Investor revolt at Bayer to escalate as CEO keeps job

FRANKFURT • The shareholder rebellion at Bayer AG is poised to worsen after its supervisory board ignored an unprecedented no-confidence vote against the leadership of CEO Werner Baumann (picture).

Several top investors of the German chemicals and drugs giant are frustrated with directors’ decision to back Baumann and his strategy that led to the US$63 billion (RM260.19 billion) takeover of Monsanto, according to people familiar with the matter.

The investors consider the move a sign that Bayer is unwilling to address shareholder concerns, the people said, asking not to be identified because the deliberations are private.

Bayer now needs to consider an overhaul of the oversight board led by Werner Wenning, take a more forthcoming approach in dealing with litigation in the US and conduct a strategic review — including a potential break-up of the conglomerate into crop science and pharmaceutical companies, they said.

At a fractious, 13-hour gathering in Bonn last Friday, more than 55% of shareholders voted against absolving Baumann and other managers of responsibility for their actions in the takeover of agriculture company Monsanto last year.

Bayer has lost €35 billion (RM161.35 billion) in market value, due in large part to subsequent lawsuits that allege the main ingredient of Roundup — the weedkiller Bayer acquired through Monsanto — causes cancer.

The lawsuits have multiplied, totalling 13,400 US cases by April 11. Bayer has vowed to fight in court and said there’s no scientific proof that glyphosate causes cancer.

A Bayer representative declined to comment on investors’ call for changes. In an email on Saturday Baumann sought to reassure employees, saying “we need to maintain our focus on delivering value for our customers”, according to a person who has seen the communication and asked not to be identified because the information  isn’t public.

The vote was heavily influenced by prominent shareholder advisory firms in the US, Baumann wrote.

Bloomberg News reported earlier last week that Baumann could lose the ballot.

In a separate motion, some 66% voted to absolve Wenning and the rest of the supervisory board.

While the results aren’t legally binding, it prompted an emergency board meeting that stretched into the early hours of Saturday.

Similar rejections have cost German business leaders their jobs. In 2015, Deutsche Bank AG co-CEO Anshu Jain stepped down after a 39% disapproval rating from shareholders. — Bloomberg