Tuesday, September 17, 2002
Welch's perks get SEC scrutiny
GE retiree gives them up
The Associated Press
HARTFORD, Conn. - The Securities and Exchange Commission has opened an informal investigation into former General Electric Co. chief Jack Welch's retirement perks.
Mr. Welch, stung by public criticism over the lavish package - which included use of a Manhattan apartment and corporate planes - asked GE to take back many of the benefits late last week. GE's board of directors agreed to do so Thursday.
The company received notice of the SEC inquiry the next day and is cooperating, GE spokesman Gary Sheffer said.
The perks came to light as part of legal papers filed in a divorce case by Mr. Welch's wife, Jane. She claims the $35,000 a month in support she is receiving does not provide the same lifestyle to which she was previously accustomed.
The divorce papers said GE paid for all expenses at the Manhattan apartment, including food, wine, cook and wait staff, laundry and furnishings. The company provided for Mr. Welch's travel expenses, entertainment, private car and driver, and computer equipment, the documents said.
Mr. Welch, in a column in Monday's Wall Street Journal, said the perks had been grossly misrepresented in the divorce case.
For the record, I've always paid for my personal meals, don't have a cook, have no personal tickets to cultural and sporting events and rarely use GE or NBC seats for such events, he wrote. In fact, my favorite team, the Red Sox, has played 162 home games over the past two years, and I've attended just one.
But Mr. Welch said that in an era of alleged abuses by senior managers at such companies as Tyco International, Adelphia Communications and ImClone, he was giving up the perks because perception matters.
In this environment, I don't want a great company with the highest integrity dragged into a public fight because of my divorce proceedings, he wrote. I care too much for GE and its people.
Mr. Welch, who retired just over a year ago, wrote that he agreed in 1996 to extend his tenure at GE through 2000 and opted to take a package of benefits extending into his retirement instead of taking a special one-time payment of tens of millions of dollars.
But he said he had since asked the GE board to eliminate everything from his contract except the traditional office and administrative support given for decades to all retired GE chairmen and vice chairmen.
Mr. Welch could not be reached for additional comment Monday.
Analyst Nicholas Heymann of Prudential Securities Inc. in New York said Mr. Welch is caught up in a backlash against companies and executives who may have misled investors.
Yet if any CEO deserved such rewards, Mr. Heymann said, it might be Mr. Welch. During his two decades as GE's leader, the company expanded from a $13 billion maker of appliances and light bulbs into a $480 billion industrial conglomerate.
Mr. Sheffer said Mr. Welch would reimburse the company for any services and facilities he has used since his retirement - an amount Mr. Welch estimated at $2 million to $2.5 million.
GE said the terms of Mr. Welch's compensation were contained in its proxy statement, filed with the SEC in March 1997. That document does not list specific perks but said the compensation was justified to ensure that Mr. Welch's skill and experience would be available to the company in the future.
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