The chemicals and pharmaceutical giant said it would create a special committee of eight supervisory board members to monitor Roundup lawsuits involving more than 13,000 plaintiffs and consult with management on legal strategies.
It also named U.S. lawyer John H. Beisner, an expert on mass tort and product litigation at Skadden, Arps, Slate, Meagher & Flom LLP, to advise the board on all legal Roundup legal matters, including trial tactics and mediation.
Bayer has faced mounting pressure from shareholders to show it is taking concrete action to resolve litigation over its Roundup weedkillers -- a legal battle that has wiped out some 40% of the company's market value over the last year. Shareholders have been venting their anger at management for entangling the company in a damaging legal fight by buying Roundup creator Monsanto Co. last year.
U.S. hedge fund Elliott Management Corp., which owns some EUR1.1 billion ($1.25 billion) worth of Bayer shares, or about 2% of the company, came out backing Bayer's steps, saying the new committee would provide "a new level of oversight and a fresh perspective to a litigation strategy in need of radical overhaul and help guide the company towards a rational, fair and swift settlement."
Since taking over Monsanto, Bayer lost the first three California jury trials with the last award topping $2 billion. Analysts have warned the legal fight could take years to resolve and potentially cost the company billions. But some shareholders have been pushing for the company to resolve it quickly by settling.
Bayer is appealing the verdicts and argues that Roundup and its active ingredient, glyphosate, are safe.
Bayer on Wednesday appeared more open to settling. Bayer said it looked forward to "constructively engaging in the mediation process" after a U.S. judge appointed well-known lawyer Kenneth Feinberg to serve as mediator in the consolidation of hundreds of Roundup cases filed in federal court. It also noted Mr. Beisner's experience in negotiating high-profile settlements.
"The Supervisory Board recognizes the negative effect the litigation uncertainty has had on the stock price and stakeholder perception, and is determined to help the company decisively but prudently advance the matter," Bayer said in a statement.
Bayer has been trying to win back investors' trust after the mounting legal woes engendered enormous frustrations with management.
Chief Executive Werner Baumann, the architect of the Monsanto deal, has drawn most of the criticism. At the company's general meeting in late April, a majority of shareholders for the first time in German postwar history voted against the chief executive of a DAX-listed company. While the vote is not binding, it was a clear warning to Mr. Baumann and his team that management had mishandled the Roundup crisis and needed to change its approach.
Some shareholders accused Bayer managers of underestimating the legal and reputational risks of acquiring Monsanto. Bayer said it acted conscientiously and commissioned a law firm to back its defense that its due diligence was thorough.
Furious about the loss in value and fearing further damage to Bayer, some institutional shareholders, including Germany's Deka Investment, demanded that Bayer tweak its supervisory board to better deal with the current legal challenge and the group's increased presence in crop science. Some also said they wanted the company to bring in an expert to deal with the Roundup litigation. Bayer said it was also considering adding new experts in food and agriculture to the board.
Elliott said that while resolving the legal challenge is an immediate priority, "Bayer could do more to maximize long-term value for all its stakeholders." Some analysts have been warning that Bayer's fragile position could lead to activist investors pushing for a more drastic change at the company, such as splitting the drugs business from its crop-science operations.