April 9, 2014 / 11:15 AM / 5 years ago

Daimler succession dynamic shifts in favor of Zetsche

BERLIN (Reuters) - Daimler (DAIGn.DE) boss Dieter Zetsche is poised to have his contract extended beyond 2016, senior executives said on Wednesday, in a move that would sideline a generation of potential successors including trucks boss Wolfgang Bernhard.

Daimler's chairman of the advisory board Manfred Bischoff addresses the annual shareholder meeting in Berlin April 9, 2008. REUTERS/Fabrizio Bensch

Succession will not be formally decided before early 2016, after the company only last year extended the 60-year-old Zetsche’s contract by three years.

But Daimler’s current product momentum, improving profits and the recent departure of Mercedes-Benz production chief Andreas Renschler work in favor of “keeping some continuity”, a person familiar with the supervisory board’s thinking said on Wednesday.

The supervisory board, a 20-member board of directors, formally appoints management board members.

“We don’t have to make a formal decision until closer to the time. This past year in particular has shown how much can change in 12 months,” the person said, adding that the current momentum was working in favor of extending Zetsche’s contract.

Last year the supervisory board extended Zetsche’s contract by only three years, instead of an expected five, and forced a reshuffle of senior managers, forcing Bernhard out of his role as head of production at Mercedes-Benz Cars.

Daimler acknowledged it was deliberating possible scenarios for succession, but said that no decision was imminent.

“The supervisory board is preoccupying itself intensively with the issue of succession,” chairman Manfred Bischoff told shareholders gathered at the annual general meeting in Berlin on Wednesday.

“It is not an urgent topic. Of course this has to be planned in advance, but this is not something for public discussion,” Bischoff said.

The remark was interpreted by senior Daimler executives as underlining the scenario that Zetsche’s contract would likely be extended, another senior Daimler executive, who declined to be named, said.

Daimler’s powerful labor representatives, who control half of the seats on the 20-member supervisory board, have demanded that the list of potential succession candidates be extended beyond Bernhard and Chief Financial Officer Bodo Uebber, the person familiar with the supervisory board’s thinking said.

“If Zetsche gets an extension until 2019, then by the time he leaves, it’s probably too late for some of that generation. By focusing on the younger generation you have time to watch them for the next six years, which is almost the length of a development cycle of a vehicle.”

As a result, Zetsche and the supervisory board now include Ola Kaellenius and two other executives in their late 40s - Markus Schaefer, head of manufacturing at Mercedes-Benz, and Klaus Zehender head of procurement at Mercedes-Benz - as potential “crown princes.”

German daily Handelsblatt also reported on Wednesday that Zehender and Schaefer were potential succession candidates.

The move effectively dims the CEO prospects of Daimler’s older guard - Bernhard, China boss Hubertus Troska and finance chief Uebber - who will all be close to 60 in 2019.

Bernhard and Zetsche have both been on a recent charm offensive with labor officials; both had clashed with unions in the past over cost-cutting measures.

Reporting by Edward Taylor and Ilona Wissenbach, editing by Mark Heinrich

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