* Zetsche gets new CEO contract valid until end-2016
* Board dropped plans to give him five-year deal -sources
* Mercedes production chief Bernhard to head up Trucks
(Adds fund manager, Daimler comments)
By Christiaan Hetzner
FRANKFURT, Feb 21 Daimler 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.
59-year-old 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.
Since Zetsche took the helm seven years ago, Daimler's
stock has risen just over 2 percent. 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 on
Thursday that the supervisory board decided at the last minute
to grant Zetsche only a three-year deal in a bid to calm
They fear Daimler's luxury Mercedes Benz brand is losing out
to Volkswagen's Audi and BMW, particularly in the important
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
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 said.
Daimler missed its original profit target last year by 10
percent, or roughly 1 billion euros ($1.3 billion), 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 twelve 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 said.
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
Daimler Chairman Manfred Bischoff praised Zetsche's "ability
to combine a feeling for cars with sound engineering knowledge
and an entrepreneurial approach."
($1 = 0.7479 euros)
(Additional reporting by Hendrik Sackmann in Stuttgart; Editing
by Erica Billingham)