Business Case Studies, Women Executives/CEO's, Brand CEOs: The Case of Martha Stewart

 

The ImClone Scandal: Martha, Penny Wise...? Cont...

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Martha's conviction in a relatively trivial case in the series of scandals the United States witnessed in the recent times, triggeredmany reactions.Alex Prud'homme, author of a book on the ImClone scandal, complained that they were charging Martha with the cover-up of the crime because they could not charge her with the obvious crime, and so they were being very careful in explaining her actions.¹³ Moreover, it was commented, "It is politics, not the pursuit of justice, which is driving this case."¹⁴ Martha Stewart's political connections with the Democrats, and the fact that her friend SamuelWaksal himself was a Democrat, fuelled the suspected political tinge in the plot. The Democrats viewed corporate accountability as a winning issue in their campaign for the upcoming elections, as against a 'permissive environment' - for the growth of scandals - created by the deregulatory measures of the Republican government. But then, the Bush administration called for the creation of a 'Corporate Fraud Task Force' and tougher criminal penalties for dishonest executives. Also, the SEC considered the detection and prosecution of insider trading violations as one of the enforcement priorities, because insider trading impairs investor confidence. "It is going to take some people to jail to do hard time for hard crime," the SEC chairman Harvey Pitt said. He sawthe need for "real CEOs and real CFOs actually going to jail for perpetuating fraud."¹⁵

Observers felt that, "her tabloid celebrity, her status as a walking talking brand name, and her role as CEO of a publicly held corporation turned what would otherwise have been a simple case into a treacherous web of legal and corporate issues."16 Had she admitted to knowing about Waksal's sale and pleaded guilty, she would have got off the case with a small fine. The sentence now, analysts indicate, could be anything from two to twenty years of imprisonment. CEO as a Brand Martha Stewart's case called for a reappraisal of the notion of personal branding - where the company’s founder or CEO is in effect its brand. PeterMontoya, the author of the book The Personal Branding Phenomenon enlisted 'eight laws' on which a personal brand is based. They are specialization, personality, leadership, distinctiveness, visibility, persistence, unity, and goodwill.Acompanywith CEO as its brand, it was considered, may have to face greater challenges alongwith greater benefits.AsDavid J. Reibstein, a professor ofmarketing at Wharton, opined, the celebrity status of a businessperson who is a brand could add a great value to a company. But then, due to their high visibility, what ‘brand CEOs’might do personally would have an impact on the company.

However, there are some experts who are optimistic about MSO’s future. Commenting on howcustomers would react to a split between the 'real' Martha andMartha Stewart's brand image, Christopher Byron, the author of an unauthorized biography of Martha Stewart, noted that it was Martha Stewart's message that appealed to people, who "were not likely to be dissuaded from it when they find that it bears no relationship to the real Martha Stewart."21 Nonetheless, Martha being a strong personal brand, that got through the three 'C'test22 - clarity, consistency, and constancy - should thrive during economic downturns, and "remain a standard bearer of style whether or not she goes to prison."23

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13]"Martha Trial's Key Ingredient", www.cbsnews.com, February 3rd 2004
14]Anderson William L., "Martha Stewart: Political Prisoner", www.mises.org, March 19th 2004
15]Wes Vernon, NewsMax.com, www.newsmax.com, July 20th 2002
16]"Not a Good Thing For Martha", op.cit.
17]VernonWes, "SEC's Pitt Says CEOsWillGo to Jail;WatchOut, TerryMcAuliffe and JonCorzine", http://www.newsmax.com/archives/articles/2002/7/19/181027.shtml, July 20th 2002
18"When the CEO is the Brand, But Falls from Grace, What Next?", op.cit.
19]"CEO as brand", http://www.b-m.ch/images/pdf/p_ceo01_e.pdf, December 3rd 2001
20]"Cooking Martha’s goose", www.economist.com, September 12th 2002