Bayer Extends CEO’s Contract, Sees Progress on Roundup Deals
(Bloomberg) -- Bayer AG extended Chief Executive Officer Werner Baumann’s contract, a vote of confidence in a leader who oversaw the acquisition of Monsanto Co. and has been trying to end a wave of litigation that came with the U.S. chemical maker.
Bayer said in a statement Thursday that its supervisory board lengthened Baumann’s term by three years, heeding his “personal plans” on the matter instead of going for the maximum potential of four years. The move provides continuity as the German company works its way through a thicket of lawsuits claiming that Monsanto’s Roundup herbicide causes cancer, which Bayer denies.
Baumann’s tasks in the coming years include setting Bayer’s pharmaceutical unit back up for profitable growth as two blockbuster medicines lose patent protection. He’ll also need to build out the crop-science business, which has been hamstrung by suits over Roundup as well as another Monsanto weedkiller, Dicamba.
Baumann, 57, has worked at Bayer since 1988. He set the $63 billion Monsanto deal in motion just weeks after taking over as CEO in early 2016. The move deepened Bayer’s commitment to a conglomerate model -- combining crop science, pharmaceuticals and consumer health under one roof -- at a time when many rivals have rigorously sharpened their focuses. Bayer’s shares are down more than 40% under Baumann’s watch.
The shares traded 0.7% lower early Friday in Frankfurt.
The timing of the contract extension is “surprising,” since Bayer hasn’t managed to resolve significant litigation yet, said Ingo Speich, head of corporate governance for Deka Investment in Frankfurt, a top shareholder. Legal risks remain and are weighing on Bayer’s shares, Speich said.
Baumann in April won a vote of support from shareholders, a year after they handed him an unprecedented rebuke by voting against absolving management of responsibility for its actions. Former Chairman Werner Wenning, a co-architect of the Monsanto deal, left earlier this year.
Baumann’s “profound knowledge of Bayer’s markets, businesses, organization and strengths” are a key reason why the supervisory board decided to extend his tenure, Norbert Winkeljohann, who took over as chairman after Wenning stepped down, said in the statement.
It’s been a busy summer for Bayer on the legal front. The Leverkusen, Germany-based company announced a $12.1 billion plan in June to settle lawsuits over products it inherited with the Monsanto deal, including Roundup and Dicamba. But Bayer still hasn’t resolved tens of thousands of current Roundup cancer claims or finalized a deal covering future claims.
Last month, it agreed to pay $1.6 billion to resolve most of the U.S. litigation over its now-withdrawn Essure contraceptive device, which some women said caused excessive bleeding and pelvic pain or failed to prevent pregnancies.
Bayer said Thursday that it’s made progress with plaintiff attorneys on a revised plan to manage and resolve potential future Roundup lawsuits. Details of the revised plan will be finalized in coming weeks, and a motion for preliminary approval will be filed after a formal agreement has been reached, Bayer said.
Elizabeth Cabraser, a California lawyer for plaintiffs, didn’t immediately return an email seeking comment Thursday.
U.S. District Judge Vince Chhabria, who is overseeing some Roundup suits, cast doubt in July about the validity of a Bayer-backed proposal for handling claims filed after it resolves existing suits over the herbicide. After those comments, Cabraser and other plaintiffs’ lawyers pulled their proposal.
Optimism over the progress in resolving future claims prompted the company to begin signing off on settlements for existing cases, Bayer said Thursday.
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