Monsanto Roundup Lawsuits Spark Bayer Shareholder Showdown

Published on April 24, 2019 by Sandy Liebhard

Monsanto Roundup lawsuits will be a major topic of discussion when Bayer AG convenes its annual shareholder meeting later this week, with several prominent investors accusing management of underestimating the risks posed by the massive litigation.

Bayer Faces Over 11,000 Monsanto Roundup Lawsuits

Bayer recently completed its $63 billion acquisition of Monsanto, and now faces more than 11,000 lawsuits alleging exposure to the popular glyphosate-based herbicide caused non-Hodgkin’s lymphoma and other cancers. Two cases have gone to trial since last August, both of which ended with plaintiffs’ verdicts totaling more than $150 million.

Some analysts have estimated that Bayer’s liability in Monsanto Roundup lawsuits could exceed $5 billion. The company’s shares have lost roughly $34 billion in market value in the wake of the verdicts.

Bayer’s executives and supervisory board members will face a no-confidence vote during Friday’ shareholder meeting in Bonn, Germany. While the vote carries no legal weight, an approval rating lower than 80% will likely spell trouble for the company’s CEO and other leaders who orchestrated the Monsanto deal.

“In all good conscience, we can’t exculpate management if so much shareholder value is destroyed,” Ingo Speich, chief of sustainability and corporate governance at Deka Investment, told Bloomberg News.

How Bayer’s Largest Shareholders Will Vote

Deka, one of Bayer’s top-10 shareholders, will not be supporting the no-confidence vote. It’s largest shareholder, fund manager BlackRock, said it plans to abstain from the vote, as has Deutsche Bank AG’s asset manager DWS.

Smaller shareholders, including the California State Teachers’ Retirement System, the Florida State Board of Administration and Australia’s Local Government Super, have already voted against management.

About 70% of Bayer’s investors receive recommendations from proxy advisers. According to Bloomberg, two of the largest — Glass Lewis & Co. and Institutional Shareholder Services Inc. — have called for a no-confidence vote. But here’s no guarantee that investors will follow those recommendations and shareholders can change their voting instructions up until the day of the meeting.

Monsanto Roundup Lawsuit Mediation Order

Glyphosate, the active ingredient in Monsanto’s Roundup, is the most popular weed killer in the world. However, in March 2015, the World Health Organization’s International Agency for Research on Cancer declared glyphosate a probable human carcinogen. The designation came after the group’s independent review linked occupational glyphosate exposure to an increased risk of cancer, especially non-Hodgkin’s lymphoma and its various subtypes.

Plaintiffs pursuing Monsanto Roundup lawsuits claim the company failed to warn users about glyphosate’s health risks and manipulated much of the subsequent research that contradicted IARC’s findings.

The nation’s third Roundup cancer trial is currently underway in California’s Alameda Superior Court. Earlier this month, the judge overseeing hundreds of similar cases in San Francisco federal court cancelled a bellwether trial that was scheduled to begin on May 22^nd and ordered the parties to enter into confidential mediation.

Bayer said it would comply with the mediation order, but promised to continue vigorously defending Monsanto Roundup lawsuits. However, some legal experts suggested the mediation could allow Bayer to resolve the damaging litigation without attracting the type of negative publicity that accompanied the earlier verdicts.