Bayer AGM Censures Leaders for Monsanto Woes

29.04.2019 -

Bayer’s annual general meeting (agm) on Apr. 26 proved to be as turbulent as expected. Although those attending the nearly 13-hour marathon session nodded off on major proposals made by management, they made clear that they were not in agreement with its course on Monsanto.

The explosive sentiment against the company’s leadership on this issue was so strong that the meeting voted by an overwhelming 55.5% not to discharge CEO Werner Baumann and the managing board of their responsibilities.

Sentiment against the supervisory board and its chairman, former Bayer CEO Werner Wenning, was less explosive; nevertheless, 33.6% of the share capital voted against discharging this board.

Under German law, the votes will not have any legal consequences.  Up to now, however, such low approval ratings were unheard of at Bayer – or at most any company listed in Germany’s DAX 30 blue chip index.

The disapproval rate for at Bayer this year was the highest ever at German DAX company’s shareholders meeting, news reports said.  At the 2018 agm, which took place four months before completion of the Monsanto takeover, only 3% voted against discharging management.

In the meantime, Bayer’s share price has plunged and its stock market value is only slightly higher than the US deal was worth, shareholders’ representatives complained. One fund manager commented that Bayer had been infected with the “Monsanto virus,” for which its pharmaceuticals arm had no antidote.

The company lost the first two US court cases, both of which took place in California, charging that the Monsanto’s glyphosate-based herbicide Roundup caused the plaintiffs’ cancer. If both appeals are unsuccessful, the company would be liable for damages of more than $180 million.

Some critics of management’s handling of the glyphosate discussion accused the board of not having conducted due diligence properly, but a shareholder’s motion calling for a special audit examining whether the boards had acted conscientiously was rejected by a vote of 74.3%.

As they were two years ago, some fund managers also said they remained critical of Bayer’s decision not to let the annual meeting vote on the Monsanto takeover.

While the Monsanto problems dominated the meeting, some shareholders said they also missed any perspective on plans for the pharmaceuticals business as well as the future of R&D and the lack of dynamic in the consumer health segment.
In contrast to the shareholders’ meeting, an extraordinary supervisory board meeting convened immediately afterward unanimously expressed its confidence in the company’s strategy. While saying it takes the shareholders’ vote “very seriously,” Wenning said the supervisory board “unanimously stands behind the board of management.”

At the same time, the chairman said, the outcome of the meeting nonetheless shows that shareholders “wanted send a clear signal to management that Bayer should bring out the company's strengths to a greater extent in the future."

Wenning said the board will use the vote as an opportunity to support management in its efforts to “swiftly and fully restore the confidence of shareholders and other stakeholders in the company and in its strategy.”

 It is the board’s top priority, he said, “to vigorously and successfully defend the company in the upcoming appeal proceedings and trials concerning glyphosate, as well as to attain the ambitious operational growth and profitability targets communicated in December last year.”

While acknowledging that the legal uncertainty over the outcome of the remaining 13,400 Roundup lawsuits has “weighed on the share price,” Wenning said the supervisory board is convinced that Bayer managers “met their legal obligations in every respect both when the acquisition agreement was signed and when the transaction closed.”