8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report: February 27, 2007

Date of earliest event reported: February 22, 2007

MARTHA STEWART LIVING OMNIMEDIA, INC.

(Exact Name of Registrant as Specified in Charter)

DELAWARE	001-15395	52-2187059
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

11 WEST 42ND STREET NEW YORK, NY	10036
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 827-8000

NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-10.1: BONUS CONVERSION POLICY

EX-10.2: FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT

EX-14.1: CODE OF BUSINESS CONDUCT AND ETHICS

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On February 22, 2007, the Compensation Committee of the Board of Directors of Martha Stewart Living Omnimedia, Inc. (the “Company”) approved an optional bonus conversion policy (the “Bonus Conversion Policy” or the “Policy”). Pursuant to the Policy, the CEO, CFO and other designated senior executive officers (collectively, the “Executives”) may convert up to $100,000 of the cash bonus to which they are otherwise entitled under the Company’s Annual Incentive Plan (in connection with their performance during the most recently completed fiscal year) into Restricted Stock Units (“Stock Units”) in order to give these individuals an increased sense of ownership and personal involvement in the development and financial success of the Company.

To the extent that an Executive elects to receive Stock Units, such Executive will enter into a Restricted Stock Unit Agreement and will receive Stock Units representing the number of shares of the Company’s Class A common stock having a value equal to 115% of the amount of the cash bonus being converted. That number of shares will be determined based on the closing price of a share of Class A common stock as reported on the New York Stock Exchange on the last business day immediately preceding the later of (i) February, 22, 2007 (the date of adoption of the Policy) and (ii) the date on which the Committee determines the actual amount of cash bonus to be awarded to the Executive under the Company’s Annual Incentive Plan for their performance in the prior fiscal year (such later date, the “Bonus Determination Date”). Because the Policy was just adopted and the annual bonuses have been determined, the operative price for this year is $19.00, the closing price on February 21, 2007. Any Stock Units awarded pursuant to the Bonus Conversion Policy will be granted pursuant to the Company’s 1999 Stock Incentive Plan.

Under the Policy, the Executive must continue to be employed by the Company in order to receive the underlying shares representing the 15% of “surplus” value, meaning the value in excess of the cash bonus amount elected to be converted, and such shares will vest in near equal annual installments over a three year period. Assuming continued employment, the Executive will be entitled to delivery of the shares underlying the award in installments of 33% at the end of the first year, 33% at the end of the second year, and 34% at the end of the third year, which installments shall each include the vested portion of the “surplus” shares.

The Company’s Bonus Conversion Policy is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein, and the form of Restricted Stock Unit Award Agreement is attached as Exhibit 10.2 and is incorporated by reference herein.

Item 5.05 Amendments to Registrant’s Code of Ethics, or Waiver of a Provision of the Code of Ethics.

(a) On February 23, 2007, our Board of Directors approved an amendment to our Code of Business Conduct and Ethics (the “Code of Ethics”). The amendment clarifies that the Code of Ethics has applied and will continue to apply to all employees, officers and Directors. The revised Code of Ethics also sets forth revised controls and prohibitions on doing business with related parties, defines the scope of those controls and prohibitions, provides a mechanism for ensuring that employees are informed of these controls and prohibitions, and requires employees to report any relevant relationships. In addition, the amendment enhances the Company’s record-keeping and disclosure policies and controls. Finally, the amendment expands the scope of the Company’s anonymous whistleblower hotline which permits employees to report, anonymously or otherwise, ethical or other concerns they may have involving the Company.

The Code of Ethics amendment is effective as of February 23, 2007. A complete copy of our Code of Ethics, as revised, is attached as Exhibit 14.1 to this Current Report on Form 8-K and is incorporated by reference herein. The Code of Ethics also is available on our website at www.marthastewart.com.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits

10.1.	Bonus Conversion Policy
10.2.	Form of Restricted Stock Unit Award Agreement
14.1.	Code of Business Conduct and Ethics

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MARTHA STEWART LIVING OMNIMEDIA, INC. (Registrant)
	By:	/s/  John R. Cuti
Date:  February 27, 2007		John R. Cuti
		General Counsel

EXHIBIT INDEX

Exhibits No.	Description
10.1.	Bonus Conversion Policy
10.2.	Form of Restricted Stock Unit Award Agreement
14.1.	Code of Business Conduct and Ethics

EX-10.1

Exhibit 10.1

MARTHA STEWART LIVING OMNIMEDIA, INC.

BONUS CONVERSION POLICY

          This MARTHA STEWART LIVING OMNIMEDIA, INC. BONUS CONVERSION POLICY (the “Policy”) authorizes certain eligible officers of the Company as designated by the Compensation Committee (in each instance, a “Named Eligible Individual”) to elect to convert up to $100,000 of any annual cash bonus that they have been awarded under the Martha Stewart Living Omnimedia, Inc. Annual Incentive Plan (the “Plan”) into Restricted Stock Units (“Stock Units”) representing the number of shares of the Martha Stewart Living Omnimedia, Inc. Class A Common Stock having a value equal to 115% of the amount of cash bonus being converted. We have provided definitions for certain capitalized terms not otherwise defined in Section 9 below.

          1. PURPOSE

          The Policy was adopted to provide a means whereby the Named Eligible Individuals may develop an increased sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its stockholders.

          2. ADMINISTRATION

          The Policy shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Committee”). The Committee shall have full authority to establish the rules and regulations relating to the Policy, to interpret the Policy and those rules and regulations, to select the Named Eligible Individuals in any year to participate in the Policy, to decide the facts in any case arising under the Policy and to make all other determinations and to take all other actions necessary or appropriate for the proper administration of the Policy, including the delegation of such authority or power, where appropriate. The Committee’s administration of the Policy, including all such rules and regulations, interpretations, selections, determinations, approvals, decisions, delegations, amendments, terminations and other actions, shall be final and binding on the Company, its stockholders and the Participants and their beneficiaries.

          3. ELIGIBILITY

          “Named Eligible Individuals” means any Eligible Individuals under the Plan designated by the Committee in any given fiscal year.

          4. EFFECTIVE DATE

          The Effective Date of the Policy is February 22, 2007.

          5. STOCK UNITS

                    (a) 1999 Stock Incentive Plan and Restricted Stock Unit Agreements. The Stock Units to be awarded in connection with the Policy will be granted pursuant to Section 8 of the Company’s 1999 Stock Incentive Plan (the “Plan”), which provision provides for the grant of Performance Units to eligible individuals under the Plan, and pursuant to Restricted Stock Unit Agreements (each an “Agreement”) to be entered into between the Company and any Named Eligible Individual who elects to participate. The Stock Units will have the terms set forth in such Named Eligible Individual’s Agreement and, to the extent not set forth in such Agreement, in the Plan or in this Policy. The Stock Units will not be designated as “Qualified Performance-Based Awards” (as defined in the Plan), meaning that the settlement of the Stock Units shall not be conditioned on the attainment of any Performance Goals (as defined in the Plan). The Agreements will be in a form approved by the Committee.

                    (b) Number of Shares. A Named Eligible Individual may elect to convert into Stock Units up to $100,000, per fiscal year, of the cash bonus to which they are otherwise entitled pursuant to annual bonus determinations made by the Committee under the Company’s Annual Incentive Plan. Upon electing to convert a cash bonus into Stock Units by the execution of an Agreement, such Named Eligible Individual will receive Stock Units representing that number of Shares having a value, based on the closing price of a Share as reported on the Stock Exchange on the last business day immediately preceding the later of (a) the Effective Date of this Policy and (b) the date on which the Committee determined the actual amount of cash bonus to be awarded to the Participant under the Company’s Annual Incentive Plan for performance in the prior fiscal year (such later date, the “Bonus Determination Date”), equal to 115% of the amount of cash bonus being converted.

                    (c) Election Period. Unless otherwise specified by the Committee, a Named Eligible Individual will have 5 business days, from and including the Bonus Determination Date, to elect to convert up to $100,000 of his or her cash bonus into Stock Units, and the amount to be converted, if any. Such election will be evidenced by the execution by such Named Eligible Individual of an Agreement.

                    (d) Delivery of Shares. Upon satisfying the specified Conditions applicable to a grant of Stock Units, and unless otherwise set forth in the Grantee’s Agreement, the Company will deliver to the Grantee or the Grantee’s beneficiary or estate, as the case may be, a certificate or certificates evidencing the Shares represented by the Stock Units.

                    (e) Vesting of Stock Units. Unless otherwise set forth in the Agreement, Stock Units granted to a Named Eligible Individual pursuant to this Policy will vest in accordance with the following schedule: 33% will vest on the first anniversary of the Bonus Determination Date; 33% will vest on the second anniversary of the Bonus Determination Date; and 34% will vest on the third anniversary of the Bonus Determination. In the event that a Named Eligible Individual’s employment with the Company is terminated during this three year period due to death or disability or pursuant to the terms of any arrangement between the Named Eligible Individual and the Company, the Stock Units shall immediately vest in full. In the event that a Named Eligible Individual’s employment with the Company is otherwise terminated during this three year period, such Named Eligible

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Individual will forfeit the number of Stock Units representing the 15% surplus beyond the cash bonus awarded prior to the conversion election (such forfeiture applying only to the remaining unvested portion of such award), and shall immediately vest in full as to the remainder.

For illustrative purposes only, and subject to the vesting and other terms specified in the Agreement, which terms shall control, the following is an example of how the vesting described above would be implemented (calculations are approximated/rounded for illustrative purposes):

Assuming a Grantee elects to convert $100,000 of cash bonus into Stock Units, s/he would be entitled to a 15% mark-up, valued at $15,000. Assuming that the closing stock price is $20.00 on the last business day immediately preceding the Bonus Determination Date, Grantee would be entitled to Stock Units representing 5,750 shares, of which 5,000 shares would be based on the initial cash bonus, and 750 shares would be based on the 15% mark-up. On the first anniversary of the Bonus Determination Date, Grantee would vest with respect to 33% of the 5,750, or approximately 1,898 shares, of which 248 shares would be based on the 15% mark-up. Assuming that Grantee resigned from the Company prior to the second anniversary of the Bonus Determination Date, he would forfeit the Stock Units representing the remainder of the mark-up shares, or 502 shares (= 750 mark-up shares less the 248 mark-up shares that vested on the first anniversary). Grantee would immediately vest upon termination with respect to the remaining 3,350 shares.

                    (f) Waiver of Restrictions and Acceleration. By written notice to a Grantee, the Board or Committee may waive restrictions and may accelerate the date on which a Stock Unit may become vested.

          6. REQUIREMENTS OF LAW

          We will not issue any Shares under the Plan or in connection with the Policy if doing so would result in a violation by us or anyone else of any law or regulation, including any federal or state securities law or regulation. We are not obligated to register any Shares or other securities covered by the Plan under the Securities Act. We are not obligated to take any action to cause Shares issued or sold because of the grant or vesting of Stock Units to comply with any law or regulation, including the Securities Act and the regulations thereunder.

          7. TRANSFER RESTRICTIONS

          The Stock Units shall not be transferable by the Grantee by means of sale, assignment, exchange, encumbrance, pledge or otherwise.

          8. AMENDMENT AND TERMINATION OF THE POLICY

          The Committee may amend, suspend or terminate the Policy at any time and for any reason. Except as permitted under any Agreement or the Plan, no amendment,

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suspension or termination of the Policy will alter or impair any rights or obligations under any Stock Unit previously granted under the Plan in connection with the Policy without the Grantee’s consent. With the consent of a Grantee, the Committee may amend any Agreement with such Grantee in a manner not inconsistent with the Plan and this Policy.

          9. DEFINITIONS

          For purposes of interpreting the Policy and related documents (including Agreements), the following definitions will apply:

          “Board” means the board of directors of the Company.

          “Class A Common Stock” means the Class A Common Stock, par value $0.01 per share, of the Company.

          “Company” means Martha Stewart Living Omnimedia, Inc., a Delaware corporation, and any successor or assignee of Martha Stewart Living Omnimedia, Inc. that assumes the Plan or awards granted thereunder.

          “Conditions” means, as applicable, the continuous service requirements that must be met before Stock Units become vested.

          “Grantee” means a Named Eligible Individual to whom the Company has granted awards under the Plan and this Policy.

          “Securities Act” means the Securities Act of 1933, as in effect on the Effective Date or as hereafter amended.

          “Shares” means shares of the Class A Common Stock.

          “Stock Exchange” means the OTC Bulletin Board, the New York Stock Exchange, the Nasdaq Stock Market and any other established national or regional stock exchange on which the Class A Common Stock is listed or admitted to trading.

          “We,” “us” and “our” refer to the Company.

*    *    *

          The Committee duly adopted and approved the Policy on the 22nd day of February, 2007.

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EX-10.2

Exhibit 10.2

FORM OF
AMENDED AND RESTATED 1999 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT

     This RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), made and entered into as of February ___, 2007 by and between                                          (the “Participant”) and Martha Stewart Living Omnimedia, Inc., a Delaware corporation (the “Company”), sets forth the terms and conditions of an Award of Restricted Stock Units granted in connection with the Company’s Bonus Conversion Policy, as adopted by the Compensation Committee of the Company’s Board of Directors (the “Committee”) on February 22, 2007 (the “Bonus Conversion Policy”) and pursuant to Section 8 of the Company’s Amended and Restated 1999 Stock Incentive Plan (the “Plan”). Any capitalized terms used but not defined herein shall have the meaning prescribed in the Plan.

     1. Grant and Vesting of Restricted Stock Units.

(a) Subject to the provisions of this Agreement and to the provisions of each of the Bonus Conversion Policy and the Plan, the Company hereby grants to the Participant                      restricted stock units (the “Stock Units”), each of which represents the right to receive, subject to the conditions set forth herein, one share of Class A common stock of the Company, par value $0.01 per share (“Common Stock”). Such number of Stock Units represents 115% of $                    , the value of the cash bonus awarded to the Participant that such Participant has elected to take in the form of Stock Units (the “Base Cash Value”), and has been calculated based on a per share value of $                    , which represents the closing price as reported on the New York Stock Exchange of a share of Common Stock (the “Per Share Price”) on the last business day immediately preceding the later of (a) the date of adoption by the Committee of the Bonus Conversion Policy and (b) the date on which the Committee determined the actual amount of cash bonus to be awarded to the Participant under the Company’s Annual Incentive Plan for performance in the prior fiscal year (such later date, the “Determination Date”). No Common Stock will be issued unless and until the Stock Units vest pursuant to this Agreement.

(b) Subject to the terms and conditions of this Agreement, the Stock Units shall vest and shall no longer be subject to any restrictions hereunder (i) with respect to thirty-three percent (33%) of the Stock Units, on the first anniversary of the Determination Date, (ii) with respect to thirty-three percent (33%) of the Stock Units, on the second anniversary of the Determination Date and (iii) with respect to thirty-four percent (34%) of the Stock Units, on the third anniversary of the Determination Date (such three year period, the “Restriction Period”). Notwithstanding the foregoing, all the Stock Units shall immediately vest and no longer be subject to restriction if the Participant’s employment with the Company is terminated during the Restriction Period due to death or Disability, or pursuant to the terms of any arrangement between the Participant and the Company, if any. Except as provided in the preceding sentence, in the event that the employment of the Participant with the Company shall terminate during the Restriction Period,

Stock Units representing that number of shares with an aggregate value, based on the Per Share Price, equal to (i) 100% of the Base Cash Value, if the termination occurs on or prior to the first anniversary of the Determination Date, (ii) 67% of the Base Cash Value, if the termination occurs after the first anniversary but on or prior to the second anniversary of the Determination Date, and (iii) 34% of the Base Cash Value, if the termination occurs after the second anniversary but on or prior to the third anniversary of the Determination Date shall vest, and the remainder of the unvested Stock Units shall be forfeited effective upon termination. For purposes of this Agreement, employment with the Company shall include employment with the Company’s affiliates and its successors.

(c) Upon the vesting of any Stock Units, the Common Stock underlying such Stock Unit will be delivered to the Participant (or, in the case of the Participant’s death, the Participant’s executor) pursuant to Paragraph 2 hereof. Nothing in this Agreement shall confer upon the Participant any right to continue in the employ of the Company or any of its affiliates or interfere in any way with the right of the Company or any such affiliate to terminate the Participant’s employment at any time.

     2. Issuance of Shares.

     Subject to Paragraph 8 (pertaining to the withholding of taxes), as soon as practicable after the Stock Units have vested, the Company shall issue (or cause to be delivered) to the Participant (or, in the case of the Participant’s death, the Participant’s executor) one or more stock certificates in respect of the Common Stock underlying such vested Stock Units. Notwithstanding the foregoing:

     (i) if the Participant is a “key employee” within the meaning of Code section 409A and             shares of Common Stock would otherwise be delivered to the Participant on account of the termination of the Participant’s employment with the Company and its affiliates, then such             shares will not be delivered to the Participant until six months (or such lesser period as may be permitted by Code section 409A) after such termination of employment to the extent necessary to avoid the imposition of the penalty under Code section 409A; and

     (ii) if the shares of Common Stock relating to the vested Stock Units would otherwise be delivered during a period in which the shares are listed on an established national or regional stock exchange or are publicly traded in an established securities market, and the Participant is (A) subject to a lock-up agreement restricting the Participant’s ability to sell shares in the open market, (B) restricted from selling shares in the open market because the Participant is not then eligible to sell shares under the Company’s insider trading or similar plan or policy as then in effect (whether because a trading “window” is not open or the Participant is otherwise restricted from trading) or (C) restricted from selling shares pursuant to an effective registration statement because of an applicable blackout thereunder, delivery of the shares related to the vested Stock Units will be delayed until no earlier than the first date on which the Participant is no longer prohibited from selling shares due to a lock-up agreement, insider trading plan or

policy restriction or applicable blackout, but in no event later than the end of the calendar year in which the shares related to such vested Stock Units would otherwise have been delivered.

     3. Nontransferability of the Restricted Stock Units.

     Stock Units shall not be transferable by the Participant by means of sale, assignment, exchange, encumbrance, pledge or otherwise.

     4. Rights as a Stockholder.

     The Participant will have no rights as a stockholder of the Company as a result of the ownership of Stock Units, including, without limitation, the right to vote or to consent to any action of stockholders or to receive any notice of meetings of stockholders.

     5. Adjustment in the Event of Change in Stock.

     In the event of a stock split or a corporate transaction such as a merger, consolidation, separation, spin-off (or other distribution of stock or property of the Company), any reorganization or any partial or complete liquidation of the Company, or any other similar change in capitalization or event for which the Committee believes an adjustment is appropriate, the number of Stock Units and the number and kind of shares underlying such Stock Units shall be equitably adjusted by the Committee as it may deem appropriate in its sole discretion. The determination of the Committee regarding any such adjustment will be final and conclusive.

     6. Payment of Transfer Taxes, Fees and Other Expenses.

     The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of shares received by an Participant in connection with the Stock Units granted hereby, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith.

     7. Other Restrictions.

     The Stock Units shall be subject to the requirement that, if at any time the Committee shall determine that (i) the listing, registration or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body, or (iii) an agreement by the Participant with respect to the disposition of shares of Common Stock is necessary or desirable as a condition of, or in connection with, the delivery or purchase of shares pursuant thereto, then in any such event, the issuance of shares of Common Stock that underlie the Stock Units granted hereby shall not be effective unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Committee.

     8. Taxes and Withholding.

     With respect to any amount that becomes includible in the gross income of the Participant for federal, state or local income tax purposes as a result of the vesting of the shares of Common Stock underlying the Stock Units, the Company shall deduct from the shares of Common Stock otherwise payable to Participant the number of shares necessary to pay any such taxes.

     9. Notices.

     All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or overnight courier, or registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

(a) if to the Participant, to the address last provided by the Participant to the Company’s Human Resources Department;

(b) if to the Company:

Martha Stewart Living Omnimedia, Inc.
11 West 42^nd Street
New York, New York 10036
Attention: General Counsel &
VP, Senior Director, Human Resources

     10. Laws Applicable to Construction.

     The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without reference to principles of conflict of laws, as applied to contracts executed in and performed wholly within the State of Delaware.

     11. Successors, Assigns and Transferees.

     This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and each of their respective successors, assigns and transferees; provided, that the Participant may not assign to any person any of such Participant’s rights hereunder other than in accordance with the provisions hereof.

     12. Administration.

     The authority to manage and control the operation and administration of this Agreement shall be vested in the Compensation Committee of the Board or such other committee of the Board as the Board may from time to time designate, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Committee and any decision made by them with respect to the Agreement is final and binding on all persons.

     13. Incorporation of Plan; Plan Governs.

     Notwithstanding anything in this Agreement to the contrary, all terms and conditions of the Plan and of the Bonus Conversion Policy are incorporated herein and made part hereof as if stated herein. This Agreement shall be subject to the terms of the Plan and of the Bonus

Conversion Policy and if there is any conflict between the terms and conditions of the Plan or the Bonus Conversion Policy and this Agreement, the terms and conditions of the Plan or Bonus Conversion Policy, as interpreted by the Committee, shall govern. The Participant may obtain a copy of the Plan and the Bonus Conversion Policy from the office of the VP, Senior Director, Human Resources of the Company, and the Participant’s execution of this Agreement constitutes the Participant’s acknowledgment, receipt, understanding and acceptance of all the terms of conditions contained in the Plan and the Bonus Conversion Policy. This Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan or the Bonus Conversion Policy.

     14. Not an Employment Contract.

     Neither this Agreement nor any Stock Unit shall confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor shall they interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of the Participant’s employment or other service at any time.

     15. Integration.

     This Agreement and the other documents referred to herein, including without limitation the Plan and the Bonus Conversion Policy, or delivered pursuant hereto, which form a part hereof contain the entire understanding of the parties with respect to their subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement, including without limitation the Plan and the Bonus Conversion Policy, supersedes all prior agreements and understandings between the parties with respect to its subject matter.

     16. Counterparts.

     This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but which together constitute one and the same instrument. Notwithstanding the foregoing, any duly authorized officer of the Company may execute this Agreement by providing an appropriate facsimile signature, and any counterpart or amendment hereto containing such facsimile signature shall for all purposes be deemed an original instrument duly executed by the Company.

     17. Participant Acknowledgment.

     The Participant hereby acknowledges receipt of a copy of the Plan, the Bonus Conversion Policy and the Prospectus. The Participant further acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan, the Bonus Conversion Policy, this Agreement and the Stock Units granted hereby shall be final and conclusive.

     IN WITNESS WHEREOF, the Participant has executed this Agreement on such Participant’s own behalf, thereby representing that such Participant has carefully read and understands this Agreement and the Plan and the Bonus Conversion Policy as of the day and year first written above, and the Company has caused this Agreement to be executed in its name and on its behalf, all as of the date first written above.

By:
	Name:
MARTHA STEWART LIVING OMNIMEDIA, INC.
By:
	Name:	Laura A. Schmidt
	Title:	VP, Senior Director, Human Resources

EX-14.1

Exhibit 14.1

February 2007

CODE OF BUSINESS CONDUCT AND ETHICS
MARTHA STEWART LIVING OMNIMEDIA, INC.

Introduction

This Code of Business Conduct and Ethics (the “Code”) for Martha Stewart Living Omnimedia, Inc. (“MSO”) covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all MSO directors, officers and employees. All of our directors, officers and employees must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. The standards in this Code may be further explained or implemented through policy memoranda, including those relating to specific areas of our business. This Code and related memoranda and manuals are available on our INET, as well as in our Human Resources and Legal Departments.

If an applicable law conflicts with a policy in this Code, you must comply with the law; however, if a local or foreign custom or policy conflicts with this Code, you must comply with the Code. If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.

Those who violate the standards in this Code will be subject to disciplinary action. If you are in or aware of a situation which you believe may violate or lead to a violation of this Code, please follow the guidelines described in Section 14 of this Code.

1. Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which MSO’s ethical standards are built. It is MSO’s policy to be a good “corporate citizen”. All employees, officers and directors must respect and obey the laws of the cities, states and countries in which we operate. Reasons such as “everyone does it” are unacceptable excuses for violating the Code’s requirement to obey the law.

Although not all employees are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers, the Legal Department or other appropriate personnel. Any suspected or actual violation of any applicable law, rule or regulation or our contractual undertakings should be reported immediately to your immediate supervisor or the MSO Legal Department.

From time to time, MSO holds information and training sessions to promote compliance with laws, rules and regulations.

February 2007

2. Conflicts of Interest

a. General Principles

A “conflict of interest” exists when a person’s personal or private interest interferes in any way with the interests of MSO as a whole. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for MSO objectively and effectively. It is critical that we avoid such conflicts, including situations that create the appearance of a conflict. The perception of a conflict, whether or not true, can be damaging.

There are many areas that give rise to potential conflicts. Conflicts of interest may also arise when an employee, officer or director, or members of his or her family, receives improper personal benefits as a result of his or her position in MSO. Issues related to the receipt of gifts are covered in the House Rules and Etiquette policy which can be accessed on MSO’s INET and which is also incorporated by reference herein, and issues related to doing business with related parties is discussed immediately below.

It is almost always a conflict of interest for an MSO employee to work simultaneously for a competitor, customer or supplier. You are not allowed to work for a competitor as a consultant or board member. The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except when acting on MSO’s behalf. It may also be inappropriate to invest in companies with which we do business. Our insider trading policy and other guidelines are addressed in this document, too.

Conflicts of interest are prohibited as a matter of MSO policy, except under guidelines approved by the Board of Directors or the MSO Legal Department. Conflicts of interest may not always be clear, so if you have a question, you should consult with higher levels of management, the Human Resources Department or the Legal Department.

b. Doing Business with Related Parties

Employees, officers and directors may not, without the prior approval of the General Counsel, conduct business on behalf of the Company with a member of their immediate family. This prohibition includes doing business with any business organization in which MSO personnel, or any immediate family member of MSO personnel, has a direct or indirect financial interest.

A person would be considered a member of your “immediate family” if that person is your child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and any person (other than a tenant or employee) who shares your household.

For example, without prior disclosure to and permission from the General Counsel, you cannot hire or influence another MSO employee to hire a company to provide services for MSO if a member of your immediate family owns part of that company.

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The rule is easy. If you or a member of your immediate family will receive personal benefit from a transaction, you MUST report it to the General Counsel for prior approval.

Press here to certify that you have read, understand and agree with the conflict of interest rules stated above. [Insert certification box here]

Please provide details below of any relationships known to you that would constitute a “related party” relationship as defined above, indicating the parties and the nature of the relationship between them and MSO.

[Insert dialog box or response space here]

3. Insider Trading

Employees, officers and directors who, as a result of their relationship with MSO, are in possession of material, non-public information about any publicly traded corporation, including MSO, may not engage in transactions in the securities of such corporations and should not share such information with anyone who might engage in such transactions. To do so is not only unethical but also illegal and could expose you to civil and criminal penalties.

Please read and familiarize yourself with the “Martha Stewart Living Omnimedia, Inc. Policy on Securities Law Compliance”, which already has been distributed to you. The policy can also be accessed on MSO’s INET. If you should have further questions in this area, please consult the MSO Legal Department.

4. Corporate Opportunities

Employees, officers and directors are prohibited from taking for their personal use opportunities (e.g., potential business ventures) that are discovered through the fulfillment of their MSO responsibilities or the use of corporate property or information without the consent of the Board of Directors. No employee, officer or director may use corporate property, information, or position for improper personal gain, and no employee, officer or director may compete with MSO directly or indirectly. Employees, officers and directors owe a duty to MSO to advance its legitimate interests when the opportunity to do so arises.

5. Competition and Fair Dealing

We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices.

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Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each employee should endeavor to respect the rights of, and deal fairly with, MSO’s customers, suppliers, competitors and employees. No employee, officer or director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

To maintain MSO’s valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics, quality requires that our products and services be designed and manufactured to meet our obligations to customers.

The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any MSO employee, family member of an employee or agent or director unless it: (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value, (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations. Please discuss with your immediate supervisor any gifts or proposed gifts which you believe may be inappropriate.

6. Discrimination and Harassment

The diversity of MSO’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances. Please consult MSO’s written policies on “Equal Opportunity” and “Harassment” posted on our INET for a further explanation of MSO’s policies in this regard.

7. Health and Safety

MSO strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining such a workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted in MSO’s workplace. MSO has a longstanding policy against drug and alcohol abuse in the workplace. Without the permission of an MSO Executive, the distribution, use, or possession of alcoholic beverages on MSO property, including office parties and other celebrations, is strictly prohibited. All other controlled or illegal substances are prohibited at all times on MSO

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property, unless you have professional medical authorization. “Controlled or illegal substances” are those that are restricted or prohibited by law with respect to their distribution, use, or possession.

8. Record-Keeping and Disclosure Policies and Controls

MSO requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, employees are responsible for to properly documenting their vacation time using the MSO Vacation Tracker and on their weekly time cards. Also, many employees regularly use business expense accounts, which must be documented and recorded accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or the controller. Rules and guidelines are available from the Finance Department. It is the responsibility of every employee to make sure that every business record he or she deals with is accurate, complete and reliable.

The law requires that MSO’s accounting, financial and other systems provide accurate and timely reporting of transactions involving company assets, and our reputation depends upon our full and complete disclosure of important information about MSO that is used in the securities marketplace. All of MSO’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect MSO’s transactions without omission, concealment or falsification of information and must conform both to applicable legal requirements and to MSO’s system of internal controls. Our financial and non-financial disclosures and filings with the Securities and Exchange Commission and in other public communications made by MSO must be fair, accurate, timely and understandable. Employees who are involved in the disclosure process are responsible for maintaining familiarity with the disclosure requirements applicable to MSO.

Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation and brought to the attention of MSO’s controller.

Business records and communications often become public and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports. Records should always be retained or destroyed according to MSO’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation please consult the MSO Legal Department.

9. Confidentiality

Employees, officers and directors must maintain the confidentiality of confidential information entrusted to them by MSO or its customers, except when disclosure is authorized by the MSO Legal Department, required by laws or regulations or if ordinary and necessary in the course of carrying out your MSO responsibilities. Confidential

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information includes all non-public information that might be of use to competitors, or harmful to MSO or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us. The obligation to preserve confidential information continues even after employment ends.

10. Protection and Proper Use of MSO Assets

All employees, officers and directors should endeavor to protect MSO’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on MSO’s profitability. Any suspected incident of fraud or theft should be immediately reported to your immediate supervisor for investigation. MSO equipment should not be used for non-MSO business, though incidental personal use is sometimes permitted.

The obligation of MSO employees, officers and directors to protect MSO’s assets includes MSO’s proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate MSO policy. It could also be illegal and result in civil or even criminal penalties.

The MSO Legal Department can provide guidance to you in these areas.

11. Payments to Government Personnel

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate MSO policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules.

The MSO Legal Department can provide guidance to you in these areas.

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12. Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code for executive officers or directors may be made only by the Board or a Board committee and will be promptly disclosed as required by law or New York Stock Exchange regulation.

13. Reporting any Illegal or Unethical Behavior

Employees are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and the best course of action in a particular situation. It is MSO’s policy not to allow retaliation for reports of misconduct by others made in good faith by employees. If you would prefer to make an anonymous report, the process for doing so is explained in the next section.

Employees are expected to cooperate in internal investigations of misconduct.

14. Compliance Procedures

We must all work to ensure prompt and consistent action in response to violations of this Code. However, in some situations it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind:

• Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.

• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.

• Seek help from MSO’s resources without fear of retaliation. In the rare case where it may not be appropriate to discuss an issue with your immediate supervisor, or where you do not feel comfortable approaching your immediate supervisor with your question, please discuss it with Human Resources or the General Counsel. MSO does not permit retaliation of any kind against employees for good faith reports of ethical violations.

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• Ask first, act later: If you are unsure of what to do in any situation, seek guidance before you act.

• Report any conduct in the workplace that raises ethical or other concerns involving MSO, including any concerns about questionable accounting or auditing matters, anonymously and without fear of retaliation. If you know of any questionable accounting, auditing or other workplace matters involving MSO that raise ethical concerns, you may report such matters anonymously to the Chairperson of the Audit Committee of MSO’s Board of Directors by calling (877) 248-1211. This hotline accepts calls at any hour of any day, and is staffed by employees of an independent, external company that specializes in receiving and processing such reports. If you prefer to make an anonymous written report, please send your concerns to the attention of the Audit Committee Chairman, Martha Stewart Living Omnimedia, Inc. at the following address: Martha Stewart Living Omnimedia, Inc., c/o Alertline, PMB 3767, 13950 Ballantyne Corporate Place, Suite 300, Charlotte, NC 28277. If your situation requires that your identity be kept secret, you can request that the service representative protect your anonymity in filing a report. MSO does not permit retaliation of any kind against employees for good faith reports of questionable conduct (including questionable accounting or auditing matters) involving MSO.