Since the acquisition of US competitor Monsanto, The agrochemical and pharmaceutical group Bayer lost its share in the stock market. Stocks fell by as much as 40% last year. In addition, because of the possible carcinogenic effect of glyphosate, a plant protection product, high compensation payments could be made to the group.
Last Friday, Group Management shareholders withdrew their confidence: 55.5% did not release the CEO around CEO Werner Baumann at the Bayer Group's Annual General Meeting. Christian Strenger, a former director of the DWS fund management firm and a specialist in good corporate governance, had phoned them before the meeting. The board made serious mistakes, says Strenger, who owns Bayer shares.
TIME ONLINE: Mr. Strenger, what do you accuse Bayer's board of directors?
Strenger: The Board's performance at Monsanto and other areas simply was not good enough to warrant a discharge. In addition, the shareholders the fiscal council's decision did not understand that
CEO Baumann will grant a short-term bonus of 25% more.
The advice took a long time, the acquisition of Monsanto complete. In addition, the Group's management would have to wait for Bayer to be forced to sell the cartel after the agreement with Monsanto. The board failed to persuade Monsanto to provide information on the 3,500 pending claims before the conclusion of the transaction. He also accepted a very high price for the acquisition.
TIME ONLINE: The vow of mistrust at trial has no convincing consequences. Several important shareholders who voted against the discharge of the Executive Board want to give a second chance to the Group's management. What do you think the council should give up?
Strenger: No, but Bayer's board is now on parole. CEO Werner Baumann is under special pressure after the vote. It needs to make Bayer more profitable again and hope that US lawsuits are going better.
It is also about empathy: Baumann could have said he was stupid. Instead, he always said that stock prices were irrational. You have to find out: Bayer's value today is below the price the Group paid for Monsanto. We shareholders lose a lot of money. We want to see it again – not just ten years from now.
TIME ONLINE: Critics say the corporation has caused shareholders to vote on the acquisition of Monsanto. How much top management and shareholders are alienated?
StrengerA stockholder survey would at least clarify whether shareholders want the acquisition. The agreement was very controversial from the outset and today we know that skepticism was justified. If the shareholders had agreed to the acquisition at the time, the Board of Directors would be much easier today. But now the directors sit there with the disaster and explain again and again that they have done everything right. The head of the group still had two assessments issued, which attest to the board of directors to have fulfilled their obligations. But that did not convince shareholders. In addition, the reports were never provided to us in their original form, but only in abstracts.
TIME ONLINE: O board Despite shareholders' mistrust, the Board of Directors strengthened its back the night after the Annual General Meeting. The panel defended the Monsanto acquisition approach. Why are the inspectors behind the administration despite all the criticism?
Strenger: What is left to the Supervisory Board? If the Supervisory Board now withdrew its confidence from the Council, it would be a confession of its own misjudgment. They also thought the acquisition of Monsanto was a good deal.
The Supervisory Board currently lacks convincing competence. He needs panelists who really understand Monsanto's business and its legal implications. For this reason, and because of the bonuses for the Board of Executive Officers, I requested at the Annual General Meeting that the Fiscal Council should not be exempted either. In the end, however, 34% of shareholders refused to trust the supervisory body. This was also a warning that things had to improve.
TIME ONLINE: Environmental activists see the glyphosate herbicide developed by Monsanto as a threat to nature and health. They accuse Bayer of not being interested in the environmental consequences of its trade and protested against the group outside the AGM. Can you understand the criticism?
Strenger: This is not my field. This should be handled by other experts. But this is also about reputation. Baumann thought Bayer's reputation should be transferred to Monsanto. Now the opposite has happened: Monsanto's reputation has also caused considerable damage to Bayer in Europe.
TIME ONLINE: Was Monsanto a mistake?
Strenger: I do not want to go that far yet. But it was a bad experience.
TIME ONLINE: The deal with Monsanto left Bayer with the worst crisis in its recent history. Some analysts warn that Bayer itself could become an acquisition target for investors. How bad will it be?
Strenger: I think Bayer is strong enough to get through this. The question is, how weakened? At the moment, however, a split is unlikely.