Daimler Executives Can’t Avoid Drama

By Joseph Szczesny

10.04.2009 / The Detroit Bureau

You are invited to a play produced by shareholder relations and staring six directors and 20 members of the supervisory board.

This long running Broadway-like production gets panned by its unwilling executive stars. For years, Daimler executives have dreaded the day of the company’s annual shareholders meeting. Not only is it long and tedious, but it’s also the one day of the year when the company’s executives really aren’t in control of every detail in corporate life. In addition — as a new study by
the Germany’s respected Rimini Protocol suggests — it also can be pretty dramatic at times.
The Rimini Protocol isn’t some kind of business study group. It’s a program that has now trained some of the best young filmmakers and theater directors in Europe today, noted Helgard Haug, an instructor in applied theater science in project headquarters in Giessen, near Frankfurt, Germany’s nominal business capitol.
Haug said she had spent three years studying various annual meetings or Hauptversammlung as they are known in German, attending dozens of them. She thought about focusing on a single company Henkel or Deutsche Bank, perhaps German’s most powerful company. But ultimately she settled on Daimler’s meeting for the focus of the study because it seemed to have a dramatic structure all of its own.
Indeed, over the years the Daimler annual meetings in Berlin have produced its share of striking moments. In 2004, a shareholder uprising played out during the meeting that forced the executives at what was then DaimlerChrysler to reconsider and finally to kill plans for an alliance with the Japanese automaker Mitsubishi.
The following year the meeting had an operatic quality to it as a handful of irate shareholders launched a ferocious attack on Juergen Schrempp, then the company’s chief executive officer, for building a hideaway office in Mercedes-Benz dealership in Munich to appease his much younger wife. As the attacks picked up momentum that day, Hilmar Kopper, a pillar of the German business establishment who was then chairman of the company’s board of supervisors, shook his head in sorrow as he called the attack on Schrempp shameful and petty. But the attacks made front-page headlines all across Germany the next day; less than 90 days later Schrempp had resigned.
Criticism of the small shareholders during the shareholders meeting also laid the groundwork for the de-merger with Chrysler. The small shareholders had
been suspicious of the deal from the start and as the evidence piled up that the financial benefits touted by Schrempp were never going materialize, Daimler executives came under increasing pressure from investment funds across Germany to dump Chrysler.
Even Daimler executives acknowledge the meetings in Berlin have come to have their own unique character. “There are a lot of crazy people in Berlin,” Schrempp said.
Thus, the Rimini Protocol had plenty to talk about as they prepared to deconstruct this year’s meeting through workshops and discussions with students, reporters and anyone else interested in the annual meeting process. “We wanted to turn it and look at it from a little bit different angle,” Haug said.
With Daimler’s share price down by more than 40% in the past year and the company’s once reliable dividend slashed, this year’s meeting certainly had plenty of dramatic potential. In fact, Daimler Chief executive Dieter Zetsche was heckled from start to finish as he reported on the company’s present condition at the beginning of the meeting even after supervisory Chairman Manfred Bischoff spent several minutes reminding everyone, including the theater people, to
behave during the meeting.
The theater people, however, weren’t there to disrupt the meeting, but to offer a critique. Haug pointed out that right from the beginning the meeting had certain theatrical quality, such as the demonstrators outside the meeting with their Zetsche masks. Everyone comes into the meeting expecting to play a certain role. (Certainly executive remarks are carefully scripted.) The
expensive lighting and the staging provide additional elements required for a theatrical production.
At the same time the event has a certain improvisational quality, Haug said. “It doesn’t necessarily change anything. But company’s hate it because it’s the one day of the year, they have to answer everyone’s questions,” she notes.
The Rimini Protocol even asked some of the critical shareholders, such as Lars Labryga and Hans Martin Buhlman, two well-versed investment fund managers who have served up trenchant criticism of Daimler’s management over the years to discuss the meeting with students who have come to observe. The meetings are important and the questions asked are quite serious, Labryga notes.
One of the themes that emerge from this year’s meeting is that Daimler is falling behind competitors in efforts to become a green company. Zetsche, of course, insisted Daimler is doing everything in its power to lead the revolution in automotive technology.
But shareholders aren’t buying it.
Late in the afternoon when the meeting was already more than six hour old, Daimler executives were confronted by a flurry of questions about why the company’s vehicles aren’t as fuel efficient as those produced by BMW; why a four-seat Toyota has better fuel economy than a two seat smart car; and what does the company plan to do about the carbon crisis. Another speaker attacked all of Daimler’s talk about producing more fuel-efficient cars that produce few emissions as so much “greenwash.”
The questioners are uniformly young, attractive and articulate. It’s as if someone has held a casting
call to summon up a youthful chorus to show up the shortcomings of vehicles made by Mercedes-Benz and point out the shortcomings in Daimler’s environmental policies. The contrast with aging, white male executives on the dais is striking.
Zetsche, who is not only Daimler’s CEO but a company man down to his finger tips, insisted that Daimler has nothing of which to be ashamed. BMW is only ahead because Mercedes-Benz has more vehicles in different categories. His answer about the smart car isn’t quite as surefooted but he noted that different tests can produce different results. Daimler is also working to meet the new European Union standards for reducing carbon emissions but doesn’t mention that Daimler has lobbied against tougher standards.
Overall, Zetsche doesn’t have much choice but to accept the criticism.
Years ago, Schrempp used to talk about using the Daimler-Chrysler merger as a wedge to remake German business in the American model, which would ultimately get rid of things like cumbersome supervisory board and co-determination that gives employees a spot on the board; restructuring the format of the annual meetings to make them more streamlined was also dreamed of.
After the de-merger of DaimlerChrysler, the financial crisis, the collapse of Lehman Brothers and the current German-American rift over expansionist financial policy to create consumer demand, the big reforms needed that would take the drama out of German shareholders meetings probably won’t happen anytime soon.


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