Auxiliary information…

Friday afternoon is always a great time to bury something in a SEC filing, and Auxilium Pharmaceuticals Inc.’s (AUXL) recent reports are no exception. 

In the 8-K Auxilium filed last Monday, June 26, the Company announced the appointment of new CEO, Armando Anido, concurrent with the resignation of former CEO Gerri Henwood.  In the filing, the Company claimed that "[t]he Company and Mr. Anido are currently discussing the terms of a potential employment agreement to be entered into by Mr. Anido and the Company. Likewise, "the Company and Ms. Henwood currently are discussing the terms of a potential Separation Agreement and Consulting Agreement to be entered into by Ms. Henwood and the Company."

Late on Friday, Auxilium filed an amendment to the 8-K that spelled out the details of the agreements, which seem to have been magically wrapped up by Tuesday, June 27, just one day after the original filing.  Under SEC rules, registrants have four business days to file any Current Report on Form 8-K, which means that by extending the agreement negotiations for one day, Auxilium was allowed to wait until Friday to file the required amendment to the 8-K.  Seems like a pretty blatant attempt to hide something if you ask us.  But we began to understand the reason for the chicanery once we dived into the amended 8-K. 

Anido is getting the usual boatload of options and juicy change-in-control agreement, but what really stood out was the "Relocation Assistance Agreement".  In it, the Company agreed to reimburse Anido for transportation and rental car expenses incurred for up to two house-hunting trips, expenses related to the sale of Anido’s current home, including broker commissions, appraisal fees, and attorneys’ fees.  Further, the Company agreed to reimburse Anido for certain expenses related to the purchase of his new home, including attorneys’ fees, mandated appraisal and inspections, and other closing costs which are normally charged to a buyer. The Company will also reimburse Anido for 60 days’ worth of temporary living expenses as well as the costs of transporting his family’s household and personal effects.  As if that weren’t enough, the Company is also throwing in $10,000 to cover "incidental relocation expenses".  The Agreement notes that some of those reimbursements might be taxable income to Anido, but the Company’s picking up the tab for any tax liability incurred.

Henwood didn’t fare too badly herself.  Her Separation Agreement grants her severance pay and bonus of some $375,000 while the Consulting Agreement she signed provided for payment of $162,100 for just eight months of work on a "substantial but less than full-time basis as an independent contractor consultant concentrating on a variety of matters related to the Company’s business."

The sad part — this may not even include everything.  The Company also disclosed the amended 8-K provides only a "summary description of certain terms of the Consulting Agreement and, by its nature, is incomplete".  To get all the information, we’ll have to wait until Auxilium files the full agreements as an exhibit to its second quarter 10-Q in August. Expect that one on the Friday before Labor Day weekend.