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Bayer’s hunt for a new CEO is on, suggesting Werner Baumann could be headed for an early exit: report

September 17, 2022
Life sciences

The saga of Bayer’s beleaguered CEO Werner Baumann may be drawing to a close.

Following years of push-and-pull over the German conglomerate’s top post, Bayer has quietly started a hunt for Baumann’s successor, Bloomberg News reported Tuesday, citing people close to the matter. The new CEO search may portend an early departure for Baumann, whose contract with Bayer isn’t set to expire until April 2024.

Bayer’s chairman Norbert Winkeljohann is looking at prospects both inside and outside the company with the goal to advance a new CEO candidate in time for Bayer’s next shareholder meeting in April 2023, Bloomberg reports.

While the search could telegraph Bayer’s intention to replace Baumann before 2024, Bloomberg’s sources caveated that it’s unclear whether Baumann will actually be asked to pass the baton early.

When contacted by Fierce Pharma, a Bayer spokesperson said the company “doesn’t comment on market rumors.”

Baumann, who’s served as Bayer’s CEO since 2016, is no stranger to leadership challenges, largely tethered to his company’s mammoth Monsanto buyout back in 2018. All told, Bayer has reportedly earmarked about $16 billion to handle lawsuits alleging the Monsanto-acquired weedkiller Roundup causes cancer.

Back in 2019, meanwhile, proxy advisers Glass Lewis and Institutional Shareholder Services (ISS) recommended a historic vote of no confidence against Baumann and Bayer’s management.

While Baumann came out of that vote unscathed, shareholder discontent flared up again earlier this year when Temasek—a key player behind Bayer’s $63 billion Monsanto deal—told the company’s chairman Winkeljohann it was seeking a regime change. Specifically, the investor requested a no-confidence vote in Baumann or a vote against ratifying Bayer’s management’s performance ahead of the company’s annual meeting in April.

Temasek was joined by fellow Bayer investor Alatus Capital, which wrote in March that Baumann’s actions had caused “significant shareholder value destruction at Bayer.”

Another wrinkle emerged in April when ISS and Glass Lewis—behind Baumann’s 2019 no confidence vote—endorsed Bayer’s leadership but stopped short of blessing the company’s “excessive” executive compensation plans.

The shareholders argued this past spring that Bayer’s C-suite compensation framework failed to accurately reflect performance and potential fines from Roundup settlements.

In its annual report last year, Bayer said CEO Baumann was in line for a minimum target payout of 3.9 million euros ($4.21 million) and up to 13.75 million euros ($14.84 million). In terms of compensation awarded and due, Baumann ultimately took home 7.79 million euros ($8.4 million) for the year.

When April rolled around, 76% of investors at Bayer’s annual meeting this year voted against the conglomerate’s compensation package. Nevertheless, when management’s performance was put to the test, 82% of shareholders approved of Bayer’s actions in 2021.

Whether Baumann hits the exit early, the search for his successor will no doubt reignite speculation about a potential breakup of Bayer’s pharma, crop science and consumer health divisions. Bayer’s leadership has long resisted such suggestions.

By Fraiser Kansteiner

Source: fiercepharma.com

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