That’s the situation unfolding at German pharmaceutical giant Bayer where mutineering shareholders have pressured the board to replace longtime CEO Werner Baumann a year before his planned departure.

“It was very obvious that there was a lot of vocal discontent from the larger shareholders about the direction of Bayer, and a strong message was given to chairman that their largest shareholders wanted to see an external rather than internal hire for CEO,” says Peter Verdult, managing director and pharmaceuticals analyst at Citi. 

Shareholders have been displeased with Bayer since 2016 when then-new CEO Baumann initiated the $63 billion merger with U.S. agricultural giant Monsanto.

The princely acquisition blindsided shareholders who had been assured by Baumann previously that Bayer’s M&A strategy would be measured and “evolutionary”—a strategy that didn’t align with charging into the pesticides and seeds business.

“The problem for Baumann was that Monsanto was seen as his deal. He was the architect. It was his vision. So he got all the heat,” Verdult says. 

Besides the cash price of the acquisition, the merger has also embroiled Bayer in a number of costly lawsuits over Monsanto’s Roundup product. Last month, Bayer said it expected to pay $2 billion to $3 billion in settlements over the weed killer this year, as part of the total $16 billion the company has earmarked for expenditure on related litigation since the deal closed.

In 2019, activist investors tried rallying fellow shareholders to launch a vote of no confidence against Baumann but failed. Baumann was granted a stay of execution in 2020 when his contract as CEO was extended for another four years.

Meanwhile, shareholders have voiced their upset with the Monsanto deal by “voting with their feet,” stripping 40% off of Bayer’s market cap since the deal closed in June 2018. Last year, shareholders overwhelmingly voted against the executive’s compensation package, too. Yet, in the same proxy season, 82% of shareholders approved of Bayer’s management actions that year. 

Recently, however, shareholder patience ran out. 

“When it comes to CEO succession we say: the sooner the better,” Markus Manns, a portfolio manager at Union Investment, one of Bayer’s 10 biggest shareholders, told Reuters in January. 

Shareholders are pushing Baumann to the exit now because the Monsanto drama is at last wrapping up. Bayer has won six consecutive lawsuits related to Roundup in the past year. Manns told Bloomberg that “once the problem is almost solved, it’s time for a new CEO.”

On Feb. 8, Bayer succumbed to shareholder pressure and announced that Baumann will be replaced by former Roche Pharmaceuticals CEO, Bill Anderson, in June this year, 11 months ahead of schedule. 

“We welcome the timely change at the top of Bayer and hope that the fresh perspective of an external candidate will provide new momentum for the strategy of the company,” Ingo Speich, head of sustainability and corporate governance at Deka, a top-20 investor in Bayer, told Reuters.

Taking the helm at a wayward ship and winning back shareholder confidence is no easy task, but it might actually be a good thing for Baumann’s replacement that shareholders are piling the Monsanto drama along with Baumann and jettisoning both overboard together.

Anderson, at least, gets a clean slate and also has the advantage of being an external hire, which is precisely what shareholders wanted.

The hope among shareholders is that Anderson will be less attached to the status quo than an internal hire would be and will implement much-needed structural reforms at the lumbering giant, potentially separating out the conglomerate’s legacy pharma units and its new agri-business.

It’s much too early to say what Anderson’s first moves will be, but the inbound CEO will have to carefully manage the expectations of an already exasperated shareholder class, providing the company’s financiers relief without simply succumbing to investor pressure.

“The Bayer stock is in a crisis of trust which the executive board is responsible for,” Speich told Reuters. “Bayer has to take investor demands more seriously going forward.”

Eamon Barrett
eamon.barrett@fortune.com

Update, March 19: this article has been updated to show that Bayer’s predicted Roundup litigation spending this year is covered by $16 billion it previously earmarked.

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TRUST EXERCISE

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