DaimlerChrysler plansmanager pay changes

6th April 2004, Comments 0 comments

6 April 2004, STUTTGART - In a bid for greater transparency in the touchy area of executive salaries, DaimlerChrysler is to restructure how it rewards its top managers, Deutsche Presse- Agentur, dpa learned Tuesday from company sources. A day before the company's annual general meeting in Berlin, the sources aid DaimlerChrysler is to do away with the controversial stock options which are a sore point with shareholders. In its place, starting in 2005, will be a three-tier system of basic salary, annual bonu

6 April 2004

STUTTGART - In a bid for greater transparency in the touchy area of executive salaries, DaimlerChrysler is to restructure how it rewards its top managers, Deutsche Presse- Agentur, dpa learned Tuesday from company sources.

A day before the company's annual general meeting in Berlin, the sources aid DaimlerChrysler is to do away with the controversial stock options which are a sore point with shareholders.

In its place, starting in 2005, will be a three-tier system of basic salary, annual bonus and remuneration based on long-term company performance.

The company will pay its top managers in virtual shares and then conduct a review after four years to determine their rewards based on various components like return on equity and on comparisons made with such competitors as Toyota, General Motors, Ford, Volkswagen, BMW and Honda.

A company spokesman confirmed the basic outlines of the new pay package plans, saying they are based on the transparency recommendations made by the German Corporate Governance Code.

The development comes as DaimlerChrysler is bracing for a challenge at its meeting by lobby groups representing small-time shareholders over the issue of the large bonuses paid to top executives.

After the steep drop in earnings, DaimlerChrysler plans to hold dividends at EUR 1.5 per share, the same payout as last year.

That issue will be one of a number of tough ones which chief executive Juergen Schrempp will be answering at the Berlin meeting after the German-American car concern's net income in 2003 plunged to just EUR 400 million from EUR 4.7 billion the year before.

The net result came on operating profits of EUR 5.7 billion, down from the 2002 figure of EUR 6.9 billion, with DaimlerChrysler hit by weak demand and restructuring costs.

Schrempp is also expected to discuss the problems at the troubled Japanese commercial vehicles maker Mitsubishi Motors, in which DaimlerChrysler holds a 37 percent stake.

On Tuesday, Financial Times Deutschland said that in the plans for a capitalisation increase at Mitsubishi, DaimlerChrysler may be looking for a new partner.

But a company spokesman in Stuttgart declined to comment on the report.

"The revamping plan is not yet finished," the spokesman said.

 DPA

Subject: German news

0 Comments To This Article