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Monsanto seeks successor (Saturday, Dec. 21, 2002 -- CropChoice news) --
Scott Kilman, Wall Street Journal, 12/19/02: Hendrik A. Verfaillie resigned as chief executive and president of Monsanto
Co., signaling more upheaval at the St. Louis crop-biotechnology company,
which is struggling against consumer unease with genetically modified food.
A successor hasn't been named for Mr. Verfaillie, 57 years old, whose
surprise departure was disclosed in a terse statement after a regular
meeting of Monsanto's directors. Monsanto Chairman Frank V. AtLee, a
longtime chemicals-industry executive, is serving as interim CEO while the
board searches for a successor for Mr. Verfaillie, a chemist from Belgium
who rose up through the ranks to become chief executive in February 2000.
Mr. Verfaillie was put in charge of Monsanto after the company, weakened by
a spending spree on crop-biotechnology and seed companies, was acquired by
Pharmacia Corp. The drug company kept Monsanto's highly profitable
pharmaceuticals business and finished spitting out the agricultural
operations in August. Monsanto's crop-biotechnology business, which swept
across the American farm belt in the late 1990s, has since lost steam as
consumers and regulators in important markets such as the European Union and
Brazil put up barriers to using Monsanto's genetically modified seeds.
A number of recent missteps by Mr. Verfaillie's team have angered Wall
Street investors, who have seen their Monsanto stock fall by half of its
value during the past year. Monsanto, the world's biggest crop-biotechnology
firm, had to slash its earnings outlook twice this year due to, among other
things, a weak economy in Argentina and a Midwest drought that depressed
farmer demand for its Roundup weed killer.
In October, a forecast released by Monsanto indicated a raft of charges will
probably result in a net loss of roughly $1.7 billion for 2002. At the start
of the year, Monsanto's management thought the company would probably earn
about $2.25 a share, excluding any charges.
In a sign of the directors' displeasure with Mr. Verfaillie, who reaped $1.2
million last year in salary and bonus, the company announced that it will
seek its next CEO from outside Monsanto, passing over logical candidates
from within the company such as 44-year-old Chief Operating Officer Hugh
Grant, who oversees Monsanto's world-wide business operations.
Messrs. Verfaillie and AtLee didn't return phone calls seeking comment. A
statement released by Monsanto 21}2 hours after its initial announcement
indicated the board doesn't intend to make any big changes to Monsanto's
strategy of selling around the world a handful of genetically engineered
seed, including corn, soybeans, cotton, and eventually wheat.
"Hendrik and the board agreed that the company's performance during the past
two years has been disappointing," said Mr. AtLee in the prepared statement.
In 4 p.m. New York Stock Exchange composite trading, Monsanto dropped $1.19
to settle at $19.02 a share.
Mr. Verfaillie's departure will likely fan continued takeover speculation
about Monsanto, which has a $4.9 billion market capitalization.
Some Wall Street analysts say Monsanto stock is trading far below its
acquisition value, based on the price of other recently acquired
agricultural concerns.
During 2001, Monsanto generated net income of $295 million, or $1.12 a
share, on sales of $5.5 billion.
Write to Scott Kilman at scott.kilman@wsj.com | |
