A BAD THING.

From 2003, Jeffrey Toobin at lunch with the embattled Martha Stewart

From 2000, Joan Didion on the powerful appeal of Martha Stewart

The cult of the chief executive reached its apogee in the nineteen-nineties, a period when C.E.O.s seemed not so much to serve their companies as to embody them. Certainly, there was a Time Warner independent of Gerald Levin, and Disney and General Electric existed beyond Michael Eisner and Jack Welch. Yet these executives, and others like them, were compensated as if they single-handedly controlled the fates of their companies. In the late eighties, a seven-figure salary was a lot to pay a C.E.O.; by the late nineties, nine-figure fortunes were routine. The chairman of General Motors, for example, made five hundred and seventy-five thousand dollars in base salary in 1991 and just over two million in 2000. Michael Ovitz, at Disney, got a severance package worth somewhere between ninety and a hundred and thirty million dollars. But how much difference did most of these executives make? They took credit when the nation's economy made almost every business leader look good, and they blamed the fates when times turned hard. Many were, in essence, lavishly paid bureaucrats--caretakers more than creators.

Then, there was Martha Stewart. There was a cult around her, too, but for different reasons. Unlike most of the famous C.E.O.s of the period, she built her company, Martha Stewart Living Omnimedia, from scratch, and, unlike virtually anyone else, she herself was in many ways its singular product. (Jeff Bezos created Amazon.com, but it sold books and other merchandise.) The challenge for Martha Stewart Living Omnimedia was to define itself as something other than its leader's corporate alter ego. When I visited Stewart at her house in Westport, Connecticut, last year, she talked about her importance to the magazine, Martha Stewart Living, saying, "This is me, O.K., me, one hundred per cent." Sharing credit does not come naturally to her, but she said that she was trying to be less dominant in the company--to turn it into an institution. Her role model was Ralph Lauren. "When you see Polo, you don't see Ralph Lauren," she said. But when people saw Stewart's company, which at its peak employed more than six hundred people, they saw Martha Stewart. Besides, the company seemed to exist more to serve its founder than the other way around. She was surrounded by people whose jobs were to anticipate and meet her every need. At Stewart's trial, which featured testimony from several of her courtiers, her bookkeeper, Heidi DeLuca, said that she was employed by the company but that her duties included maintaining Stewart's personal checkbook, paying her bills--such as health, life, and automobile insurance--and overseeing the payroll for her personal staff of between thirty and forty people. (Stewart reimbursed the company for a portion of DeLuca's salary.)

Stewart's sale of 3,928 shares of stock in the biotech company ImClone, on December 27, 2001, and the legal disaster it led to, is in many ways a story of her support system in action. At every stage--from the transaction to the investigation by the Securities and Exchange Commission and the F.B.I. to, finally, her criminal trial--people mobilized to help her: assistants, brokers, lawyers, even other celebrities. Yet the more they tried to help, the more excruciating Stewart's problems became. With the guidance of her entourage, she invariably made the wrong decisions, and the result was humiliation and conviction. On March 5th, a jury in United States District Court in New York found Stewart guilty of all four charges against her: conspiracy, obstruction of justice, and two counts of making false statements. Her co-defendant, the stockbroker Peter Bacanovic, was convicted of four counts, too: conspiracy, perjury, obstruction of justice, and making a false statement.

On the scale of highly publicized misdeeds in the past decade, Stewart's trade must rank among the most trivial. She netted only about fifty thousand dollars more on the deal than if she'd held the stock for another day, and, as she told me, her ImClone holding constituted .03 per cent of her assets. It seems almost implausible that such a misstep could send Stewart to prison and lead her company to ruin--and that this happened with the help of the best and most loyal people that money could buy.

Peter Bacanovic, Stewart's broker at Merrill Lynch, was, like almost everyone else, just trying to keep Martha Stewart happy. On December 27, 2001, while he was on vacation in Florida, he heard from his assistant, Douglas Faneuil, that another of his clients, Sam Waksal, the chairman of ImClone, was trying to get rid of virtually all his own and his family's stock in the company. Bacanovic knew that Stewart owned ImClone stock--Stewart and Waksal were close friends--and he told Faneuil to call her and let her know.