German luxury carmaker Daimler has announced a three-year contract extension for CEO Dieter Zetsche. He's been under mounting pressure to increase net profit margins.
Maker of luxury vehicles and trucks, Daimler of Germany, announced on Thursday its supervisory board had extended the contract of the group's CEO, Dieter Zetsche, for three more years.
"The supervisory board of Daimler passed a unanimous resolution to extend his contract of service until December 31, 2016," the company said in a statement.
Zetsche turns 60 in May of this year and was appointed chief executive in January 2006, after joining the auto maker's executive board eight years earlier.
Big challenges ahead
Supervisory board chief Manfred Bischoff called the long-term orientation of the group's leadership "an essential factor for Daimler's sustained success."
"We're maintaining the important continuity at the top executive level," Bischoff said, simultaneously announcing a three-year extension for research and development boss Manfred Weber.
To some analysts, the CEO's contract extension came as a surprise; many had expected it to be prolonged by five years like on past occasions. There was speculation that the shorter contract might have been the result of Zetsche being under growing pressure to enhance the group's profitability.
Daimler's shares have not increased significantly since Zetsche took over as CEO. "Compared with its direct rivals BMW and Audi, Daimler's yield from revenues is lower," said SEB Investment Management economist Jürgen Meyer.
Daimler's earnings report for 2012 revealed that the Stuttgart-based company - with Mercedes its flagship marque - sold a record number of vehicles last year, but the rise in revenues once again did not translate into a higher bottom-line profit.
hg/msh (Reuters, AFP, dpa)