Beleaguered Bayer CEO Werner Baumann has clinched the support of two major investors, but shareholder concerns surrounding the German conglomerate’s C-suite payouts persist.
Prominent proxy brawlers Institutional Shareholder Services (ISS) and Glass Lewis have endorsed Bayer’s leadership but stopped short of blessing its “excessive” executive compensation plans, Bloomberg News first reported. The investors' partial support comes after both outfits in 2019 agitated against Baumann's leadership, recommending a historic no-confidence vote against the CEO.
Bayer’s top brass has been in hot water with investors ever since the company’s $63 billion buyout of infamous agrochemical outfit Monsanto in 2018. While Baumann survived his no-confidence vote in 2019, Bloomberg late last month reported that Singapore-based investor Temasek Holdings had put in a bid for another no-confidence vote against the chief executive or a vote against ratifying Bayer management’s performance.
Alatus Capital piled on, writing in a release at the time that Baumann’s actions had caused “significant shareholder value destruction at Bayer.”
In a note to clients, Glass Lewis said it doesn’t “believe it is in shareholders’ interests to broadly recommend to withhold support from [the ratification of Baumann and his team’s performance] at this time,” as quoted by Bloomberg.
The advisor group admitted, however, that some shareholders might be “reasonably concerned with the company’s performance and its substantial environmental, social and governance and product risk exposure.”
ISS largely agreed, according to the news outlet, though it suggested a vote against management could be in the cards if Bayer doesn’t make significant progress toward resolving its Roundup weedkiller litigation, which is tied to the conglomerate’s Monsanto buyout.
Bayer could ultimately end up shelling out more than $16 billion to fight and settle its herbicide lawsuits, Bloomberg pointed out last year.
ISS and Glass Lewis, meanwhile, took issue with Bayer’s compensation framework, arguing that it failed to accurately reflect performance and potential fines from Roundup settlements.
Short-term incentive bonus adjustments prompted “payouts that do not accurately reflect company performance,” while some executives’ pension contributions “can be considered excessive and are not aligned with the wider workforce or market practice,” ISS said, as quoted by Bloomberg. The investor urged shareholders to vote against Bayer’s compensation report.
Glass Lewis echoed ISS’ remuneration concerns.
“We are troubled by two decisions taken by the board in the past fiscal year, namely the exclusion of litigation effects from the free cash flow metric under the annual bonus scheme, and the full awards to a departing management board member,” the proxy outfit said.
Baumann took over as Bayer’s CEO back in 2016. Aside from the poorly-timed Monsanto deal—which came just as the American company was facing a thicket of Roundup lawsuits—some investors have pushed Bayer to split up its pharma, crop science and consumer health divisions, which Baumann has resisted.
As for Baumann’s 2021 pay, Bayer in its annual compensation report said the CEO was due for a minimum target payout of €3.9 million ($4.21 million) and up to €13.75 million ($14.84 million). In terms of compensation awarded and due, Baumann ultimately took home €7.79 million ($8.4 million) for the year.