* Aims to retain dual roles as head of Daimler and Mercedes
* Decision to add duties as Mercedes CEO one of his best
* Market cap falls below BMW's for 1st time on record
* Daimler worst performer on Germany's DAX on Tues, falls
(Adds more CEO comments, context)
By Hendrik Sackmann and Christiaan Hetzner
FRANKFURT, Nov 15 Daimler's 58
year-old chief executive is not looking to groom a successor at
its core Mercedes-Benz business quite yet, disappointing some
investors frustrated with management's chronic underperformance
compared with other German carmakers.
Dieter Zetsche, whose contract runs through the end of 2013,
said he has no plans to hand over the reins of luxury carmaker
Mercedes-Benz to his top lieutenant, saying his dual role
increased his effectiveness.
"I am convinced that I would be a considerably worse CEO of
the group if I wasn't deeply anchored in its operating
business," Zetsche said in comments emailed to Reuters on
Whereas shares in car and truck maker Daimler have risen 27
percent since the start of 2009, pure-plays like Volvo AB
gained nearly 90 percent during the period and stock
in German rival rival BMW has more than doubled.
"For the first time in history, BMW is now worth more on the
stock exchange than Daimler," said Auto industry analyst Arndt
Ellinghorst of Credit Suisse, pointing to the Munich-based rival
that is about a third smaller in revenue terms, "and Mercedes
now has a margin comparable to that of (VW's Czech value brand)
"The single most asked question that we receive from
investors is if and when there is a change in management,"
Daimler CEO Dieter Zetsche, whose contract runs through the
end of that same year, said he has no plans to hand over the
reins of luxury carmaker Mercedes-Benz to his top lieutenant,
saying his dual role increased his effectiveness.
The ex-Chrysler boss was first appointed head of Daimler in
July 2005, only to be given responsibility for Mercedes by the
company's board the following month after rival CEO-candidate
and then-Mercedes chief Eckhard Cordes decided to leave.
"I would also be much worse a Mercedes chief if I didn't
have the opportunity to shape its fortunes directly and with all
consequence and determination," Zetsche said in his emailed
comments, adding that accepting the post was "one of the best
decisions I made so far".
Credit Suisse's Ellinghorst said Daimler's management has
repeatedly fallen short of market expectations, clung to an
inefficient conglomerate structure, bought stock back at a high
price before then selling at just over 20 euros a share to Aabar
, only to omit the dividend for 2009.
Ellinghorst believes Daimler shares need a catalyst to
outperform, which he argues would be promoting Mercedes
production and procurement chief Wolfgang Bernhard to brand
Zetsche said he did not favour any one candidate to replace
him one day at the helm of either Mercedes or Daimler, despite
widespread belief that the job is Bernhard's for the taking.
"We have no crown princes. I have six boardroom colleagues
here that all do an excellent job performing their respective
duties. No considerations have already been made about when this
question (about succession) will become an issue and certainly
no decisions -- even less has there been any deliberation made
about how," he said.
"SCEPTICISM AMONG INVESTORS"
With an operating margin of nearly 9.4 percent in the first
nine months, Mercedes lagged behind equivalent returns above 12
percent at Volkswagen's Audi and BMW, even though
the two tend to sell cars priced below those of Mercedes.
Albrecht Denninghoff, an analyst at Silvia Quandt Research,
said there was a "clear scepticism among investors" that Daimler
can deliver on its target to achieve average annual operating
margins of 10 percent at Mercedes and 8 percent at Daimler
Trucks on a sustainable basis starting 2013.
The Daimler CEO said the performance of Mercedes had nothing
to do with the additional burdens of his dual executive roles,
pointing to other rivals like Martin Winterkorn, head of both
the Volkswagen brand and group, as well as Renault-Nissan CEO
Carlos Ghosn and Fiat-Chrysler CEO Sergio Marchionne.
"It's a positive development that a majority of those
responsible in the auto industry also have an operational role
and don't just walk around as a mere figurehead," Zetsche said.
(Editing by Jon Loades-Carter and David Holmes)