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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