BOSTON — He was hailed as the Tiger Woods of management, a brilliant business magician and, as head of General Electric Co., one of the world's most admired executives. In turn, Jack Welch heaped praise on his wife, Jane, lauding her in his bestselling autobiography as "the perfect partner."
Now that they are divorcing, Jane Beasley Welch has become the most formidable opponent the retired chief executive has encountered.
Thirteen years after they wed on the island of Nantucket, the two are embroiled in a divorce that promises to be as costly as it is nasty.
For The Record
Los Angeles Times Saturday September 21, 2002 Home Edition Main News Part A Page 2 National Desk 9 inches; 338 words Type of Material: Correction
Jack Welch--A photo caption in Section A on Tuesday incorrectly reported that retired General Electric chief executive Jack Welch and wife Jane Beasley Welch were shown at the Willard Hotel in New York. The Willard Hotel is in Washington, D.C.
Following disclosure of his affair with the editor of the Harvard Business Review, the captain of capitalism has been painted as a ruthless womanizer who let his shareholders pay for just about everything--right down to the GE light bulbs in his numerous homes. Jane Beasley Welch has emerged as the modern model of the savvy corporate wife: so clever that she thought to include an expiration date in her prenuptial agreement--and stayed married long enough to pass it.
With perhaps $1 billion at stake, the Welch divorce is a primer on how wealthy couples uncouple. The case also affords a window into the benefits that corporations lavish on retired top executives--everything, in Jack Welch's case, from sports tickets to the lifetime use of GE-owned jets, with charge accounts at flower shops and one of New York's most expensive dining establishments thrown in as well. Mostly, this is a story about how a man who routinely crushed adversaries when he ran a Fortune 500 empire was stopped in his tracks by his own wife.
Welch may be tough, shrewd and possessed of a famously competitive spirit, but, said a New York lawyer who knows Jane Welch well, "I can tell you this much: Jack Welch has clearly met his match."
The 50-year-old former mergers-and-acquisitions lawyer fired the first salvo by telephoning the woman who was having an affair with her husband. Don't you think, Jane Welch reportedly asked Harvard Business Review Editor Suzy Wetlaufer, that it's inappropriate to write about someone you're sleeping with? Flaunting a shiny diamond bracelet given to her by Welch, Wetlaufer, 42, left her job in April, weeks after she took Jane Welch's call.
Jack Welch, 66, soon announced that he expected an amicable divorce, with details to remain "personal" and private. For her attorney, Jane Welch chose William Zabel, who specializes in keeping the details of high-profile divorces (such as those of novelist Michael Crichton and philanthropist George Soros) personal and private.
Then Jack Welch filed for divorce in Connecticut, one of four states where the couple have residences. Assets in Connecticut divorces are divided under a policy called equitable distribution, which does not guarantee a 50-50 split. Welch's former colleague, ex-GE Capital Chief Gary Wendt, was forced to pay his wife, Lorna, $20 million when they split up in Connecticut several years ago. That amount was a fraction of Wendt's net worth--but twice what he originally offered.
Despite Welch's intentions to keep things private, Jane Welch filed an affidavit in Bridgeport, Conn., outlining the couple's "extraordinary" standard of living--much of it compliments of General Electric. The next day, the New York Times ran a long article describing how GE pays for the apartment the Welches occupied on Central Park West, membership fees at five country clubs and full staffs and services at homes in Florida, New York, Connecticut and Massachusetts.
By Monday, the Securities and Exchange Commission had begun an informal inquiry into Welch's compensation agreement. Welch himself penned a column in Monday's Wall Street Journal revealing that he offered last week to give up many of his retirement benefits--and the GE board accepted.
"In these times when public confidence and trust have been shaken, I've learned the hard way that perception matters more than ever," Welch wrote. "In this environment, I don't want a great company with the highest integrity dragged into a public fight because of my divorce proceedings."
Welch earned $16.7 million at GE in 2000, his last full year of employment. In retirement, he receives $86,000 per year as a consultant for 30 days' work. For each additional day of consulting after that, GE pays Welch $17,307.
As CEO, Welch built his company's market value by more than $450 billion over 20 years. His generous retirement package was unanimously approved by the GE board in 1996, but the company was not required to disclose Welch's long list of benefits. Many retired executives often are rewarded with cushy consulting contracts and perks such as cars and drivers. But prime seats at Red Sox, Yankees and Knicks games, and Wimbledon tickets--all part of Welch's deal--are considered unusual.