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Monday, 16 September, 2002, 17:32 GMT 18:32 UK
Watchdogs look into GE chief's perks
Jack Welch, former GE CEO
Mr Welch's perks included a free Manhattan apartment
US regulators have begun an informal investigation into the compensation package given to former General Electric (GE) chief executive Jack Welch.


One thing I learned during my years as CEO is that perception matters.

Jack Welch
former GE CEO
Mr Welch, a darling of Wall Street during his tenure at GE, has come under fire in recent days for his lavish retirement package, which included perks such as free air travel and satellite television systems at his homes.

On Monday, GE acknowledged it had received a request for information regarding Mr Welch's post-employment scheme from the Securities and Exchange Commission (SEC), a markets watchdog.

On Friday, the SEC informed GE it was looking into the compensation package agreed with Mr Welch, following news reports his pension scheme was excessive.

The SEC request for more information came one day after Mr Welch asked the board of directors at GE to amend his 1996 contract, which the firm did.

General Electric was once the most highly valued of American companies, profitably producing items as diverse as kitchen appliances, aircraft engines and medical-imaging equipment.

The firm's share price, however, has faltered this year in response to investor concern over numerous corporate-accounting scandals that have emerged over the last year.

Image saver

With his post-retirement contract now altered, Mr Welch only has the use of an office and an administrative assistant - benefits usually afforded retiring GE executives.

He will now pay the firm up to $2.5m (1.62m) a year for use of company jets and an apartment.

The details of his extravagant post-employment scheme came to light in divorce documents filed in court last week by his wife, Jane Welch.

The much-lauded former chief executive has sought to damp criticism of his retirement perks since they were disclosed.

Mr Welch has taken pains to preserve his image as well as that of GE.

Scandals

In Monday editions of the Wall Street Journal, he wrote that he faced "a helluva problem" in dealing with the controversy around his contract and opted to revise it based on his "gut" feeling.

Analysts have speculated Mr Welch acted as he did in order to distance himself and his firm from claims of excessive compensation and corporate scandals that have littered the US business landscape.

GE has come under scrutiny for months following revelations of accounting misdeeds at firms such as Tyco and WorldCom.

Numerous high-profile arrests have taken place over the summer months as the SEC and the Department of Justice have thrown down the gauntlet in their pursuit of corporate wrongdoers.

Perception matters

GE is a Connecticut-based conglomerate usually associated with the production of heavy-industry goods.

In recent years, however, it has aggressively expanded its businesses and now generates most of its profits from its financial-services divisions.

It also owns television-giant National Broadcasting Corp, commonly known as NBC.

Under Mr Welch's leadership, GE became the pre-eminent US firm, an archetype of how a company should be run.

Mr Welch served as its chief executive for 21 years and worked for GE for 41 years.

A hallmark of his tenure was a stellar reputation for returning profits to investors year after year without fail.

In altering his retirement agreement, Mr Welch wrote in the Journal the "one thing I learned during my years as chief executive is that perception matters.

"And in these times when public confidence and trust have been shaken, I've learned the hard way that perception matters more than ever."

 WATCH/LISTEN
 ON THIS STORY
Thomas O'Boyle, author
"Jack Welch is worth $900m today, he gets a $9m pension per year"

Politics of regulation

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FORUM
See also:

09 Jul 02 | Americas
14 Aug 02 | Business
12 Jun 02 | Business
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