2023 was anything but a pleasant year for Bayer shareholders. Operations were sluggish, and there were also extraordinary issues, such as the discontinuation of the study for one of the most promising drugs in the pipeline, and the resurgence of glyphosate lawsuits. This led to the dividend being capped at the legally required minimum - for three years. The combination of all these unfortunate circumstances did not leave the share price unscathed. In 2023, the DAX share lost a third of its value, while the blue-chip index gained almost 20%.

Nevertheless, shareholders are unlikely to revolt at the Annual General Meeting on April 26. Especially as the new CEO Bill Anderson, who was welcomed with praise at the beginning of last year, is not responsible for the situation. The disastrous takeover of Monsanto, which landed Bayer in numerous legal disputes, was eight years ago, and the thinned-out pharmaceutical pipeline is by no means the result of the past twelve months. And it was the Supervisory Board that approached the shareholders to appoint Anderson, who came from Roche.

The recommendations of the proxy advisory firms also point to a satisfactory outcome at the AGM. Glass Lewis, for example, supports the management's proposals on all agenda items and has only made a restrictive comment on the approval of the remuneration report. Ivox, although a subsidiary of Glass Lewis, has a German viewpoint, and bases its assessment on the recommendations of the German Corporate Governance Code and the guidelines of the German Investment Funds Association (BVI). Though Ivox sometimes has different positions, its basic tone is positive.

This year the election of five new Supervisory Board members is on the agenda. Three of the candidates put forward would be newly elected. A highly charged theme is that Jeffrey Ubben is the first shareholder activist to be put forward for election by Bayer. It can be assumed that his nomination was not entirely voluntary. Ubben had already addressed the public at the beginning of 2023, and called for the company to be split up.

While Bayer initially headed off Ubben's bid for a seat on the Supervisory Board by including him on the Sustainability Council, this year there was apparently no way around the issue. The proxy advisors have no objections to Ubben's election, and there are no doubts about either the qualifications or the suitability of the candidates, especially as they are all independent. In any case, the election of an activist investor does not necessarily have to be detrimental to a company and its shareholders. Although Union Investment is alarmed by the nomination, Ubben can also generally count on the votes of German fund managers.

Of course, the nomination goes against the self-image of the Leverkusen-based company. But times have changed. Bayer can no longer afford to ignore the- often justified- demands of investors. This is also reflected in the new remuneration system that the shareholders are being asked to approve. It is also supported by the proxy advisors.

This is not least due to the fact that Supervisory Board Chairman Norbert Winkeljohann has responded to the massive investor criticism of previous years. For example, free cash inflow as a component of the assessment basis in the short-term variable remuneration will no longer be adjusted for settlement payments in connection with legal disputes. In addition, the targets for long-term remuneration are more demanding, and will be even more dependent on relative share price performance compared to the peer group.

The situation is different when it comes to approving the remuneration report for 2023. Last year, the report was only approved with 52.3% of the votes, with numerous abstentions. Ivox also advises shareholders to take a critical view this year, as the cashflow in the previous remuneration system has been adjusted for the settlement payments from legal disputes. Glass Lewis has other concerns, specifically about the new CEO, whose fixed remuneration of 1.7 million euros is 27% higher than that of his predecessor Werner Baumann.

In addition, there is a one-off payment of 3.8 million euros as compensation for lost entitlements at his previous employer. The proxy advisors emphasise that, in Bayer's current situation, it was challenging to recruit a new CEO who met investors' desire for a change of direction. However, the excessive remuneration also points to failures by the Supervisory Board in succession planning.

In addition to the usual items on the agenda, Bayer also wants the shareholders to approve an advance resolution on a share buyback. This is an issue that international proxy advisors are less critical of than German investment companies. Ivox rejects the proposal, as Bayer is requesting the anticipatory resolution for a period of five years.

While Bayer's feared spin-off debate was given fresh impetus last year with the appointment of an external CEO, it has so far remained a storm in a teacup. Anderson clearly rejected the idea at the annual press conference in March. However in view of the coming changes to the Supervisory Board, the discussion looks to have been postponed at best.