In view of the high level of debt and rising financing costs, Bayer pulls the ripcord and drastically cuts the dividend. Instead of the 2.00 euros per share expected by analysts, only 0.11 euros is to be paid out. In principle, this is a sensible decision, as it is of little help to shareholders if the dividend policy formulated years ago is adhered to regardless of the dramatic marginal parameters.

The dividend policy was previously based on adjusted earnings per share and did not take into account special charges, which at Bayer are often in the billions. In recent years, the company has, therefore, often paid out of the substance. What is even more remarkable is that the dividend was not earned in 2020 and 2021, let alone that the amount distributed could have been financed from free cash flow.

It is, therefore, to be welcomed that the new Bayer CEO, Bill Anderson, is putting a stop to the activities intended as a massage for the troubled souls of investors. To get the balance sheet ratios back on track, there is no way around drastic spending cuts. Conversely, the turnaround in the dividend policy, as objectively understandable as it may be, also raises questions: Why did Bayer reaffirm its commitment to its dividend policy in the summer after the sobering profit warning? Which investors were the ones who, according to Bayer, encouraged a reversal in the dividend policy? And why is the dividend not being cancelled altogether?

The answer to the latter can be found in the German Stock Corporation Act. According to this law, shareholders are entitled to a minimum dividend as long as the distribution does not jeopardise the existence of the company. If the company nevertheless retains the profits in full, the resolution on the appropriation of profits can be contested. So much for the "suggestions from investors", which reflect the loss of confidence in the capital market.

However, the rating agencies have probably also contributed to the rethinking, as Bayer is now fixing the minimum payout for the next three years. Financial debt of more than 40 billion euros is no trivial matter, quite apart from the interest costs, which have been burning deeper holes in the cash register since the interest rate turnaround in refinancing and further restricting the financial room for manoeuvre. "The status quo is simply not an option for Bayer," Anderson chanted in November. Since Monday, this statement has been interpreted differently.