SEC examines Welch's perks
By Rich Hassis
Associated Press
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Welch, stung by public criticism over the extent of 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 directors agreed to do so Thursday.
The company received notice of the SEC inquiry the next day and is cooperating, said GE spokes-man Gary Sheffer.
The perks came to light as part of legal papers filed in a divorce case by Welch's wife, Janet. 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. In addition, the company provided for Welch's travel expenses, entertainment, private car and driver, and computer equipment, the documents said.
Yesterday, the Wall Street Journal ran a column by Welch in which he 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," Welch 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 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."
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."
Welch could not be reached for additional comment yesterday.
Analyst Nicholas Heymann of Prudential Securities in New York said Welch is caught up in a backlash against executives who may have misled investors.
Yet if any CEO deserved such rewards, Heymann said, it might be Welch. During Welch's 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.
Welch became one of the most admired businessmen in the country and received a $7.1 million advance for his best-selling autobiography, "Jack: Straight From the Gut."
"Nobody created as much shareholder value on his watch, not even (Microsoft chairman) Bill Gates," Heymann said.
Sheffer said Welch would reimburse the company for any services and facilities he has used since his retirement — an amount Welch estimated at $2 million to $2.5 million.
GE said the terms of Welch's compensation were contained in its proxy statement, filed with the SEC in March 1997. It 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."
