Governance in Brief
May 16, 2019 | Editor: Martin Wennerström
Following acquisition, Bayer tackles Monsanto fallout
In the past week, Bayer has grappled with two separate controversies linked to Monsanto, which the healthcare and chemicals conglomerate acquired in 2016. On May 13, a US jury ordered Bayer to pay USD 2 billion in compensatory damages to a California couple, over clams that its glyphosate-based Roundup herbicide lay behind their cancer. The judgement represents the healthcare and chemicals conglomerate’s third courtroom defeat related to the product. One day prior, Bayer had announced that external counsel would investigate claims that Monsanto had collected “personal information by fraudulent, unfair or illicit means” on dozens of influential people. It is alleged that this information was meant to shift these individuals’ stance on pesticides, and the affair is already the subject of an investigation by French authorities. This barrage of legal issues comes just weeks after a stormy 2019 AGM, at which a majority of votes were cast against management board discharge, and around 26% were cast in favor of a shareholder proposal requesting a special audit. However, the meeting’s prime focus was the fallout from the USD 63 billion Monsanto acquisition, which sent Bayer’s share price down by over 40% and triggered a wave of lawsuits.
GE holds first Culp-era AGM
On May 8, US multinational General Electric (“GE”) held its first AGM after appointing Larry Culp as CEO in October of last year. Culp, who first joined the board in 2018 as an independent director, was part of a major board overhaul which led to seven new appointments and 15 retirements in the past two years. Shareholders showed high support for the current board composition, with each nominee receiving at least 90% support. The executive compensation report was, however, opposed by around 30% of votes cast, while a shareholder proposal calling for the separation of CEO and Chairman roles was defeated, gathering around 28% support. Proxy advisory firm ISS recommended a vote against the say-on-pay proposal, given the bonuses’ discretionary component, while supporting the proposal for an independent Chairman. The firm’s auditor KPMG received limited shareholder opposition, despite controversies concerning GE’s accounting practices.
Deutsche Bank to face shareholder revolt
Proxy advisors Glass Lewis and ISS have both recommended that Deutsche Bank shareholders vote against the supervisory and management board discharge at the upcoming May 23 AGM, citing the bank’s plunging share price and legal woes. Despite FY2018 representing the bank’s first annual profit since 2014, shareholders could potentially deny discharge amidst growing concerns over the bank’s compliance systems.
On another note, after it was announced in April 2019 that merger talks with Commerzbank had been abandoned, reports have recently emerged that the lender is now in discussions with Zurich-based bank UBS over a potential tie-up between their asset management arms.
Charges brought against former Danske executives
Danish prosecutors have brought charges against ten former Danske Bank executives, including former CEO Thomas Borgen, as part of an ongoing investigation into alleged money laundering at the bank’s Estonian subsidiary. The precise nature of the charges has not been disclosed, although none of the supervisory board members have been charged. Meanwhile, the bank has appointed Chris Vogelzang as its new CEO, effective June 1. Vogelzang, a Dutch national, has spent 18 years within ABN AMRO, including eight years on its management board. The appointment is part of a broader effort to rebuild trust in the bank, which faces criminal investigations in several jurisidictions, including Denmark, Estonia, France, and the United States.