Shareholders to vent at annual meeting in Germany -- and maybe sing

By From freep| Apr 02 2007
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Dieter Zetsche and Tom LaSorda will take their place on stage Wednesday in Berlin as punching bags for DaimlerChrysler AG shareholders unhappy with the Chrysler Group's performance and its role in the company after nearly nine years of marriage.

The Germany-based company's annual meeting traditionally is more raucous than U.S. shareholder meetings, in part because of how such gatherings fit into German culture.

"They're vocal, they're merciless and they're long," said Gerald Meyers, University of Michigan business professor and former chairman of American Motors Corp.

This DaimlerChrysler annual meeting probably has received more attention and buildup than any since Daimler-Benz AG purchased Chrysler Corp. in 1998 because of the growing likelihood that the merger could be undone.

DaimlerChrysler Chairman Dieter Zetsche's decree Feb. 14 at a news conference in Auburn Hills that all options were on the table for the U.S.-unit's future, including its possible sale, made the company a topic of worldwide speculation. The company's shares -- which sold for about $64 before the announcement -- have skyrocketed since to more than $81 a share.

"This will be one of the most interesting shareholder meetings in many, many years," said Bill Mann, a senior analyst for the Motley Fool and the lead adviser for Motley Fool Global Gains.

Some had hoped an announcement of the future might come at the annual meeting. Company officials, however, have worked to dampen such speculation, saying such a meeting, which deals with reviewing the past, is not the proper venue for such an announcement.

Experts say, besides, that a potential deal would be too complicated to be completed so quickly.

The annual meeting is more than just a look at the company's bottom line -- it's an event. People who have attended the meetings say they have seen an occasional shareholder dressed in costume or singing in the back of the auditorium.

Former Chrysler spokesman Tony Cervone, now a vice president of communications at General Motors Corp., attended a special shareholders meeting in 1998 regarding the merger.

"They're huge," he said of the German shareholders meetings. "They're kind of like an Oktoberfest."

Shareholders get the chance to ask questions at the meeting, and the company's top executives sitting onstage will at least address the issue -- if not answer the question. Zetsche is expected to be on stage as well as Chrysler President Tom LaSorda, other members of company management and the entire supervisory board, which includes UAW President Ron Gettelfinger.

By law, the meeting, which includes approving the 2006 stock dividend, must be done by 11:59 p.m. The company expects more than 12 hours of shareholder questions, which sometimes are more statement than query. About 300 questions were logged at last year's meeting.

"I cannot remember any shareholder meeting at Daimler that took less than 10 hours," said shareholder Leonhard Knoll, who began attending Daimler-Benz meetings in 1990. "It has different reasons. In the end, Daimler has a special problem -- it has quite a lot of activist groups."

Anger over Chrysler

Knoll, a German university professor, and Ekkehard Wenger, who own enough company shares to force proposals to be voted on by all shareholders, have filed 15 with the company. The first proposal calls for the word Chrysler to be removed from the company's official name by next year if the unit is not sold first. This is only the second time in recent history that shareholder proposals have been added to the meeting's agenda.

"Some of these votes are simply designed to drive a wedge in between Daimler and Chrysler and really to force the issue," said Mann, of the Motley Fool.

Chrysler Group, already beleaguered from losing $1.5 billion last year, is sure to face its critics in Germany, company officials acknowledge. Daimler-Benz AG spent about $40 billion in 1998 to acquire Chrysler Corp., and now it looks like the company might be lucky to sell it for as much as $6 billion.

Canadian auto-parts supplier Magna International Inc. has reportedly submitted a bid to buy Chrysler for $4.6 billion to $4.7 billion.

Big-name private equity firms Blackstone Group and Cerberus Capital Management are believed to be in the mix after having visited the Auburn Hills headquarters in late February to review Chrysler's books.

Crosstown rival General Motors Corp. -- touted as a possible buyer early on -- appears to be on the sidelines after making a tentative proposal to take on Chrysler in exchange for giving DaimlerChrysler some GM stock.

Attendance dwindles -- to 8,100

At the high point in 1999, DaimlerChrysler shareholder meetings attracted 20,000 people. There was not a venue large enough in Stuttgart, where DaimlerChrysler is based, and the company had to construct a meeting site out of tents.

Eventually, officials decided to move the affair to Berlin, where they could easily rent a facility large enough to hold everyone.

In recent years, the number of people making the trip has declined.

Last year 8,100 shareholders attended -- a tiny percentage of the company's 1.5 million shareholders. Daimler officials don't expect a big increase in attendance this year.

A majority of the company's shareholders live in Europe. Forty-three percent of the shareholders live in Germany, compared with about 18% from the United States.

It's a get-together

In Germany, it is not uncommon for retired workers who own shares in their companies to view the annual meeting as a chance to have a reunion with old colleagues, Fritz Kübler, a professor at the University of Pennsylvania Law School, said by telephone from his home in Frankfurt.

Some are able to take advantage of tax breaks by attending the meetings.

"You have something that is called a natural dividend if you attend," he said.

The attendance is in stark contrast to shareholder meetings in the United States, where few outsiders attend.

"U.S. annual meetings are way different," said Cervone, the GM spokesman. "GM's is in Delaware every year. There are maybe 200 people at it. ... They're pretty straightforward."

While a U.S. company's annual meeting might attract a handful of so-called gadflies who comment on the business, German meetings attract them in swarms.

"You always have a number of sort-of crazy people who just want to get the attention. Then you have people who are looking for a platform to propagate an agenda that does not necessarily have a lot to do with what the company is doing," Kübler said.

In recent years there have been comments about the company's environmental record and supposed treatment of animals, with some activists unhappy that dealers might be supporting such events as rodeos or dogsled races. Some shareholders take the opportunity to complain about problems they've had with their Mercedes; others complain about the salaries paid to management.

But amid the noise, serious points are addressed, and those statements can have an influence, observers say.

"It's more important even than a meeting of an American company," said David Healy, an analyst with Burnham Securities. "It's an event. It's theater. The small shareholders view it as really the only opportunity they have each year to sound off against management."

 

 

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