Daimler chief faces detractors

Institutional shareholders had said they may abstain or formally oppose the re-endorsement of the German-US firm's management team and supervisory boards.

Despite the fierce criticism, the board still received 95% support in a vote on their performance in 2004.

And Juergen Schrempp's tenure at the top continues despite shareholder fury.

DaimlerChrysler's operating profits fell last year on the back of poor sales at the Mercedes division.

In February, the carmaker announced that fourth-quarter operating profits for 2004 fell to 785m euros ($1bn; £537m) from 2.4bn euros in 2003.

The drop in revenue masked a strong performance from the Chrysler group whose returns met market expectations following a costly turnaround plan.

Meeting targets

At the start of the AGM Mr Schrempp, the chief executive, said the group had been working to overcome its difficulties and had made "clear progress".

He noted overall 2004 operating earning targets of 5.8bn euros had been reached.

"We have achieved the profit target set for the group," he told the gathering of 10,000 shareholders at the Berlin Messe convention centre.

"However, we are, of course, not satisfied with that."

He said new models should help Mercedes brand sales rise slightly this year.

Expensive mistakes

The company faced more problems last week when it issued a recall of 1.3 million Mercedes cars, the biggest in its history.

It said problems with batteries, alternators and brakes on a number of models made since 2001 would be fixed.

Analysts have said the move is likely to cost many millions of euros, with the firm acknowledging the efforts to improve its product would hit profits.

It also announced a restructuring of its loss-making Smart compact car unit last week. This will cost the company 1.2bn euros, lead to about 700 job losses and impact on profits this year.

Dissent

DaimlerChrysler was formed in 1998 from a tie-up between Daimler-Benz and Chrysler.

There were signs of shareholder unrest at last year's meeting when investors holding 88.5% of the group's share capital backed the management, down from 99.4% in 2003.

This year, German asset manager Union Investment has already indicated that it will abstain from endorsing executives.

The Reuters news agency has also reported that fund group SEB will "probably" vote against backing management.

Klaus Kaldemorgen from fund manager DWS told the meeting DaimlerChrysler had put the prestigious Mercedes brand at risk by letting quality fall.

"Shareholders' patience is exhausted," he said.

"Do you have to shoot yourself in the foot first to provide first aid?" he asked.

"Playing down results seems to have become part of the corporate culture."

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