- The Washington Times - Tuesday, September 17, 2002

HARTFORD, Conn. (AP) 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 lavishness of the package which included use of an apartment in uptown New York City and corporate planes, asked GE to take back many of the benefits late last week. Its board of directors agreed to do so Thursday.

The company received notice of the SEC inquiry the next day and is cooperating, said GE spokesman Gary Sheffer.

The perks came to light as part of legal papers filed in a divorce case by Mr. Welch's wife, Janet. She says the $35,000 a month she receives as support does not provide the lifestyle to which she has been accustomed.

GE paid for all expenses at the Manhattan apartment, including food, wine, cook-and-wait staff, laundry and furnishings, the divorce papers said. The company also provided for Mr. Welch's travel expenses, entertainment, private car and driver, and computer equipment.

Yesterday, the Wall Street Journal ran a column by Mr. 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 seats for such events," Mr. 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 Mr. Welch said that in an era of purported abuses by senior managers at such companies as Tyco International, Adelphia Communications and ImClone Systems Inc., 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 the company through 2000 and opted to take a package of benefits extending into his retirement, instead of 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 yesterday. Messages were left at his GE office and with the attorney representing him in the divorce proceedings.

Analyst Nicholas Heymann of Prudential Securities Inc. in New York said Mr. Welch is caught in a backlash against companies and executives who may have misled investors.

Yet, Mr. Heymann said, if any chief executive deserved such rewards, it might be Mr. Welch. During Mr. 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.

Mr. 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," Mr. Heymann said.

Mr. Sheffer said Mr. Welch would reimburse the company for the cost of any services and facilities he has used since retirement an amount Mr. Welch estimated at $2 million to $2.5 million.

GE shares gained 85 cents yesterday to close at $27.90 on the New York Stock Exchange.


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