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Retired GE Chief Lives Lavishly on Firm's Dime

September 07, 2002|From Times Wire Services

Jack Welch, who retired as chief executive of General Electric Co. last year, is still living large on the company's dime, enjoying freebies such as country club memberships and tickets to New York Knicks basketball games, according to a court filing by his wife in their divorce case.

The exhaustive catalog of expenses GE covers for Welch represents another example of corporate largess and is likely to fuel investor outrage about lush pay packages for top executives.

The papers also disclosed perks that were showered on Welch and his wife by GE during their 13-year marriage. GE pitched in more than $7.5 million of the $32.5 million the couple spent on houses and furnishings, according to the papers filed by Jane Beasley Welch in Bridgeport, Conn., and first reported in the New York Times.

GE and Welch defended the arrangement Friday.

"GE prospered during this transition period," Welch said. "During my full tenure, GE's market capitalization increased by about $400 billion, with shareowners, including myself, our employees, retirees and the like, benefiting greatly from that increase."

GE said the company has complied with all disclosure requirements and that Welch's benefits have been public for years.

The company said in its proxy statement in 2001 that after Welch's retirement it would provide him with "continued lifetime access to company facilities and services comparable to those which are currently made available to him by the company."

Welch has remained a consultant to the company.

Welch, who earned about $16.1 million in salary and bonuses from GE last year, according to regulatory filings, will continue to have free access to the corporate jet. This perk alone could be worth $3.7 million a year, analysis by an aviation consulting group hired by Welch's wife shows.

In addition, the company provides Welch with an apartment adjacent to New York's Central Park that the court papers value at $80,000 a month. GE helps furnish the apartment, gives him GE appliances and pays for routine expenses such as groceries, toiletries and postage. The papers did not give a dollar amount for these items.

When Welch travels, the company picks up the tab for limos and also pays for country club memberships including one at Augusta National, the exclusive club that is home to the Masters golf tournament.

The Welches separated earlier this year after public disclosures that he was having an affair with Suzy Wetlaufer, editor of the Harvard Business Review, who left her job in April.

Welch has been providing his wife $35,000 a month, an amount she accepts "under protest," according to the filing.

"Such funds are patently inadequate to maintain the marital standard of living," the filing reads.

Executive compensation has become a hot topic. Dennis Kozlowski, the former CEO of conglomerate Tyco International Ltd. who has been indicted in New York for alleged sales tax avoidance, received $135 million in company loans to fund a lavish lifestyle, according to published reports.

Nicholas Heymann, a GE analyst with Prudential Securities in New York, said the generous arrangement with Welch is unusual, but his tenure was unusually successful.

"Normally, you don't keep all of the toys when you retire," Heymann said. "Given what he did, it's not way out of control."

Shares of GE stock were up 30 cents, closing at $28.30 on the New York Stock Exchange.


Reuters and Associated Press were used in compiling this report.

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