Chrysler Chairman Says His Gains Not a Factor

Chrysler Corp. Chairman Robert J. Eaton said Wednesday that his personal gain is not a factor in the planned merger with Daimler-Benz, though his stock options could give him a reward of more than $100 million on the deal.

Throughout the executive ranks of the No. 3 U.S. auto maker, the deal could bring personal gains totaling more than $1 billion.

“I’ve repeatedly said that this made sense for the companies,” Eaton said of the planned merger that would create a global automotive powerhouse. “It made sense for the employees, it made sense to the areas in which we do business, and obviously my own personal situation had no bearing whatsoever.”

The personal gains would come from stock options granted earlier by the company to its executives. If the deal goes through, those Chrysler shares could be exchanged for stock in the new DaimlerChrysler.

Chrysler had 30.7 million executive options outstanding at the end of last year, with an average price of $27.71 a share, according to Chrysler’s annual report. Eaton held more than 3 million, worth $83.7 million.

But analysts expect the merger will place a value on Chrysler of $61 a share. That would bring Eaton’s stock options in the new company to $184.3 million.

Eaton’s increase could go up or down, depending on Chrysler’s value at the time of the merger with the German auto maker. The merger could be consummated as early as September, Eaton has said.

In all, about 2,000 Chrysler executives had stock options at the end of 1997, a Chrysler spokeswoman said.

The total value of those options was $850 million at the end of last year, based on the $27.71 price. The executives’ options would grow to nearly $1.9 billion if the expected $61 merger value of Chrysler comes true--a $1-billion increase.

At the time of the merger, Chrysler options will be converted into DaimlerChrysler shares based on the difference between Chrysler’s market price and the price of the option--plus a 2% markup, according to a Chrysler filing at the Securities and Exchange Commission.