DaimlerChrysler Stock Plan Upheld
STUTTGART, Germany (AP) _ A court Monday upheld auto giant DaimlerChrysler’s stock option plan for executives, rejecting a challenge by shareholder activists who charged it was too generous.
A DaimlerChrysler shareholder meeting approved the plan for 6,500 executives last April, part of a growing trend among German-based companies to offer such programs in hopes of attracting top managers.
The offer allows DaimlerChrysler managers worldwide _ including about 2,000 in the United States _ to tap up to 96 million shares over the next five years. They can cash in shares when the company’s stock rises 20 percent above a 2000 benchmark of 62.30 euros ($54.20).
In trading Monday on the New York Stock Exchange, DaimlerChrysler shares were up $1.10 a share at $45 which is less than $2 higher than its 52-week low of $43.11.
Critics went to a state court last month to try to block the plan, arguing that common shareholders were being short-changed.
One plaintiff was German economics professor Ekkehard Wenger, who complained that the stock options were not tied to DaimlerChrysler’s stock performance relative to competitors in its field _ a common practice among German companies that offer such incentives.
Also in the lawsuit was the German Society of Small Shareholders charged that DaimlerChrysler management failed to inform stock holders of the program’s full financial implications.
But Guenter Goessel, a judge in Stuttgart, the company’s European base, threw out the case. He ruled that the stock options conform to German law and DaimlerChrysler had the right to structure its program’s incentives.