The business icon that was Jack Welch has fallen.
A messy personal life has exposed the plush post-retirement perks he enjoys and
most people, even CEOs, are appalled.
On Dec. 20, 1996, Jack Welch settled on his
post-retirement consulting agreement with GE. It included a salary of $86,000
for his first 30 days of consulting work and $17,000 for every day thereafter.
Also in the agreement were provisions for access to aircrafts, cars, offices,
apartments and financial planning services. Further, GE agreed to reimburse him
for "reasonable travel and living expenses" which he incurs because of his
position as retired chairman of the board and chief executive.
For Jack, this agreement looked wonderful. After
a year, it's still impossible to separate the man from the company - so,
everything is a retirement expense. It was fine too for Welch's wife, Jane -
before Suzy that is.
After a 13-year marriage, following the
revelation of Jack's affair with former HBR editor Suzy Wetlaufer, the Welches
are getting a divorce. In court Jane, the woman scorned, disclosed details of
the expenses covered by GE during Jack's employment and after. They include
tickets for the New York Knicks, the US Open and Wimbledon tennis tournaments,
Yankees and Red Sox games and other leisure activities. GE also picks up all
costs associated with Jack's NY apartment, $80,000-a-month, plus wine and food,
laundry, toiletries and newspapers.
Most people are surprised, and even shocked, that
GE failed to disclose the extent of Jack's perks. The lavish pay packages and
extras for recently ousted corporate bigwigs - Dennis Kozslowski of Tyco, Bernie
Ebbers of WorldCom, and others are now being held up as gross improprieties.
Unfortunately for GE, the details of Jack's golden handshake came out in a
courtroom, and not the boardroom.
Jack Welch has descended from America's loftiest
executive perch directly into tabloid hell. On Sept. 7, the one-year anniversary
of his retirement, the front page of the New York Daily News featured his
smiling mugshot under the headline: "Greed!" Jack Welch, once crowned the
"Manager of the Century," has become a target of resentment and revisionism.
Jack's response to the flap over his perks is, in
essence: I deserve them. "During my full tenure," he boasted, "GE's market
capitalization increased by $400 billion, with shareowners, employees, retirees,
and the like benefiting greatly." Of course, he was first in line on payday,
retiring with $880 million in GE shares.
It's a pity the icon that was Jack Welch had to
shatter this way.
GE Should Have Revealed