Expert Corporate Governance Service (ECGS)
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Bayer - 26 April 2019 AGM

Items 2 and 3: On 7 June 2018, Bayer closed the acquisition of Monsanto for USD 63bn, including debt, the biggest acquisition in Bayer's history. As of 28 January 2019, lawsuits from approximately 11,200 plaintiffs claiming to have been exposed to glyphosate-based products manufactured by Monsanto had been served in the United States. Since the closing of the merger, Bayer's market capitalisation decreased by almost 42% from EUR 92.3bn to EUR 53.7bn between 7 June 2018 and 29 March 2019. This was a critical destruction of shareholder value, ultimately caused by the Management Board's decision to acquire Monsanto and the Supervisory Board's approval thereof. In our view, both Boards underestimated the legal and reputational risks associated with the transaction and we therefore recommend to oppose the discharge of the Management Board and the Supervisory Board.

Item 4: We recommend to oppose the re-election of Dr. Simone Bagel-Trah to the Supervisory Board due to concerns over aggregate time commitments.

Item 6: Deloitte, Munich, is proposed as auditor for the current financial year. Deloitte has audited the Company since the financial year 2017. Ratio of non-audit/audit fees was 66.67% during the year under review and 75.00% over a two-year aggregate period which exceeds our guidelines. We therefore recommend opposing the proposal.

Bayer AG

Bayer is a life sciences group based in Germany. Co.'s operations are organized along three divisions: Pharmaceuticals (engaged in prescription pharmaceuticals for cardiology and women's healthcare); Consumer Health (engaged in non-prescription products in dermatology, dietary supplement, analgesic, gastrointestinal, allergy, cold and flu, foot care, sun protection and cardiovascular risk prevention categories); and CropScience (engaged in the development of seeds and plant traits; crop protection; and for gardens, the green industry and non-agricultural pest control). Co. also maintains an Animal Health business unit engaged in the development of products for farm and companion animals.


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