Bayer Bows to Investors With New Board Appointment

By Ruth Bender 

MONHEIM AM RHEIN, Germany -- Bayer AG Tuesday appointed a prominent U.S. agriculture expert to its board in the German chemicals and pharmaceuticals company's latest effort to convince investors that it has its troubled crop-science business under control.

Bayer said Ertharin Cousin, a former director of the United Nations World Food Program, would succeed German manager Thomas Ebeling on its supervisory board.

Large Bayer shareholders had expressed concern about a lack of expertise among the company's nonexecutive directors in assessing the difficulties Bayer has faced since acquiring U.S. agriculture giant Monsanto Co. last year.

With the acquisition, Bayer inherited thousands of lawsuits claiming that Monsanto's Roundup herbicide causes cancer. Bayer has argued that Roundup is safe, but it lost the first three U.S. jury trials, which sent its share price plummeting and frustrated shareholders.

As tension rose between shareholders and management, culminating in a rare no-confidence vote at this year's general meeting, investors pushed the company to beef up its legal expertise and bring in more people to oversee an agriculture business that now accounts for nearly half of group sales.

Ms. Cousin, a lawyer by training, served as the U.S. ambassador to the U.N. Agencies for Food and Agriculture from 2009 to 2012, and held several positions in the private sector, such as head of public affairs at U.S. supermarket chain Albertsons.

Bayer Chairman Werner Wenning said Ms. Cousin's "expertise and international experience at the interface between government, business, academia and civil society" would give Bayer new perspective.

Under Germany's dual-board structure, nonexecutive directors who represent shareholders and employees act as a controlling instance on management. And with their trust in the company's leaders severely dented, shareholders have pushed to tighten their control.

In June, Bayer responded by creating a special committee of the board with responsibility for the Roundup lawsuits. The company also hired a lawyer to advise directors on the proceedings.

While they welcomed the efforts, analysts said nothing short of resolving the Roundup lawsuits would suffice to lift the uncertainty that is still clouding the group's prospects and weighing on its stock.

In recent months, Bayer has hinted that it was growing more open to settling with plaintiffs, prompting a limited rally in its shares. But it also continues to fight cases in court and is appealing all three verdicts against it.

"The point for us is to have finality," Liam Condon, head of Bayer's crop-science unit, told The Wall Street Journal at a Bayer-organized conference on the future of farming. "What doesn't make any sense is to settle and leave a lot of cases open, because that doesn't settle anything for anybody."

When pharmaceuticals companies settle damage claims that target their drugs, they typically withdraw the medicine from sale or add additional warning labels. Bayer's plan to continue to sell Roundup even after a settlement is complicating the process.

One of the keys to finding a potential settlement agreement, Mr. Condon said, was finding a way to prevent future lawsuits over a product that not only is still being sold but also can't be labeled as risky since regulators deem it safe. Whether that could be achieved remained unclear, he said.

Write to Ruth Bender at [e-mail]

(END) Dow Jones Newswires

October 01, 2019 14:02 ET (18:02 GMT)

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