Bayer Board in Emergency Meeting After Investors Rebuke CEO

(Bloomberg) -- Bayer AG’s supervisory board called an emergency meeting on Friday after Chief Executive Officer Werner Baumann lost a crucial confidence vote as investors questioned his handling of the $63 billion Monsanto deal and the wave of U.S. lawsuits that followed.

In a stunning development for the German drugs and chemicals company, about 55 percent of shareholders voted against absolving Baumann and other managers of responsibility for their actions in the takeover last year. Though the result isn’t legally binding, it throws his future into question and prompted an immediate supervisory board session. Similar rejections have cost German CEOs their jobs.

Chairman Werner Wenning said the board is taking the vote “very seriously” and would “do everything to win back the trust of shareholders as quickly and completely as possible.”

“We regret this exceedingly,” Wenning said. “Nevertheless, the voting results show that the stockholders’ meeting wanted to send a clear signal.”

Bayer Board in Emergency Meeting After Investors Rebuke CEO

The vote at around 10 p.m. local time capped a tumultuous meeting in Bonn, with investors berating Baumann, arguing with Wenning and demanding explanations for the erasure of some 35 billion euros ($39 billion) in market value since the deal. At the heart of the debate was whether Baumann, Wenning and other leaders properly assessed the legal risks of Roundup, the controversial weedkiller it acquired together with Monsanto.

“The loss of a nonbinding confidence vote at Bayer’s annual meeting may hasten management changes and the eventual logical split of Crop Chemicals and Pharmaceuticals into separate companies,” said Bloomberg Intelligence’s Christopher Perrella.

Before the ballot, Bayer said a majority of shareholders opting not to endorse its managers’ actions at such a meeting hasn’t happened in at least 20 years, and possibly for its entire history. Former Deutsche Bank AG co-CEO Anshu Jain stepped down in 2015 after a 61 percent approval vote from investors. In a separate motion, some 66 percent voted to clear Wenning and the rest of the supervisory board.

Bayer completed the Monsanto takeover last June after years of wrangling with antitrust regulators. Then in August, a California jury found that glyphosate, the main ingredient in Roundup, caused a school groundskeeper’s cancer. Lawsuits have multiplied since then, totaling 13,400 U.S. cases by April 11. Bayer has vowed to fight in court and says there’s no scientific proof that glyphosate causes cancer.

Dwarf Mutation

“Mr. Baumann, what have you done with our stable company?,” said Joachim Kregel, a representative of German shareholders association SdK. In just two years, “the erstwhile pharma giant has mutated into a dwarf,” said Ingo Speich, chief of sustainability and corporate governance at Deka Investment.

Earlier, Wenning and his protege Baumann sought to reassure stockholders even as hundreds of protesters outside erected the CEO’s effigy from bales of hay and shouted “shame on you.” Inside, investors demanded explanations, with one likening the company to “a pile of broken glass.”

“The supervisory board is convinced that the strategy of management, including the takeover of Monsanto, was the right path,” Wenning said. “We have the fullest trust that Bayer under the leadership of Mr. Baumann will be very successful.”

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.