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For Germany Inc.,
Retirement Rule
Faces a Battle
By STEPHEN POWER
July 25, 2006

MUNICH -- Helmut Panke, the departing chief executive of BMW AG, said he expects German corporations to re-examine their retirement-age policies for top executives as part of a broader debate about how long citizens in the world's third-largest economy should be expected to work.

Mr. Panke's comments, during a luncheon with reporters at BMW's Munich headquarters, are his most extensive in public since the auto maker abruptly announced Thursday that he would step down Aug. 31 -- the day he turns 60 years old -- and be succeeded by Norbert Reithofer, 50, a member of BMW's management board with responsibility for production.

Although the announcement was consistent with a company rule that requires top BMW executives to relinquish their posts around the time of their 60th birthday, the move surprised many industry observers, who had expected BMW's board to make an exception for Mr. Panke after his four-year run as CEO.
[Helmut Panke]

Since 2001, BMW's world-wide vehicle sales have climbed almost 44% to 1.4 million a year, and net profit has risen almost 20% to €2.2 billion ($2.8 billion). Last year, BMW's core BMW unit overtook archrival Mercedes-Benz, a DaimlerChrysler AG unit, as the world's best-selling premium brand for the first time in more than a decade.

Mr. Panke has indicated he was in no rush to give up his post. "I like being captain," he said at the company's annual news conference in March. In a written statement last week, he added "I myself never left anyone in any doubt that I enjoyed, and still enjoy, this task."

Yesterday, Mr. Panke declined to answer directly when asked whether he had hoped for an extension of his contract, saying instead that he expects the recent move by Germany's government to extend the retirement age of ordinary workers to 67 years from the current 65 years to produce a similar "discussion" inside many German boardrooms.

"The mentality in Germany used to be that we should lower the retirement age to create more jobs," Mr. Panke said. "The political discussion has begun about raising the retirement age. This will inevitably enter the corporate sector. This will raise the question of whether the 60-year-old retirement rule makes sense. It is guaranteed to become a discussion."

A spokesman for the Society of German Industry, a Berlin-based group representing German corporations, said there is no mandatory retirement age for corporate executives in Germany.

A person familiar with the matter said that Mr. Panke hadn't expected BMW's board would grant him an exception to its retirement-age rule and that he hadn't lobbied for one. His successor, Mr. Reithofer, is a 19-year company veteran who isn't expected to make radical changes.

Although Mr. Panke's contract would have let him remain CEO until next spring, he said he opted to leave sooner to avoid becoming a "lame duck." He said he expects to receive "interesting offers" from other companies but declined to specify whether he will continue to work in the auto industry, adding he will continue to serve on the board of directors at Microsoft Corp. and UBS AG.

-- Edward Taylor in Frankfurt contributed to this article.

Write to Stephen Power at [email protected]
 

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Discussion Starter · #2 ·
I didn't realize the German economy was the 3rd largest in the world and BMW has a policy requiring executives to give up their post around their 60th bday.:dunno:
 
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