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.March 24, 2004
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DaimlerChrysler Removes Topic of Variable Supervisory Board Remuneration from the Agenda of the 2004 Annual Meeting
 

Legal uncertainties after Federal Court Decision Possible contradiction between the Federal Court Decision and the recommendation of the Corporate Governance Code The Company is waiting for clear legislative pronouncements

Stuttgart - As a result of the possible legal uncertainties surrounding the decision of the Federal Court of Justice (Bundesgerichtshof(BGH)) regarding stock option programs for Supervisory Boards, the Board of Management and the Supervisory Board of DaimlerChrysler AG have decided to withdraw their recommendation for variable Supervisory Board remuneration based on the long-term success of the company and to remove the topic from the Agenda of the Annual Meeting on April 7, 2004. DaimlerChrysler had requested shareholder approval to reduce the fixed Supervisory Board remuneration by approx. 25 percent and to restructure the latter portion as a variable component that would depend on the stock price. The total remuneration of Supervisory Board members would rise only in the event of increase in stock prices in the course of their activity. The planned issuance of phantom shares by DaimlerChrysler was compatible with the previous legislation and is in conformity with the express recommendation of the government commission on corporate governance headed by Professor Baums and the pronouncements on the German Corporate Governance Code. The planned program expressly provides that the variable remuneration may not consist of stock options, which are created from conditional capital or are serviced from treasury shares. The Federal Court of Justice has declared this type of construction as inadmissible.

Subsequent to the Federal Court Decision published on March 15, 2004, however, it can not be ruled out that the Court would view a variable form of Supervisory Board remuneration based on the stock price as generally inadmissible. DaimlerChrysler continues to maintain that the Decision does not extend to the model originally proposed to the Annual Meeting. Nonetheless, the Federal Court Decision, which is possibly in variance with the recommendations and regulation of the Commission, has led to an uncertainty regarding the legal position. The lawmaker is therefore called upon to alleviate this uncertainty.

(March 23, 2004)