Top Bayer shareholder won’t back management amid Monsanto mess: report

Werner Baumann
As Bayer was dealt with Roundup legal defeats and reputational damage, Chairman Werner Baumann could face a vote a no confidence from its top investor BlackRock, Reuters reported. (Twitter)

Things could get awkward for Bayer CEO Werner Baumann at his company's upcoming annual general meeting on Friday.

There, investment firm BlackRock, which holds 7.2% of Bayer’s voting rights, plans to either abstain from or oppose a key vote on Bayer management's performance last year, Reuters reports, citing two people familiar with the matter.

The reason? The legal fallout from its mammoth Monsanto deal. The symbolic move “will send a message to the board” that the German drugmaker's top investor is not happy with how Bayer handled the acquisition, one of the sources told the news service.

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The news came just shortly after a report from Bloomberg that Bayer shareholder and corporate governance expert Christian Strenger filed a motion stating that members of the supervisory board not be discharged of responsibility. Specifically, the former CEO of DWS Investment is not happy about how the board handed Baumann a cash bonus boost, even though his total pay slid 17% to €5.3 million—far below his Big Pharma peers.

Top proxy advisers Glass Lewis and Institutional Shareholder Services (ISS) also recommended a vote of no confidence in Baumann and the management, according to Bloomberg. While Glass Lewis also backed Strenger’s course, ISS didn’t recommend a “no” vote for the supervisory board, but it did criticize the pay increase when Bayer faces “unprecedented potential financial and reputational damage,” as quoted by Bloomberg.

RELATED: Bayer's $80M Roundup verdict raises odds of a multibillion-dollar settlement: analyst

The “damage” and BlackRock’s dissatisfaction both stem from Bayer’s Monsanto buyout, and along with it, the legal risks linked to the Roundup weedkiller’s alleged cancer risk.

Recently, in a key bellwether trial, a U.S. federal jury in San Francisco found Bayer liable for plaintiff Edwin Hardeman’s non-Hodgkin lymphoma and awarded him $80 million in damages. Bayer said it plans to appeal, as it is doing with a California state suit that awarded the plaintiff $78 million. Still, there are more than 11,200 other similar suits, according to Bayer’s last tally.

Despite the trial failure, Baumann has reportedly said the management team still has the supervisory board’s backing. According to Reuters, Bayer’s nonexecutive chairman, Werner Wenning, was himself behind the Monsanto transaction.

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