Bayer CEO Bill Anderson is criticized by investors at his first Annual General Meeting.

Almost a year after he took office, the long-suffering shareholders draw a predominantly negative balance sheet, with still no solution in sight for the problems of the crisis-ridden pharmaceutical and agricultural company. "Mr. Anderson, you have not been able to build trust on the capital market in your first year," criticized Ingo Speich, Head of Sustainability and Corporate Governance at the fund management company Deka, at the company's virtual Annual General Meeting on Friday. "A successful start looks different." Anderson asked for patience: there is no quick fix, but he wants to turn Bayer around.

When he took office, the former Roche pharmaceuticals boss received advance praise. Expectations were high; the American has stepped up to lead the Leverkusen-based company, which is facing a mountain of debt and a loss of almost three billion euros last year, out of a deep crisis. His predecessor Werner Baumann's billion-euro takeover of glyphosate developer Monsanto had brought Bayer into a seemingly never-ending legal dispute over the alleged carcinogenic effects of the weedkiller and had squandered a great deal of trust.

"THE HOUSE OF BAYER IS ON FIRE"

According to Deka expert Speich, investors are looking back on a lost year, with the share price having plummeted by 52 percent since the last Annual General Meeting. "Under your leadership, Mr. Anderson, the downward trend and thus the decline of the share has even accelerated." Deka therefore did not want to approve the actions of Bayer's Board of Management. According to Speich, the eagerly awaited Capital Markets Day in March, at which Anderson presented his strategy, did not provide any substantial new insights. The biggest challenges remained unresolved.

"Bayer's house is on fire and you as the landlord are starting to clean up instead of putting out the fires," said Speich. "We expect a much stronger focus on reducing legal risks, improving the pharmaceutical pipeline and a more powerful agricultural business." The fund company DWS, on the other hand, came to the conclusion that Anderson had already provided important impetus. "We are aware that some of the effects of these measures will take time to materialize," said its representative Hendrik Schmidt. DWS wanted to exonerate the Management Board and Supervisory Board, as did the fund company Union Investment. The two influential proxy advisors ISS and Glass Lewis also recommended voting in favor of discharge. In the end, the actions of the Management Board were approved by 91.69 percent.

Anderson now has a responsibility to find solutions to the problems inherited from his predecessor, said Janne Werning, Head of ESG Capital Markets at Union Investment. The measures announced by Anderson to date have had no effect on the capital market. The Bayer CEO wants to focus initially on introducing a new organizational model that is intended to reduce bureaucracy and will involve a significant reduction in personnel at the expense of many managers. The dividend will be reduced to a minimum for the next three years in order to reduce debt.

At the Capital Markets Day, Anderson rejected the idea of splitting up the Group, which some investors had called for, for the time being. However, the Management Board remains open to anything. In the next two to three years, however, the company will concentrate on building a strong pharmaceutical pipeline, reducing legal risks, lowering the debt of 34.5 billion euros and continuing to introduce the new organizational model.

Anderson reiterated that Bayer is considering all options to end the legal disputes. However, he left open how the company intends to finally draw a line under the wave of lawsuits that has been plaguing Bayer for six years. The shareholders will therefore need to be patient. "The journey ahead will be challenging," said Anderson. "But I am convinced that there is a way to turn Bayer around." The shareholders are impatient, they have already spent a lot of time dealing with problems, countered Marc Tüngler, Managing Director of the Deutsche Schutzvereinigung für Wertpapierbesitz. "We are literally thirsting for them to do something different, please get started."

(Report by Patricia Weiß, edited by Olaf Brenner. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)