DaimlerChrysler Wants to Extend CEO Schrempp's Contract

NEW YORK October 8, 2003; Dow Jones reported that five years after the merger that created DaimlerChrysler AG , the German-American auto maker is struggling in nearly every corner of its global empire, Wednesday's Wall Street Journal reported.

Although investors often have criticized Chief Executive Jurgen Schrempp for the company's weakened state, some members of its supervisory board have quietly begun floating the idea of extending Mr. Schrempp's current contract, which is set to expire in April 2005.

Mr. Schrempp said Tuesday that a long-awaited turnaround at the company's Chrysler Group, its most troubled division, will get under way next year. Speaking in a telephone interview, he said he expects a slew of new products slated to be launched in 2004 will boost sales and help Chrysler improve its profit margins despite a punishing U.S. price war with archrivals General Motors Corp. and Ford Motor Co.

DaimlerChrysler's supervisory board, which is the German equivalent of a U.S. board of directors, appears willing to allow Mr. Schrempp's strategy of introducing new models and relentlessly cutting costs more time to play out. "I feel more pressure by supervisory board members to influence Jurgen to stay longer, rather than the other way around," Hilmar Kopper, the board's chairman, said in an interview. The supervisory board hasn't formally discussed a contract extension for Mr. Schrempp, Mr. Kopper said. But "over a glass of wine" individual members have raised the topic.

"It's gentle pressure," Mr. Kopper said. "It's, 'Wouldn't it make sense to have him a bit longer?' "

Four other board members confirmed they want to stick with Mr. Schrempp and his strategy. "I would like him to stay longer" after his contract expires, said Jurgen Langer, an employee representative on the board, which has 20 members. " The U.S. is a problem, but I think his strategy is right."

Mr. Schrempp declined Tuesday to say if he wants or would accept a contract extension. "If the board asks me, then I will have to think about it," the 59- year-old executive said. "I'm very energetic. I'm in top shape. I have been here for more than 40 years. This is my life."

DaimlerChrysler board members' backing for Mr. Schrempp harks back to traditional European reticence to make waves in the boardroom. More recently, however, European companies, including Deutsche Telekom AG , Vivendi Universal and others, have booted their chief executives as their companies' fortunes flagged. In the U.S., struggling telecommunications concern Motorola Inc. recently got rid of its CEO, and Ford got a new chief after the auto maker posted a huge loss two years ago.

Wall Street has doubts about DaimlerChrysler's turnaround plan. While the company's share price has risen in recent weeks to about $35, it remains far down from the heights of $100 a share attained in early 1999. A number of analysts also question Chrysler's ability to report a small operating profit this year, as it has promised, after the company posted an operating loss of about $930 million in the first half. Valued at $47 billion at the time of its 1998 merger, DaimlerChrysler today has a market capitalization of $36 billion.