By Arno Schuetze

The changes at the top agreed at an extraordinary supervisory board meeting on Saturday come after a boardroom row linked to privately owned Schaeffler's move to become Continental's biggest single shareholder last year.

Schaeffler, which holds a 49.9-percent voting stake, called on Tuesday on Continental Chairman Hubertus Gruenberg to resign. A Schaeffler spokesman said at the time that von Gruenberg had hindered solutions to problems confronting the two groups.

Rolf Koerfer, one of four supervisory board member candidates appointed by Schaeffler, will take over as chairman, Continental said in a statement. Von Gruenberg is stepping down but will remain a member of the supervisory board.

"After a period of intense discussion, we have found a solution which reflects the interests of all those involved," von Gruenberg said in the statement.

Both companies are facing a slowdown in demand due to the deepening crisis in the car industry worldwide. Schaeffler is also grappling with billions of euros in debt amassed for its acquisition.

Continental's shares have lost 77 percent in the past 12 months. The DJ Stoxx auto index <.SXAP>, which includes some car parts suppliers, has fallen 45 percent.

MOVE TO STEEL

Continental said Alan Hippe, chief financial officer since June 2002, would leave at the end of February. A successor would be appointed" in the coming weeks," the company said.

Hippe, 42, will move to German steelmaker ThyssenKrupp where he will take charge of controlling, accounting and financial reports from April 1, ThyssenKrupp said on Saturday.

Continental said its supervisory board gave the executive board the task of developing "concepts for the cooperation between the automotive businesses" of Continental and Schaeffler.

"That what belongs together can now grow together," Schaeffler owner Maria-Elisabeth Schaeffler, who is also among the supervisory board member candidates proposed by her company, said in the statement.

"It is my strong conviction that Schaeffler and Continental will be able to master the current economic challenges together and have a promising future," she said.

The executive board would also start to convert the rubber division into an organizationally and legally independent entity, a so-called carve out, Continental said.

The company said all board changes have to go through a court approval process before Continental carries them out.

(Additional reporting by Tom Kaeckenhoff; writing by Peter Starck; editing by Patrick Graham)