An unusually special award at Sigma-Aldrich

Earlier this week, there was big news in big-pharma when the German pharmaceutical giant Merck KGaA announced plans to buy Sigma-Aldrich Corp. for $17 billion. The $140 a share price represented a 37% premium to Sigma-Aldrich’s closing price.

Since that announcement on Monday, Sigma-Aldrich has filed 16 separate documents with the SEC, or somewhere north of 400 pages — from the transcript of the post-announcement call to the Powerpoint presentation to something called employee talking points, which was presumably designed by HR-types to reassure employees that they still have a job, at least for now.

But it was this 8-K filed late on Thursday that really jumped out at us: in the filing, Sigma-Aldrich says it is making a “special award” of $500,000 in cash to CFO Jan Bertsch. Though the filing was very brief, it did go out of the way to note that the award was “not related to the recently announced acquisition of the Company by Merck KGaA.”

We’ve been reading filings a long time and while this may come across as a bit cynical, it’s been our experience that when a company says that something has absolutely nothing to do with some other event, like a merger, it’s usually stretching the boundaries of truthiness.

Just to prove our point, we did a search through Sigma-Aldrich’s filings and couldn’t find a single other incident of the company offering another “special award”. The only time the company ever used that phrase is just four days after announcing this mega-deal. Bertsch, by the way, has been CFO since 2012, so there was certainly other opportunities to give her something special.

While the award itself is hardly huge in terms of some of the other merger-bounties we’ve seen — we’re talking about you, John Kanas — it still represents the equivalent of one year’s salary for Bertsch. That, plus the $5.9m in severance she could receive based on the company’s most recent proxy statement from March 2014.

Then again, CFOs are usually the ones who work the hardest to get the deal done and are usually among the first to lose their jobs once the deal is completed. Most people understand that and as we noted above, $500K is hardly giving away the store. So why would Sigma-Aldrich go out of their way to say that the $500K bonus is totally unrelated?