Auto Industry News: Schrempp Defends Decision to Shift Chrysler Management

WILMINGTON, Del. December 10, 2003; Dow Jones reported that DaimlerChrysler AG Chairman and Chief Executive Jurgen Schrempp, under cross-examination by a lawyer for billionaire Kirk Kerkorian, defended his decision to shake up management at the former Chrysler Corp. as consistent with the "merger of equals" agreement underlying the 1998 combination of Chrysler and Daimler-Benz AG, Thursday's Wall Street Journal reported.

Mr. Schrempp is accused by Mr. Kerkorian in a civil lawsuit of disguising a takeover as a "merger of equals" in order to avoidpaying a takeover premium to Mr. Kerkorian and other Chrysler shareholders. Mr. Kerkorian is seeking as much as $2 billion in damages.

Mr. Schrempp Wednesday was questioned about an interview he gave to the Financial Times in 2000 in which he was quoted as saying that the transaction wasn't really a merger of equals, but that the characterization enabled him to acquire Chrysler in a "roundabout way."

Mr. Schrempp, formerly chairman and chief executive of Daimler-Benz, testified that he was concerned at the time he gave the interview that sweeping changes needed to be made at Chrysler.

By late 2000, the head of Chrysler at the time, James Holden, was pushed out and succeeded by two German executives.

Mr. Schrempp denied that he had a direct hand in dismissing senior Chrysler officials. He said either former Chrysler Chairman Robert Eaton had suggested their removal or that the executives resigned on their own. In earlier testimony, Mr. Holden said Mr. Schrempp made it clear to him that he was out of a job.