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PDFThe news came as a surprise to many, since Local seemed to magically flourish with Agius in charge of its numbers. The company reported a string of record quarters, pushing its stock from $1.60 to almost $9 a share, during her first 14 months on the job. The stock began to lose steam after that time, however, and ultimately suffered a massive hit when TheStreetSweeper raised questions about Local in general – and Agius in particular – a couple of months ago.
For its part, Local has chosen to downplay the abrupt departure of its top finance executive. In a press release issued after the market closed last Tuesday, the California-based Internet company stated that Agius had left for “personal reasons” so that she could be near her new husband on the East Coast. Moreover, Local stated in its official corporate filings that her “separation from the company is not as a result of any disagreement with the company, its management or its auditors.”
But Local actually terminated Agius – while at least suggesting that she left willingly – just six months after renewing her annual contract, those records show, and promised her a generous severance package if she signed a confidentiality agreement that would prevent her from sharing information about the company.
Local did not respond to messages seeking input for this story.
Meanwhile, Agius herself has offered few signs that she ever left Florida – her longtime home base – and went to work for Local in California at all. Nine months after Local hired her, records show, Agius registered her automobile (a Mercedes-Benz) with the Department of Motor Vehicles in the state of Florida. She also owns a home in Florida, records show, which still shows up as her primary residence.
Agius never obtained a driver’s license or purchased a house in California, records indicate, even though Local spent an extra $75,000 last year on her “relocation” expenses. She may have rented a fancy $5,300-a-month apartment in California, those records show, but that address still follows her Florida home on a list of possible residences.
On another odd note, records indicate, Local actually filed to withdraw Agius’s status as its CFO more than six months ago. Local went ahead and renewed her contract shortly after that, however, and continued to rely on her to certify its financial statements until officially announcing her departure from the company this month.
In yet another curious move, Agius has apparently erased Local from her professional record if she ever included the company on that record in the first place. According to her bio on LinkedIn, she has spent the past four years and 10 months serving as the CFO of a firm (Private Asset Management Group) that she founded in Florida. Although Local lists PAMG among Agius’s past employers in its regulatory filings, it claims that she left that firm at least two years ago.
Repeat Performance
Agius herself includes only one former job on her LinkedIn bio. She lists her past role as CFO of MIVA, another former employer identified in Local’s regulatory filings, but omits her recent post as CFO at Local entirely.
Interestingly, both Agius and her replacement at Local – newly appointed interim CFO Ken Cragun – worked in the finance department at MIVA (formerly known as FindWhat.com) during the same time period. Agius arrived at FindWhat in 2002, company records show, with Cragun joining her there the following year.
By 2004, records show, FindWhat had promoted Agius to CFO and Cragun to vice president of finance. FindWhat soon ran into trouble, however, with Ernst & Young resigning as its independent auditor after identifying multiple weaknesses – including specific concerns the company’s accounting practices and its finance staff – the very next year.
Agius stepped down as CFO of FindWhat shortly after that and, in a move repeated last week at Local, Cragun replaced her by shifting from vice president of finance to interim CFO.
FindWhat’s stock plummeted from around $20 to $5 a share during Agius’s brief stint as CFO, records show, and continued to lose ground after Cragun replaced her and ultimately followed her out the door. The company, now known as Vetro (Nasdaq: VTRO), currently trades for less than $3 a share. That plunge actually looks far worse when adjusting the price for splits, with the stock spiraling from the equivalent of $100 a share in 2004 to its present level in the low single digits.
Double Duty
If anything, the next company that hired Cragun as its CFO fared even worse. Cragun left MIVA in April of 2006 and became CFO of Modtech Holdings (OTC: MODT.PK) two months later, records show, with Modtech’s stock trading for around $5.50 a share. Modtech spent the next 18 months posting increasingly bad results, records show, pushing the stock below the $1 minimum price required for continued listing on the Nasdaq by early 2008.
Unable to stage a comeback, the stock officially moved to the OTC Bulletin Board later on that year. Modtech fetched less than a penny a share by the time that Cragun departed from the company in March of 2009, records show, and remains a sub-penny stock – now trading on the lowly Pink Sheets – to this day.
Nevertheless, Local touted Cragun as an accomplished finance veteran when welcoming him to the company shortly after his exit from Modtech in the spring of last year. With Cragun officially installed as its interim CFO, Local now claims that he has served as “the backbone of the company’s finance operation” since he first arrived on the scene.
Local sure paid Agius – the official leader of its finance team – quite well in the meantime. All told, the company’s 2009 proxy statement shows, Agius received a compensation package worth roughly $775,000 for her first 10 months on the job. (Even CEO Heath Clarke failed to score a payout that generous last year.) The value of Agius’s pay package would later expand, however, along with the company’s stock price.
Local awarded Agius 260,000 stock options, priced at $1.62 a share, when hiring her as its CFO early last year. As previously noted, Local then went on to report a string of record-breaking quarters – fueled in part by an aggressive acquisition strategy – that pushed the company’s stock to a multiyear high of almost $9 a share. While the stock has lost almost half its value since touching that peak, Agius’s options would still generate roughly $725,000 in gains – a sum almost equal to her entire 2009 pay package – even at today’s lower prices.
She held onto her valuable options, while picking up another $385,000 in future salary and bonuses, under the terms of her severance agreement.
Outside Reviews
Quite often, Wall Street views the departure of a company CFO as an important – and potentially dangerous – event. In the case of Local, however, analysts have essentially chosen to ignore this senior management change.
They have so far yet to publish any reports about Agius’s sudden exit, investors say, or its possible implications for the company. One of those analysts found enough time to write about Agius in the past, however, when TheStreetSweeper raised concerns about her track record two months ago.
In early August, just days after TheStreetSweeper published its first article on Local, MDB Capital Group analyst Jon Hickman rushed to defend both the company and its CFO in a reassuring investment report. At the time, Hickman – who disclosed a financial interest in Local – confidently reiterated his buy recommendation and his $15 price target on the company’s stock. (Notably, his firm recommends buying 85% of the stocks it covers and selling none of them.)
Local’s stock, which fetched $4.36 on the date of Hickman’s report, nevertheless continued to fall to a new 52-week low of $3.22 a share over the course of the next two weeks. Although the shares bounced back above $4 the following month, fueled by the buyout of a competitor in the same space, they still need to jump more than 200% in order to reach Hickman’s lofty target.
Local has already capitalized on its latest quarterly results, however, by pre-announcing anticipated upside to its earnings – and sparking a brief rally in its shares -- the week before Agius left the company. At the time, Local mentioned in passing that those numbers remained preliminary in nature and were therefore “subject to further review and completion by the company and its auditors.” It promised to issue official results “at a later date.”
Almost two weeks have passed since that time. Meanwhile, Local investors are still waiting on that financial report and wondering – perhaps with good reason – who exactly will sign it.
By now, in fact, even some avid Local bulls have been flocking to Internet chat rooms with concerns about the company.
“The sudden departure of the CFO and the link to questionable characters from the acquisitions make it more difficult for institutions to stick their neck out on this stock,” one shareholder stated on Local’s Yahoo Finance message board this weekend. “We have a problem with management.
“Don’t you feel like they are stumbling forward? Granted, the direction is forward – but they continue to make mistakes that leave question marks with investors.”
* Note: No member of TheStreetSweeper’s staff or advisory board has ever taken a financial position in Local.com (LOCM) or received any compensation from others who have positions in the stock. As editor of the site, Melissa Davis will never take a position in any of the stocks that she covers. To contact Ms. Davis, the author of this story, please send an email to editor@thestreetsweeper.org.
