Daimler Boss Faces Increasing Stockholder Discontent
Despite shareholder lawsuits, plummeting stock values and executive shake-ups, the message being put out by German helmsmen of DaimlerChrysler is that the troubled multinational is on the right track to reach its long-term aim of becoming one of the leading global auto makers.
That’s their story and they’re sticking to it.
But for the first time since his German automotive icon expanded across the Atlantic to become the world’s fifth-largest auto manufacturer, Chairman Juergen Schrempp is under siege both at home and abroad, and some of this country’s most influential analysts see both his job and his dream of worldwide prowess as being in serious doubt.
The gregarious Schrempp, who seemed until a few weeks ago to be the quintessence of German efficiency and American can-do determination, is under fierce attack not only from shareholders in the U.S. such as Kirk Kerkorian, but also from former Daimler-Benz shareholders who have seen their stock values more than halved since the merger.
Schrempp’s installation of a close ally at the head of the U.S.-based Chrysler Group bought some breathing room for the DaimlerChrysler chief who is almost single-handedly responsible for wresting the Stuttgart auto maker from the cozy and complacent world of German industry. The first German chief executive to enshrine shareholder value as the paramount measure by which a manager is judged, Schrempp now faces an increasingly defiant investment community that has concluded he has failed them.
“The Clock is Ticking for the Daimler Chief,” said a headline in Handelsblatt, Germany’s most important economic newspaper, along with a withering analysis of Schrempp’s recent performance. It concluded that while Schrempp’s vision of a worldwide automotive power was likely achievable in the distant future, stockholders were quickly losing patience in the here and now.
Ekkehard Wenger, an economist and shareholder advocate known in German corporate circles as “the boardroom nightmare,” has announced he will attend the next DaimlerChrysler supervisory board meeting here and demand the merger be reversed and that Chrysler be sold off to the highest bidder.
He has also warned he will, on behalf of smaller German shareholders, seek the ouster of Schrempp and supervisory board chairman Hilmar Kopper, who are co-defendants along with Chief Financial Officer Manfred Gentz in Kerkorian’s lawsuit.
Charging that Schrempp brought the legal action upon DaimlerChrysler with his unguarded comments about never having sought a merger of equals, Wenger said German shareholders will sue the CEO as well if the company is made to pay even one mark for his “babbling.”
Schrempp has made few public comments amid the controversy and the only interview he is known to have given in the last few weeks was a carefully worded delivery to the populist mass-circulating Bild newspaper on Nov. 25, when he dismissed as “nonsense” rumors that a Chrysler sell-off might be in the offing. He also forecast a turnaround in the U.S. auto maker’s fortunes by last next year.
Among senior Stuttgart managers to speak out publicly is Eckhard Cordes, the man who put form and substance to Schrempp’s vision of creating a “global footprint” by negotiating the Chrysler acquisition.
“The biggest asset we have is the Mercedes-Benz brand,” Cordes said in an interview with The Times, noting the car maker’s vanguard product is regularly invoked as a synonym for quality.
Cordes blames the company’s free-falling share price on what he sees as erroneous perceptions in the financial markets that DaimlerChrysler is underperforming and has spread itself too thin with almost simultaneous acquisitions of Chrysler, 34% of Japan’s Mitsubishi and 10% of South Korea’s Hyundai.
“There are some doubts [among analysts] about whether our plate is too full,” Cordes conceded. “This is reflected in the share price, the perception that the burden on our shoulders is too heavy. But we are deeply convinced that mid-term, long-term, we are well positioned in the automotive market.”
