Martha Stewart Out as CEO and Chairwoman

Shortly after her indictment by a federal grand jury, Martha Stewart decided to step down Wednesday evening as chairwoman and CEO of her namesake company in what may be the best decision of a bad lot of choices for her and the company.

Stewart, who is facing federal criminal and civil charges, will remain with Martha Stewart Living Omnimedia (MSO Quote) as a director and as its new chief creative officer.

The move allows the company to put some distance between it and her while still retaining Stewart's cachet, said Seth Taube, chairman of the securities litigation department at law firm McCarter & English.

"This was the right decision for the company," said Taube. "This gives investors the confidence that her brand name and creative help will remain, but that the business of the company will be run by people without integrity issues."

Jeffrey Ubben, head of a private investment firm and the largest shareholder after Stewart herself, will serve as chairman, and company President Sharon Patrick will become CEO, the company said.

"I love this Company, its people, and everything it stands for and I am stepping aside as Chairman and CEO because it is the right thing to do," Stewart said in a prepared statement. "This will enable the Company to continue to build the confidence and love of its readers, viewers, customers and strategic partners, without the distraction of my personal legal issues."

Just hours earlier, Stewart was indicted on charges of conspiracy, obstruction of justice and making false statements. In addition to those criminal charges, the Securities and Exchange Commission brought civil charges against Stewart, accusing her of insider trading.

The charges relate to Stewart's sale of ImClone Systems(IMCLE Quote) stock just before the Food and Drug Administration rejected a drug produced by ImClone, a move that sent the company's stock price tumbling.