CORPORATE GOVERNANCE IN COMPARISON

Corporate Governance

Dr. Sandra Dow

01/19/2010

Presented by

Ashkin Merrikh,

Lee Eisenberg

and Rizayel Mukashev

OUTLINE

Financial and Key Ratios

Board of Directors (size, gender diversity, director compensation, composition)

Ownership, CEO compensations, Incentive Pay

Conclusions

FINANCIAL COMPARISONS

ALTMAN’S Z-SCORE under 1.8 -- Bankrupt over 3 -- Great 1.8-2.7 --Fair 1.7 - 2.99 is "zone of ignorance“

2008 2007 2006

MSO MDP MSO MDP MSO MDP

1.20 0.62 1.86 1.17 1.43 1.25

BOARD OF DIRECTORS COMPARISON

SIZE

1. Charles Koppelman (2008)

2. Charlotte Beers (2008)

3. Todd Slotkin (2008)

4. William Roskin (2008)

5. Michael Goldstein (2008)

6. Arlen Kantarian (2009)

7. Frederic Fekkai (2009)

1. Mary Sue Coleman (1997)

2. James R. Craigie (2006)

3. Alfred H. Drewes (2007)

4. D. Mell Meredith Frazier (2000)

5. Frederick B. Henry (1969)

6. Joel W. Johnson (1994)

7. William T. Kerr (1994)

8. Stephen M. Lacy (2004)

9. Philip A. Marineau (1998)

10. Elizabeth E. Tallett (2008)

Martha Stewart Meredith Corp.

GENDER DIVERSITY

The Board of Directors

includes:1 – Woman6 - Men

The Board of Directors

includes:3 – Women7 - Men

Martha Stewart Meredith Corp.

BOARD COMPOSITION (INDEPENDENT&CAPTURED INVESTORS)

Martha Stewart Meredith Corp.

DIRECTORS’ COMPENSATION

1.Charles Koppelman – $ 3 951 223

2.Charlotte Beers – $ 75 812

3.Todd Slotkin - $ 159 254

4.William Roskin - $ 30 414

5.Michael Goldstein - $ 129 959

6.Arlen Kantarian – N/A

7.Frederic Fekkai – N/A

1. Mary Sue Coleman - $ 144 067

2. James R. Craigie - $ 124 152

3. Alfred H. Drewes - $ 138 736

4. D. Mell Meredith Frazier – $ 152 036

5. Frederick B. Henry - $ 142 036

6. Joel W. Johnson - $ 167 062

7. William T. Kerr - $ 462 906

8. Stephen M. Lacy – N/A

9. Philip A. Marineau - $ 152 036

10. Elizabeth E. Tallett – N/A

Martha Stewart Meredith Corp.

Incentives, Ownership, andStreet Talk

EXECUTIVE COMPENSATION BY CATEGORY

DUAL SHARES

Each share of Class A – 1 vote

Each share of Class B – 10 votes

Each share of Common Stock – 1 vote

Each share of Class B – 10 votes

Martha StewartMeredith Corp.

OWNERSHIP DATA

                     

  Class A Common

Stock   Class B Common Stock  

Name Shares Voting%   Shares Voting

%

Total VotingPower  

 

Martha Stewart 28,295,949 51.3 % 26,690,125 100.0 90.9 % 

Alexis Stewart 28,224,244 51.2 % 26,690,125 100.0 90.9 % 

Martha Stewart Family Limited Partnership 27,090,125 49.4 % 26,690,125 100.0 90.6 % 

Charles Koppelman 1,086,882 3.8 % — — *   Charlotte Beers 14,705 *   — — *   Michael Goldstein 58,945 *   — — *   Arlen Kantarian 19,132 *           William Roskin 8,063 *   — — *   Todd Slotkin 10,286 *   — — *   Susan Lyne 611,916 2.1 % — — *   Howard Hochhauser 22,009 *   — — *   Wenda Harris Millard 194,949 *   — — *   Robin Marino 131,332 *   — — *   Gael Towey 176,253 *   — — *   Gregory Barton 22,480 *   — — *   All directors and executive officersas a group (12 persons) 1,736,662 6.0 % — — *  

OWNERSHIP DATA

A Common Stock Owned   Class B Common Stock Owned    

Name

Sole Votingor

InvestmentPower  

SharedVoting or

InvestmentPower

% ofClass  

Sole Votingor

InvestmentPower  

SharedVoting or

InvestmentPower

% ofClass  

Beneficial owners of more than 5%        Katherine C. Meredithc/o Marilyn Dillivan

   19,200   92,412  11.47   4,484,144    92,412  49.85 

E. T. Meredith, IVc/o Marilyn Dillivan

   0   92,412  6.05   1,546,545    692,412  24.39 

D. Mell Meredith Frazier, Director

   20,232   92,412  5.91   1,467,866    692,412  23.53 

Anna K. Meredith Endowment Trust

   0   0  1.63   0    600,000  6.53 

Select Equity Group, Select Offshore Advisors, LLC, and George S. Loening

   5,618,742   0  15.17   0    0  0 

WHAT ANALYSIS SAY

Current Month Last Month Two Months Ago

Three Months Ago

MSO MDP MSO MDP MSO MDP MSO MDP

Strong Buy 0 0 0 1 0 1 0 1

Buy 0 0 2 1 2 1 0 0

Hold 0 0 3 5 3 5 3 5

Underperform 0 0 0 0 0 0 2 0

Sell 0 0 0 0 0 0 0 0

CGQ RATINGS

Compared to:News Corp (FOX, WSJ) 74.4% of Media CompaniesTime Warner 99.2% of Media CompaniesWalt Disney 100 % of Media Companies

Martha Stewart Living Omnimedia Inc.'s Corporate Governance Quotient (CGQ®) as of 3-Jan-10 is better than 69.5% of Russell 3000 companies and 78.3% of Media companies

Meredith Corp.'s Corporate Governance Quotient (CGQ®) as of 3-Jan-10 is better than 3.7% of S&P 500 companies and 52.7% of Media companies.

Conclusion

MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE - FINANCIAL

Goal? Long-term share-holder wealth maximization

Martha Stewarts Financial Condition: Current Assets substantiate Current Liabilities Net Income Down 2 of 3 years Debt ratio is on edge, but is better than

competitor Altman Z score is not favorable, but better than

MDP Negative Earning Surprises

-100%, 50%, -38.46%, and -88.89% in last 4 quarters

MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE – BOARD

Board Considerations: Newer Members -- Shows high turnover A good size, even and small Met 16 times in 2008, committees met 29

timesNominating is also “Corporate Governance” Committee >75% attendance

Questions about Chair and CPO, and their compensation ($3.59M)

All Independent

MARTHA STEWART’S LIVING OMNIMEDIA, INCCORPORATE GOVERNANCE – GOOD OR BAD?

Family had vast majority of voting rights. Same for MDP, to some extent

Executives had strong financial incentives to perform, with handsome stock awards and options.

Better than perceived Lasting impact of Insider Trading Scandal

QUESTIONS