MUNICH: Bayer AG Chief Executive Officer Werner Baumann faces the biggest test of his three-year tenure as shareholders increasingly upset with the Monsanto takeover gather for a day-long meeting that will culminate in a crucial confidence vote.
Baumann sought to reassure stockholders even as hundreds of protesters outside of the annual meeting erected his effigy from bales of hay and shouted “shame on you,” urging holders to “vote against the destruction of our Earth.”
Inside, the building was so crowded that latecomers were taken to an overflow space to watch the proceedings on screens.
Chairman Werner Wenning lent Baumann his support, saying he has the “fullest trust” in his leadership. Bayer is confident it will be able to reduce the legal uncertainty clouding Roundup, the controversial weedkiller inherited in last year’s $63 billion Monsanto acquisition, the CEO said.
He vowed to continue to fight against the mounting wave of U.S. lawsuits claiming that glyphosate, the herbicide’s main ingredient, causes cancer.
“We are working relentlessly,” Baumann said at the event in Bonn. The impact on Bayer’s shares has been “disappointing and painful.”
Baumann’s future
The legal turmoil related to Roundup wiped away some 35 billion euros ($39 billion) in shareholder value.
There’s a 50-50 chance that a majority of investors at the meeting will vote against absolving Baumann and other managers of responsibility for their actions last year, according to a person familiar with the matter, who asked not to be identified because the situation is private.
A growing number of influential shareholders and proxy advisers have backed the protest vote. A loss in this traditional nod of confidence wouldn’t be legally binding, but would raise questions about Baumann’s future. Similar rejections have cost German CEOs their jobs.
“The Monsanto takeover represents a rupture in Bayer’s corporate history,” said Janne Werning, an environmental, social and governance analyst at Union Investment, which won’t back management in the vote.
“It’s reasonable to question whether it can turn into a success story. Because even as the industrial logic of the deal remains to be proven, the legal and reputation risks have already materialized.”
Even an approval rating below 80 percent would be a blow to Bayer’s management. Former Deutsche Bank AG co-CEO Anshu Jain stepped down in 2015 after a 61 percent approval vote from investors.
A spokesman for Bayer declined to comment on shareholder votes. The company has defended the Monsanto acquisition and said its executives diligently reviewed the risks connected with Roundup. It has consistently said there’s no scientific proof that glyphosate causes cancer.
Bayer said a majority of shareholders voting not to endorse its managers’ actions at such a meeting hasn’t happened in at least 20 years, and possibly for its entire history.
Top shareholders have stopped short of calling for Baumann to be replaced. A new leader from outside Bayer would need too much time to get oriented, Ingo Speich, chief of sustainability and corporate governance at Deka Investment, said this week.
The supervisory board is facing a similar no-confidence ballot Friday, but may find more shareholder support, because proxy advisers split on whether they should be discharged of responsibility. Wenning, a former Bayer CEO and Baumann’s mentor, was also an important architect of the Monsanto deal. - Bloomberg
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