UPDATE 1-Daimler extends CEO Zetsche's contract until 2013

FRANKFURT, Feb 17 (Reuters) - Daimler approved a three-year extension to Chief Executive Dieter Zetsche's contract on Wednesday and elevated Wolfgang Bernhard to the board of management at the German car and truck maker.

Reuters had reported on Tuesday that Zetsche who is also head of Mercedes-Benz Cars, would keep his hand on the wheel at the Stuttgart-based company.

In addition to Zetsche's extension Daimler also extended the contract of Thomas Weber, the management board member responsible for group research until end 2013.

The contracts of Weber and Zetsche were set to expire at the end of 2010.

Daimler said Wolfgang Bernhard, head of Mercedes-Benz Vans, would be appointed as an additional member of the board of management to a newly created position.

Bernhard will assume responsibility for Mercedes-Benz Cars production and procurement as well as for the Mercedes-Benz vans division, with immediate effect, the company said.

He is appointed until the end of February 2013



SMALL CAR CHALLENGE

Zetsche needs to find a solution for Mercedes' lack of scale and cost-competitiveness in the compact segment, where talks are under way with other carmakers including Renault over joint production and development.

Mercedes is losing out to BMW and its fleet of more fuel-efficient cars as well as to smaller competitor Audi, which is far more profitable thanks in part to the economies of scale it can achieve as a unit of parent Volkswagen.

Zetsche turns 60 in May 2013, an age at which rival BMW permits board members to extend their contract only by one-year intervals, if at all.

Daimler's board also signs off on 2009 results on Wednesday ahead of a press conference on Thursday.

The average estimate in a Reuters poll of 14 analysts sees an operating loss of 773 million euros before one-off charges of 694 million as the crisis pushed both Mercedes-Benz Cars and Daimler Trucks to a substantial loss.

(Reporting by Christiaan Hetzner and Edward Taylor, editing by Will Waterman) Keywords: DAIMLER/ ([e-mail]; Reuters Messaging: [e-mail]; [phone]) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.