Baumann Bayer CEO
Bayer CEO Werner Baumann Photographer: Krisztian Bocsi/Bloomberg
In what was an unprecedented show of anger following the losses around the acquisition of Monsanto, shareholders at Bayer have delivered an unprecedented vote of no confidence in the CEO, Werner Baumann, and the company's top management executives.
In what is a first in German corporate history, 55.5% of Bayer shareholders have voted against ratifying the board's action, in particular with regard to 2018's $62.5-billion takeover of US agrochemical and agricultural biotech firm Monsanto. Only 44.5% of Bayer shareholders now voted in favour - a large drop from the 97% at last year's annual general meeting.
The vote makes CEO Werner Baumann the first serving chief of a DAX-listed company to suffer a vote of no confidence.
Bayer was once one of Germany's most valuable companies. Since the takeover, it is now valued at $63-billion, the same amount it paid for Monsanto. It represents a 43% drop in Bayer share prices from €108.60 in April 2016 to €61.54 at close of business on Friday, which means €42.5-billion has been wiped off the company's market capitalisation.
The vote by shareholders has no legal consequences for Baumann or any other board members and is largely symbolic. Top board members' tenures can only be terminated by a vote of the supervisory board, which has expressed its continued support for the managing board. Werner Wenning, who is the chairman of the supervisory board said "the supervisory board is convinced that the strategy of management, including the takeover of Monsanto, was the right path.”
The German chemicals giant has been facing growing legal problems over a herbicide sold by Monsanto in the US named Roundup, which contains glyphosate. Last month, a jury in California found that there was a direct link between glyphosate and cancer. The number of legal claims facing Bayer in the US over the weedkiller now stands at 13,400.
In an interview with the Financial Times, Ingo Speich, head of sustainability and corporate government at Deka Investment, one of the top 10 Bayer shareholders, said: "They have to prove they have got a grip on things, that the integration of Monsanto is working, and to achieve better results in the pharma division... If they just stick with business as usual, the pressure from shareholders will only grow.”
Some analysts have said that the collapse in the price of Bayer shares could ultimately lead to the break up of the company, or leave it vulnerable to takeover.
Mr Baumann's position appears to be relatively unchanged since his assertion last month that the acquisition of Monsanto was "a good idea". He complained at the general meeting that the US court's decision has been based only on the basis of a 2015 finding by an agency of the World Health Organization which found glyphosate to be "probably carcinogenic". Baumann went on to say, "We remain convinced of the safety of glyphosate," adding that no new evidence had been provided to link it with cancer.
The CEO also said, regarding the two court cases that had already been heard, that "we remain optimistic that the next higher courts will reach different verdicts.” and that these and any future decisions should be made on scientific data and analysis and "not on emotions."
Mr Baumann also said that market reactions were at present "exaggerated" and had no reflection on the "true value" of the company.
In a letter to Bayer staff cited in the German press, the CEO did acknowledge that investor confidence needed to be restored: "We understand the state of mind of our shareholders and share their disappointment with the movement in the price of the shares of our company. Of course, we will work very hard to regain the trust of the shareholders."
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