GERMANY: Daimler gives CEO Zetsche only three more years
Daimler has extended the contract of its chief executive by only three years in a gesture to investors concerned that rival premium carmakers are winning the race for global leadership.
Dieter Zetsche, who wants Daimler to overtake BMW and Volkswagen to become the world's biggest premium carmaker by the end of the decade, had been expected to get five more years, Reuters noted.
Since he took the helm seven years ago, Daimler's stock has risen just over 2%. During the same period, BMW shares nearly doubled in value while the European auto sector jumped by more than half.
Two sources familiar with the matter told Reuters the supervisory board decided at the last minute to grant Zetsche only a three-year deal in a bid to calm critics.
They fear Daimler's luxury Mercedes Benz brand is losing out to Volkswagen's Audi and BMW, particularly in the important Chinese market.
A Daimler spokesman said the board decided to extend executive contracts by three years if the manager had already turned 60 years, or would do so during the course of the contract.
BMW has a long-standing policy that its top executives retire when they turn 60.
Zetsche will receive a new deal valid through the end of 2016, making him one of Daimler's longest-serving CEOs if he fulfils the contract.
The head of equities at DWS, Germany's largest retail fund manager, welcomed the decision to extend Zetsche's contract for only three years.
"Unlike at Volkswagen or BMW, the management team at Daimler has seldom met their guidance in the past years and therefore repeatedly has been forced to warn on profits, and yet they still talk about being the number one," Henning Gebhardt told Reuters.
Daimler missed its original profit target last year by 10%, or roughly EUR1bn (US$1.3bn), and said a weak first quarter would mean earnings would stagnate this year. It also scrapped its 2013 margin goal for Mercedes.
"Daimler's stock has outperformed its close peers only twice over the past 12 years. Something fundamental needs to change in other words, and it is hard to imagine the same leadership would suddenly make different decisions," Credit Suisse analyst Erich Hauser told the news agency.
Part of the problem, Hauser suggested, is that no large Daimler shareholder, such as Kuwait, has a seat on the supervisory board like either the Quandt family does at BMW or the Porsche and Piech clans at Volkswagen.
In another surprise, Mercedes production and purchasing chief Wolfgang Bernhard will swap jobs with his colleague Andreas Renschler and take over as head of Daimler Trucks as of April.
Daimler chairman Manfred Bischoff praised Zetsche's "ability to combine a feeling for cars with sound engineering knowledge and an entrepreneurial approach."
SUPERVISORY BOARD OF DAIMLER AG EXTENDS CONTRACTS OF DR. DIETER ZETSCHE AND PROF. DR. THOMAS WEBER
- Three-year extensions for Dr. Zetsche and Prof. Weber until December 31, 2016
- As of April 1, 2013: Andreas Renschler to be responsible for Production and Purchasing Mercedes-Benz Passenger Cars and Vans, Dr. Wolfgang Bernhard to be responsible for Daimler Trucks
- Dr. Manfred Bischoff, Chairman of the Supervisory Board of Daimler AG: “With today’s extensions of the contracts of Dieter Zetsche and Thomas Weber, we are maintaining the important continuity at the top executive level.”
Stuttgart – In its meeting today, the Supervisory Board of Daimler AG passed a unanimous resolution to extend the contract of service of Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars, until December 31, 2016. The contract of service of Prof. Dr. Thomas Weber, Board of Management Member for Group Research and Mercedes-Benz Cars Development, was also extended until December 31, 2016.
As of April 1, 2013, Andreas Renschler will assume Board of Management responsibility for production and purchasing of Mercedes-Benz Passenger Cars & Mercedes-Benz Vans. At the same time, Dr. Wolfgang Bernhard will assume Board of Management responsibility for Daimler Trucks.
Dr. Dieter Zetsche has been a member of the Board of Management of Daimler AG since December 16, 1998 and its Chairman since January 1, 2006. He is also Head of the Mercedes-Benz Cars division.
Prof. Dr. Thomas Weber has been a member of the Board of Management of Daimler AG since January 1, 2004 and is responsible for Group Research and Mercedes-Benz Cars Development.
Andreas Renschler has been a member of the Board of Management of Daimler AG and Head of Daimler Trucks since October 1, 2004. Dr. Wolfgang Bernhard has been a member of the Board of Management of Daimler AG and Head of Operations Mercedes-Benz Cars since February 18, 2010.
Dr. Manfred Bischoff: “The long-term orientation of the Group’s leadership is an essential factor for Daimler’s sustained success. With today’s extensions of the contracts of Dieter Zetsche and Thomas Weber, we are maintaining the important continuity at the top executive level.”
“Dieter Zetsche and the Board of Management have a clear plan how to further enhance Daimler’s overall performance together with their team. Dieter Zetsche is distinguished of course by his great experience, but also by his ability to combine a feeling for cars with sound engineering knowledge and an entrepreneurial approach,” continued Dr. Bischoff.
“Research and development are two key areas in the automobile industry. I am therefore delighted that we will continue the successful collaboration with Thomas Weber. He will steadily continue to maintain Daimler’s claim to technological leadership," stated Dr. Bischoff.
“Wolfgang Bernhard and Andreas Renschler are two highly experienced members of Daimler’s Board of Management. With this change, they will both be able to utilise their management know-how from their previous responsibilities within in their new functions, thus expanding their own expertise in all automobile areas” explained Dr. Bischoff.
The contracts of service of Dr. Zetsche and Prof. Dr. Weber would otherwise have expired in December 2013. In accordance with Section 84 Subsection 1 of the German Stock Corporation Act (AktG) and with the Rules of Procedure of the Supervisory Board of Daimler AG, the Supervisory Board passes a resolution on reappointments to the Board of Management at the beginning of the last year of a member’s current period of office.
Original source: Newspress