Teflon Jack unscathed – HR Left to Clean up Messes – John F. Welch Jr – Brief Article
Former General Electric CEO John F. Welch Jr. slipped right out of the scandal that brewed in September when his divorce proceedings unearthed a package of executive perks that startled even the most jaded post-Enron corporate critics. Welch seems to have escaped any lasting damage, but HR executives will come under new pressure to scrutinize CEO compensation.
Welch’s perks, valued at $2 to $3 million a year, included a Manhattan apartment and staff, use of a corporate jet and car, and lavish entertainment and sports tickets. GE disclosed his lifetime compensation package in a 1996 proxy statement, but the details did not hit the headlines until Welch’s well-publicized affair with former Harvard Business Review editor Susie Wetlaufer prompted Mrs. Welch to file for divorce and sort through marital assets.
Unbowed, Welch defended the perks in the Wall Street Journal but promised to repay part of the cost. Current GE CEO Jeffrey R. Immelt and other business leaders justified the retirement package on the basis of GE’s performance under Welch’s leadership. GE’s stock price, already in a downward spiral, simply continued its descent, and the company’s board of directors still found a place on Business Week’s “Best Boards” list.
The Securities and Exchange Commission launched an inquiry into the Welch retirement package, but few expect it to amount to much. Welch and his estranged wife even managed to reach an “amicable resolution” of the issues concerning his assets, valued at a handsome $900 million. HR executives and compensation committees, however, will be left to clean up the mess as regulators and investors call for closer examination of CEO pay and benefit packages that once passed quickly from board approval to proxy statement footnotes.
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COPYRIGHT 2002 Gale Group