Dusseldorf Several important Bayer shareholders are opposed to calls for CEO Werner Baumann to be dismissed early. They justify this with the recently improved development of the group. “The first progress can be seen, and an early termination of his contract would only produce chaos,” said Janne Werning, Head of Capital Markets & Stewardship at the fund company Union Investment, the Handelsblatt.
Temasek justified this “with concerns about Bayer’s operational performance under Baumann”. In Germany, the sovereign wealth fund has met with a lot of criticism for demanding that the CEO be dismissed. Marc Tüngler from the German Association for the Protection of Securities (DSW) called the attack “absurd theater – in terms of content and timing”.
DSW represents thousands of Bayer’s small shareholders. On Monday, Tüngler called on the “long-term oriented” Bayer shareholders not to support Temasek’s action. He pointed out that the chairman of the supervisory board, Winkeljohann, had long since heralded the end of the Baumann era. The CEO will leave the group by April 2024 at the latest.
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Union Investment is one of the larger German fund companies among Bayer shareholders. Union manager Werning is quite critical of the Baumann era: “We think it’s right that Mr. Baumann’s contract expires in two years,” he says. With the purchase of Monsanto, Bayer chose “the riskiest seed company” and “unnecessarily” took a high financial risk.
Hedge funds do not want any relief for the Bayer boss
“However, Mr. Baumann should now be able to continue the renewal process and hand over the company to his successor in an orderly manner,” explained Werning. Another larger fund, which is invested in Bayer but wishes to remain anonymous, argued similarly. “We see no point in urging the Bayer boss out of office now,” it said.
But not only Temasek is critical of Baumann. While the state fund has so far remained in the background, Bayer has submitted an official counter-motion to the proposed discharge of the board of directors at the annual general meeting from another fund.
>> Read about this: Bayer’s major shareholder Temasek wants to force CEO Baumann out of office – and is receiving harsh criticism
It was submitted by Geneva-based investment firm Alatus Capital on behalf of its Cayman Islands-based hedge fund, Aquilus Inflection Master Fund. In the letter to Bayer, Alatus specifically demands that Baumann not be discharged and justifies this with key figures from his previous term of office. From May 2016 to the end of February 2022, the group lost 48 percent of its market value.
Alatus calls on Bayer to let the shareholders vote individually at the Annual General Meeting on the discharge of the members of the Board of Management. The shareholders usually vote at a general meeting on the work of the board of directors as the overall body of a stock corporation. Bayer has rejected this claim in a public statement. According to the legal provisions for general meetings, such a request for an individual vote in the discharge is not permissible.
The letter also makes it clear that the supervisory board stands behind the management board. “The Supervisory Board has unreserved confidence in the work of the Management Board under the leadership of the Chairman of the Management Board and in the strategy developed by the Management Board,” it said. The group also refers to the operational successes in 2021, in which Bayer exceeded its own forecast.
Price gain of 30 percent since the beginning of the year
This performance is recognized by investors. “Bayer has managed to turn the trend operationally and is in a much better position than in the previous year,” says Union Investment Manager Werning. Bayer has also made progress in the pharmaceuticals sector and “reinforced the pipeline through clever acquisitions”.
The operational improvement is also reflected in the share price, which rose by a further 1.5 percent to EUR 61.50 on Monday. With a price increase of 30 percent since the beginning of the year, Bayer is the strongest value in the Dax. The fact that the group has a portfolio of medicines and agricultural commodities that is more resilient to the economy, which is also in demand in times of crisis, also contributes to this.
Politicians fear that Bayer could be weakened by a dispute between investors in the current critical phase. The agricultural business with seeds and crop protection products in particular is being challenged because of the consequences of the Ukraine war. The lack of deliveries of wheat from Russia and Ukraine is exacerbating the supply situation, especially in African countries.
As a supplier of important agricultural goods, Bayer is a systemically important player from Europe, emphasized the chairman of the agricultural committee in the European Parliament, Nobert Lins (CDU).
More: Bayer wants to show strength in 2022: profit should increase to twelve billion euros