THE DAIMLER / CHRYSLER MERGER – The culture clash heard ’round the world
20 years later, an oral history of DaimlerChrysler
By Richard Johnson and Larry P. Vellequette
Photos by Joe Wilssens
The strange thing is that May 6, 1998, a Wednesday, started out just like any other day. Then, bam, a story in the European edition of The Wall Street Journal that Chrysler might merge with Daimler-Benz or be taken over.
This was seismic.
The following day 20 years ago today the deal was announced, or more like proclaimed, at a hastily called yet flawlessly organized press conference at the London Arena, where security guards wore matching bronze jackets, waiters circulated with trays of canapes and fruit punch, and Chrysler Corp. CEO Bob Eaton never once stopped smiling.
Whatever kind of deal it was, a merger or takeover or just a jamming together of two giant companies, it was beyond historic. It was apocalyptic.
I was there along with two London-based Automotive News Europe colleagues, Bill Diem and Kathy Jackson. We sat in thrall at this union that had not been rumored or speculated and yet was suddenly upon us.
I watched as Eaton, on stage, called it a "merger of equals." I recall thinking I’d never heard the term "merger of equals" and that it sounded like wishful thinking.
The fact that it was Eaton who first used the term that day with a rather insistent tone seemed significant. Daimler-Benz chief Juergen Schrempp, Eaton’s new co-chairman, merely nodded.
Then Eaton whom I’d known and admired when he headed General Motors Europe before going to Chrysler in 1992 said something else I’d never heard before. He announced he would retire within three years, which sounded to me as though Schrempp and Eaton would never be co-anything. Not really.
Ahead of the press conference, Diem, managing editor of Automotive News Europe, surmised that the new company would be named "Chrysler-Benz." In fact, he was convinced of it. He seemed ready to call the idea in to Stuttgart and Auburn Hills just in case they hadn’t thought of it. But when the three of us arrived at the London Arena, "DaimlerChrysler" was emblazoned on everything in sight.
Yet Bill was onto something. The top Chrysler guys had insisted on a name that was more or less what he had reckoned and when they didn’t get it, or rather when Eaton didn’t get it for them, it was an early sign that the deal was doomed.
Most of us know the sad story of DaimlerChrysler. It was the culture clash heard ’round the world. The damage is still being assessed, the lessons still being absorbed.
Bob Lutz has his say and is mentioned by others.
Bob Eaton does not come across well here, but have an inkling that he wasn’t so much a pushover as he was elated w/ his compensation package after the merger of equals and was already looking to retirement.
According to this article – Eaton got quite the windfall.
Striking evidence of this arrived last week in the form of a proxy statement filed by Chrysler, which showed that current Chrysler CEO Bob Eaton will receive $70 million in cash and stock next year. This is 35 times the salary of Daimler CEO Jurgen Schrempp, with whom he’ll be running the new DaimlerChrysler. Eaton’s base salary will be twice that of Schrempp. But he’ll also receive 628,000 shares of stock in the new company. These aren’t stock options, but actual shares, which means they’re pure gravy. Eaton will also receive warrants on another 2.3 million shares, and he worked a nice little deal with his pension benefits as well. As long as he sticks around for three years, he’ll get an extra $30,000 a month after he retires. But then, what’s $30,000 a month between friends?
Oh, Eaton also has a new golden parachute clause in his contract. If he gets fired in the first two years, he takes home a cool $24 million.
By contrast, if you add up the salaries of the entire 10-member management board that runs Daimler, they amount to less than what Chrysler’s former No. 2 guy, Bob Lutz, made last year. Daimler’s execs, in fact, made slightly less in 1997 than they did in 1996, even though the company’s business has been booming.
via GM Inside News Forum http://www.gminsidenews.com/forums/
May 8, 2018 at 01:32PM