair and make-up services.” She gets to stay in her current New York City office until the lease runs out in early 2018.
There’s a vague reference to certain employees or their replacements who the company “shall not terminate” except for cause. Their pay can’t be cut.
There’s more: If Stewart’s contract isn’t renewed in 2020 then she’ll serve as a consultant through 2025, receiving anywhere from $1.5 million to $4.5 million a year depending on the company’s gross licensing revenues. In any case, starting in 2026 she’ll receive “legacy payments” equal to 3.5% of the yearly gross licensing revenues that last through 2030 or her death — which ever one comes later.
She gets to audit the company’s books, of course.
Stewart’s company has until July 22 to look for someone to top Sequential’s offer. If her company accepts a different offer, then it will have to pay Sequential a $7.5 million break-up fee. If the deal falls apart after August 6, then the fee rises to $12.8 million.