How disputes exploded inside DaimlerChrysler

Conflicts between Americans and Germans claim top U.S. executive Stallkamp’s career

The Detroit News Chrysler’s Bob Eaton, left, and Tom Stallkamp attended a charity event in Detroit when they were on the same team. Stallkamp’s criticism of the pace of integrating Daimler-Benz and Chrysler cost him his job in 1999.

By Bill Vlasic and Bradley A. Stertz / The Detroit News

    Tom Stallkamp, president of DaimlerChrysler’s U.S. operations, penned a one-page letter entitled “Personal Frustrations,” and sent it to company co-chairmen Juergen Schrempp and Robert Eaton. He poured it all out. Financial analysis didn’t exist. The management board structure needed changing. Accounting methods had to be refined. His role as head of integration required clarification.

    “I would like to talk with each of you,” Stallkamp wrote, “concerning exactly what you anticipate or are looking for as my role in the company, particularly regarding integration. I am not upset, just wondering what direction we are taking.”

    He never received a reply.

    Stallkamp arrived Aug. 10, 1999, at the house he had just built in the Bay Harbor development overlooking Lake Michigan near Traverse City.

    On the first day of his vacation Eaton’s secretary, Mary Ann Demski, called him.

    “Mr. Eaton is going up north to check on his new home and he’d like to see you,” she said.

    “Okay, sure,” Stallkamp said.

    He drove over to Eaton’s place on Walloon Lake, thinking in the car that Eaton probably wanted to talk about the management board restructuring under review.

    Eaton had torn down his longtime vacation spot on Walloon Lake, and bought the place next door to stay in while his new home was going up. After Eaton and Stallkamp sat down, Eaton pulled out a handwritten piece of paper, and began reading why Stallkamp should leave DaimlerChrysler.

    Eaton would never publicly discuss what was said next. Stallkamp kept detailed notes.

    “You’ve been too negative,” Eaton said, reading word for word off the paper. “You’ve been too negative, and as a result your staff, your direct reports, also think you’re too negative and too critical. Because of it, you can no longer lead.”

    Stallkamp was floored.

    “You’re not happy,” Eaton said, his voice shaky. “You’ve become negative.”

    “Who have you talked to?” Stallkamp probed. “What do you mean, my direct reports?”

    Eaton said he had talked to the other American executive vice-presidents. He admitted he couldn’t reach “all of them” because of vacations.

    “I have personally determined that you have lost their support and can no longer lead,” Eaton said stiffly. “You should consider other alternatives.”

    Stallkamp couldn’t fathom what Eaton was saying.

    “Look, Bob, I am raising issues that I think are critical to the integration of the company,” Stallkamp jabbed. “You have not supported me on any of those issues, like leanness, how Chrysler was lean. Look at the opulence on the German side versus our side. We can’t ask our people to be lean if people are flying the Concorde. It’s crazy. When I ask you about it, you go, uh, so what?”

    Eaton kept fumbling with his script, referring back to it.

    “Am I,” Stallkamp said, “being fired?”

    “No,” Eaton said. “If I wanted you to leave I’d ask you to leave now. You come back with some other alternatives of what you want to do.”

    Stallkamp’s mind raced. If he was demoted or fired without specific cause, his contract triggered a $5.4 million severance package. It was in the merger agreement.

    “You’ve triggered me,” Stallkamp declared. “You trigger my agreement if you kick me out of my job or you change my job.”

    “Talk to O’Brien,” Eaton blurted out.

    Talk to the company lawyer? “What the hell is going on?” he said, too loud.

    Eaton’s hands were shaking, and he choked on his words. Stallkamp thought Eaton was about to start crying.

    This is strange, Stallkamp said to himself. I should be emotional. He’s firing me and he’s crying.

    Eaton told him to call Gary Valade, the new purchasing chief, and Kathy Oswald, the head of human resources. Stallkamp reached both as soon as he returned home. They seemed shocked, shaken. Valade expressed concern about Eaton.

    “What did you do to him?” Valade asked Stallkamp. “He’s almost crying.”

A ‘bizarre’ ending to Stallkamp career

    On August 10, Schrempp booted up his laptop computer to check e-mails while on vacation in South Africa. The first message was from Stallkamp.

    “What the hell is going on?” the e-mail started.

    Only when Stallkamp returned from vacation, did he receive Schrempp’s e-mail reply. “I really didn’t know Eaton was going to meet with you,” Schrempp wrote. “But I know we were having some issues.”

    A few days later, Stallkamp went to Eaton to propose an “alternative” to remaining president.

    Stallkamp put the offer in writing. But Eaton didn’t even seem to listen.

    “I think we need to accelerate this,” Eaton said.

    “But I thought you wanted my alternatives?” Stallkamp said.

    “We should accelerate this,” Eaton repeated. “The end of the year is probably right.”

    “This is bizarre!” Stallkamp blurted. “I should leave?”

    Eaton talked about Jim Holden, head of Chrysler sales and marketing, being ready for the president’s job and Stallkamp’s “unhappiness.” Eaton had to make this move before he left, or else Holden could be frozen out down the road. Stallkamp was flabbergasted.

    Eaton told him to go see Gershon Kekst, the public relations guru. Stallkamp didn’t get it, but he flew to New York the next day and met Kekst at his office.

    Kekst favored cardigan sweaters, and spoke in professorial, knowing terms about the highest levels of corporate behavior. To Stallkamp, he was nothing but a hired gun.

    “I think you’re very angry,” Kekst said.

    “Nah, I know I’m going to come out of this fine,” Stallkamp said.

    Kekst suggested Stallkamp write a letter to Eaton and Schrempp, saying he had been thinking of retirement for a long time and wanted to leave right away.

    “I’m not a lawyer, but that sounds like I started this,” Stallkamp said. “I didn’t start this. You guys did.”

Secret sessions lead to changes at top

    When he returned to Auburn Hills, Stallkamp confronted Holden and asked whether he had orchestrated it all.

    “We need to get on with life,” Holden said. “All of us.”

    The supervisory board was set to meet September 24 in Frankfurt. A week before, a secret session of DaimlerChrysler’s “shareholders’ committee” had convened in New York. The committee was charged with protecting the interests of American shareholders and Chrysler employees.

    Eaton presented the case for removing Stallkamp while Schrempp watched from the side. The outside directors listened skeptically. Dumping Stallkamp was a dangerous move that would shake the old Chrysler to its foundation. But Eaton had made up his mind. Stallkamp had to go. Holden was the replacement.

    Schrempp said Eaton should leave, too. Get it over with. Let the management board start fresh.

    Eaton waffled. Schrempp pressed him. Eaton buckled. Maybe, Eaton said, it was time for him to bow out. He would go if the shareholders’ committee approved.

    No, the former Chrysler directors said in unison. Eaton could not leave now. If Eaton quit, the publicity would be brutal.

    Schrempp blew up.

    “Maybe I should go if you are staying!” Schrempp bellowed. “I will go back to South Africa!”

    The Chrysler directors called his bluff. Eaton, they demanded, had to stay.

    For a week executives in Auburn Hills felt paralyzed. Was Stallkamp out? Nobody knew, and Eaton would not tell even his senior officers.

    On September 24, after a tense meeting in Frankfurt, the supervisory board dropped the bomb. Stallkamp was out, off the board immediately and retiring at the end of the year. In the press release Stallkamp said he was retiring. Schrempp and Eaton heaped plaudits on him. “He has played a critical role in making our historic merger work,” Eaton said.

    The integration of Daimler and Chrysler was complete, Schrempp and Eaton added. “We are now,” they proclaimed, “one company.”

    In Auburn Hills, they called it Black Friday.