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Monsanto Chief Surprises Investors with Resignation
Dec 19, 2002 (St. Louis Post-Dispatch - Knight Ridder/Tribune Business News via COMTEX) -- Hendrik Verfaillie, the Monsanto Co. chief executive who was villified and glorified for championing genetically modified crops around the world, resigned unexpectedly Wednesday. The move shocked friends, co-workers and Wall Street. After 26 years with the agrochemical and biotechnology company -- 23 of them at its Creve Coeur headquarters -- Verfaillie left his post as president, chief executive and director of the board. Frank AtLee III, chairman of the board, will continue in that role and serve as interim CEO "while an external search is conducted," Monsanto said in a press release. The company said Verfaillie's resignation was a mutual decision, stressing the point in a brief, late-afternoon statement that followed the original announcement: "Hendrik and the board agreed that the company's performance during the past two years has been disappointing." Monsanto lost $1.75 billion in the first nine months of the year, compared with a profit of $399 million for the same period of 2001. It warned in October that it would not meet prior expectations for the year, despite cost-cutting that included eliminating about 700 jobs in April. But industry analysts and those who have closely worked with Verfaillie over the years said they believe the board called for his resignation. Verfaillie would never leave, they said. He was devoted to Monsanto; the science and social potential of genetically modified crops; and developing St. Louis into a recognized biotechnology hub. "I think he was fired," said Sergey Vasnetsov, an analyst with Lehman Brothers in New York. "The board apparently was unhappy with the company's performance. ... The board must feel it will take a different type of person to take the company in a different direction." Verfaillie did not return a phone call seeking comment. Friends said late Wednesday afternoon that they had not heard from him. Peter Raven, director of the Missouri Botanical Garden and an internationally known plant scientist, said he suspected that Verfaillie secluded himself while word spread. "He's a terrifically optimistic and positive person, and very realistic. ... He will take whatever happens to him in stride and will always land on his feet," said Raven, who counts himself among Verfaillie's friends. Raven recalled a recent chat in which he asked Verfaillie about being under pressure. "He said he learned early in his career that you do the best that you can ... and some things, you just can't control." That has certainly been true for Monsanto this year. Drought in the Midwest dried up crops and weeds alike, stunting demand for Monsanto's Roundup herbicide. Political unrest and economic hardship in Brazil and Argentina caused buyers to default on payments owed for Monsanto seed. And controversy over the use of genetically modified, or GM, crops continues to dog the company. The European Union has steadfastly refused to lift its four-year de facto moratorium on new approvals of GM crops and imports. And in recent weeks, the Europeans have moved toward imposing strict labeling and record-keeping that likely will pose further barriers to the technology. Some African countries, facing drought and starvation, have refused to receive kernel corn grown from GM seeds. Some say they are unconvinced of its safety. Others worry that if GM corn becomes mixed with their own crops, they will be unable to export to the lucrative European market. So strained is the relationship between the United States and Europe over biotechnology that the Bush administration is expected to file a complaint soon with the World Trade Organization alleging unfair trade practices. To many, the GM debate is personified by Verfaillie. Monsanto initially was called arrogant and domineering for its we-know-best attitude toward the spread of GM crops. Touting potential environmental and humanitarian benefits, the company glossed over concerns about limited biodiversity, possible health impacts and corporate dominance of developing countries. Verfaillie has candidly acknowledged some mistakes. Speaking at an agriculture forum in Washington two years ago, he said Monsanto officials had been "blinded by our own enthusiasm" and he pledged to change the culture in the company. He initiated a corporate pledge to share information and seek input from stakeholders worldwide. "Everyone gives him full credit for dealing with those issues in an honest way. But there is a lot of baggage there, and some folks in the activist community, like Greenpeace, don't want to let go of that baggage for their own self-serving interests," said Val Giddings, vice president of food and agriculture with BIO, a Washington-based industry organization. But most industry observers credit Verfaillie with furthering agricultural science with potential to do a lot of good. "The products that he produced have been revolutionary. Never in history have we seen new crop varieties developed at such a rate -- the history books will give Hendrik a lot of credit for that. ... But the stock price has fallen by more than half, so no good deed goes unpunished," said one scientist and industry watcher who did not wish to be identified. Monsanto shares, which traded over $35 a year ago, bottomed out at $13.20 in July. The stock closed Wednesday at $19.02, down $1.19 or 6 percent from the previous close. St. Louis biotech activists say the city has Verfaillie to thank for creation of the Donald Danforth Plant Science Center, an independent research center based on land donated by Monsanto and built in part with a company grant. And he helped establish the Nidus Center for Scientific Enterprise, an incubator for startup biotech companies also on Monsanto land. He was a regular on the speaking circuit, promoting St. Louis as a national hub for plant and biotech research and industry. Verfaillie sits on the boards of the St. Louis Symphony Orchestra and the Missouri Botanical Garden, and is a member of Civic Progress. "My impression of Hendrik is that whenever anyone came to him, he always came through. He supported them emotionally and professionally and financially," said Bob Calcaterra, Nidus Center president. At work, Verfaillie had a reputation for being tireless. He led the company through a merger with Pharmacia & Upjohn, an initial public stock offering and, ultimately, Monsanto's spinoff from Pharmacia in August. Virgina Weldon, a former Monsanto senior vice president who now chairs the St. Louis Symphony Orchestra Board of Trustees, said some of the executives used to have a "contest" to see who would pull into the garage earliest in the morning and leave last at night. "He won, hands down," she said. It is that level of dedication that makes it difficult for Verfaillie's friends and colleagues to believe his departure from Monsanto is voluntary. But at least one analyst said that dedication may have been his undoing. Monsanto's depressed stock price makes it a potential candidate for acquisition by a larger company -- and Verfaillie could have deterred such a deal, said John Moten, an analyst with Deutsche Bank in New York. "If it's been your life's work building a business, it's probably worth more to you than someone who's dispassionate about it," he said. "One could speculate that the board probably felt that they had a fiduciary responsibility to evaluate all options. It boils down to a philosophical difference." Bill Lambrecht of the Post-Dispatch contributed to this report.