Shareholders Confront DaimlerChrysler Boss
DaimlerChrysler shareholders vented their anger at the auto maker’s management Wednesday for a buying spree that turned sour, saddling the maker of Mercedes cars with troubled U.S. and Japanese divisions.
Several critics at the company’s annual shareholder meeting demanded the removal of board Chairman Juergen Schrempp for presiding over the evaporation of billions of dollars in stock value, mostly because of huge losses at the U.S.-based Chrysler Group.
At the end of the day, however, Schrempp and the rest of the management board won a vote of support from the company’s shareholders. Schrempp won 88% of the 10,800 votes--with help from major shareholders such as Deutsche Bank.
Schrempp, who masterminded the 1998 German-U.S. merger, appeared subdued on the podium as he parried critics who blamed him for the plunge in the company’s share price and renewed charges that he misled investors about Chrysler’s value before the deal.
Eckehard Wenger, an economics professor and fierce Schrempp opponent, charged that Daimler-Benz had bought a “scrap heap” in the “biggest mistake in German corporate history.”
“If something is to change, not only Mr. Schrempp but the entire supervisory board must get out of here,” Wenger shouted.
But Schrempp told the 9,400 shareholders he will not budge from his abiding ambition of making DaimlerChrysler the No. 1 global auto maker. And he said a Chrysler rescue plan unveiled in February is on track.
Countering persistent speculation that Chrysler might be dumped, he said both the U.S. branch and the alliance with Japan’s Mitsubishi Motors remain essential to the company’s international strategy.
“They are not expendable,” Schrempp said.
The meeting at a Berlin convention center was the first chance for investors to confront Schrempp about heavy losses unfolding at Chrysler since last fall--even as the auto maker’s German operations turn a profit.
Despite shareholder accusations of mismanagement and lawsuits by investor groups seeking possible damages, Schrempp’s position seems safe for now.
Schrempp said Wednesday that he expects legal claims by shareholders against the company to be resolved within a year and repeated that he considers the claims unfounded.
Most prominent among the complaints is an $8-billion lawsuit filed by American billionaire Kirk Kerkorian, who says Schrempp deceived shareholders at the time of the DaimlerChrysler merger.
Schrempp drew snickers in the hall Wednesday when he insisted: “No one was deceived. Everything was out in the open. All agreements were observed.”
He said he still expects Chrysler to break even next year and reiterated a forecast that the overall operating loss in the first quarter of this year will be $710 million to $890 million.
DaimlerChrysler bought stakes in Mitsubishi and South Korea’s Hyundai Motor Co. last year and plans to share parts between its various units to reduce costs. It also plans to cut about 35,000 jobs at Chrysler and Mitsubishi to boost earnings.
The company said Wednesday that it acquired an additional 3.3% stake in Mitsubishi from Swedish truck maker Volvo for $297 million.
A $3.9-billion, three-year recovery plan is aimed at reviving Chrysler after it drove the enlarged group to a loss of $250 million in the last three months of 2000.
“Simply sitting out our problems or selling off business units is not an acceptable solution,” Schrempp told shareholders. “Our strategy remains to make DaimlerChrysler the world’s leading auto maker.”
To underline that push, the company announced a $300-million deal Wednesday to jointly produce commercial vehicles with Mitsubishi, strengthening its position in Asia.
Shareholders admiring gleaming late-model Mercedes and Chrysler cars displayed outside the meeting hall appeared resigned to sticking out the slump that has the company’s stock price down 20% from a year ago.
“There’s no alternative,” said engineer Kurt Ratjen, who has held DaimlerChrysler stock for about six years. “You have to wait it out. But I strongly question whether Chrysler was properly valued.”
In trading on the New York Stock Exchange, DaimlerChrysler’s American depositary receipts rose a penny to finish at $48.61.
