The company promoted Wenda Harris Millard and Robin Marino to assume Ms. Lyne's responsibilities as co-CEOs. Ms. Millard, the onetime Yahoo ad sales chief, continues as president-media; Ms. Marino, a former president-COO of Kate Spade, continues as president-merchandising. Both will report to Chairman Charles Koppleman.
It wasn't immediately clear why Ms. Lyne is leaving now, but she said in a company statement that she had achieved her principal goal of returning the company to profitability -- which had foundered on an earlier advertising downturn and the incarceration of its namesake founder.
"While there is never a perfect time to depart, the company is on sound footing and we expect the transition to be very smooth," she said. "Wenda and Robin share Martha's vision of the company's future, they understand our businesses and have earned the trust of our partners."
Ms. Lyne's interest in taking on something new had been rumored as early as last year, but today's announcement was silent on her future plans. Her background in TV -- she had been president of ABC Entertainment -- means she could join a short list, however, of potential leaders at the planned Oprah Winfrey Network. Deadline Hollywood Daily reports that Judy McGrath, chairman-CEO of MTV Networks, may also be talking to Ms. Winfrey about a role with OWN.
The company has struck a number of high-profile deals as it sought growth under Ms. Lyne. Most recently it bought Emeril Lagasse's brand and business for $50 million, including TV programming, cookbooks, licensed products and his website. "We do believe that there is a big upside to our Emeril business," Ms. Lyne said in an April conference call. "It will be an immediate contributor, but we have a lot of good ideas already about how we are going to grow that business."
As Martha Stewart Living Omnimedia faces a difficult advertising and retail environment, meanwhile, it most likely won't mind removing Ms. Lyne's salary from its expenses -- after the end of the year, under the separation agreement. She received $900,000 in base pay last year, plus a bonus of $873,000 and options on 400,000 shares. The company has signaled its attention to costs with moves such as shutting down Blueprint magazine last December after less than two years in print.
"My guess is ultimately she wanted to step down and she felt like the resources were there," said David Bank, managing director at RBC Capital Markets, which has a rating of "sector perform" on the company, roughly equivalent to a "hold" rating. "But I do think they are in a relatively cost-conscious position. You've got a lot of high-powered and frankly high-earning executives. Could that have played into it? I suspect she must have been aware of that, the impact on the operating structure of the company, that her departure would have had."