Bayer Board Plans to Meet After Investors Rebuke CEO

(Bloomberg) -- Bayer AG’s board is preparing to hold a special meeting in coming weeks to discuss responses to shareholders’ unprecedented rebuke of Chief Executive Officer Werner Baumann, according to a person familiar with the situation.

Directors are weighing a range of possible changes amid a growing investor rebellion over the $63 billion acquisition of Monsanto and the handling of legal challenges linked to the deal, said the person, who asked not to be identified because the deliberations are private.

After 55 percent of shareholders registered their disapproval of management at the company’s annual general meeting Friday, the supervisory board is expected to meet again, aiming to show investors that it understands their concerns. No decisions have been made, the person said, as directors seek to strike a balance between quick action and a sober analysis of the options.

Some investors want Bayer to take a more proactive approach in dealing with U.S. litigation over Monsanto’s Roundup, people familiar with the situation said after the vote. Options could include hiring a high-profile U.S. lawyer with a strong track record in settling class-action lawsuits or beefing up the management team dealing with the litigation, a person said.

The company has lost two cases claiming the weedkiller causes cancer and faces 13,400 more suits. While Bayer says Roundup is safe, the legal defeats have wiped more than 35 billion euros ($39 billion) off the company’s market value.

Strategic Review

Some shareholders are also calling for Bayer to overhaul its supervisory board, people familiar with the situation said after the vote. That could include adding more U.S. representation and agricultural expertise, a person said. Some shareholders are also seeking a strategic review -- including a potential breakup of the conglomerate into crop science and pharmaceutical companies, the people said.

Replacing Baumann, 56, would be counterproductive at this stage, Union Investment said in a statement. Because the extent of legal liability won’t be clear until next year at the earliest, the firm said it’s “fair and necessary to give the management more time.”

A Bayer representative declined to comment beyond a statement the company issued after the vote in which it said the board “will continue to thoroughly examine the results and discussions” from the annual meeting, while unanimously standing behind Baumann and his team.

After shareholders’ rebuke of management, the board discussed possible consequences but decided that more time would be necessary to develop a comprehensive response, one of the people said.

“What’s going to happen in the next two to three weeks? What will the company do to reach out to investors?” said Ingo Speich, chief of sustainability and corporate governance at Deka Investment. “They have to show that they understand they can’t do the job in the same manner compared to before the AGM.”

To contact the reporters on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net;Tim Loh in Munich at tloh16@bloomberg.net

To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net

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