Jack Welch has always admitted that his guilty pleasure is reading the gossip pages. Now the former General Electric chairman's exploits are giving New York's tabloids unusually juicy fodder. Jackpot: GE tycoon's scorned wife seeks half his fortune, trumpeted a headline last week. The troubles began last fall when Welch, 66, was interviewed by the editor of the Harvard Business Review, Suzy Wetlaufer, 42. Soon afterward they commenced what management theorists might call an unusually friendly "horizontal integration." Jane Welch, 49 and Jack's second wife, learned of the relationship in December. The rest of the world found out this month, when The Wall Street Journal tucked news of the affair into a broader story about the turmoil it caused at Harvard. Last week brought a new excuse for high-minded publications (like NEWSWEEK) to air this laundry: the Welches say they're divorcing. So if you choose to read on, it's because you're interested in the legal angle, not the tawdry stuff. Right?

The Welch split will be one of the highest-profile corporate divorces in history--and could land Mrs. Welch one of the biggest settlements ever. It may also spark debate about the fair distribution of assets in a failed second marriage. The Welches' net worth is estimated at $900 million, leading to speculation that Mrs. Welch could get $450 million (their prenup expired on their 10th anniversary, in 1999). But that reasoning is wrong. The half dozen legal experts consulted by NEWSWEEK agreed: Jane Welch won't have a claim on the wealth her husband brought into the 1989 marriage. "She only gets a portion of what has been acquired during the marriage," says renowned Manhattan divorce attorney Raoul Felder.

Indeed, according to GE's 1989 proxy statement, Welch held 339,867 GE shares. According to NEWSWEEK's analysis, they'd be worth at least $160 million today and, like other investments he amassed during his first eight years as GE's chairman, will probably be off the table. "I don't see any theory under which she's going to end up with $450 million," says Connecticut divorce attorney Sarah Oldham. We may never know what she gets: the case will likely settle quietly without a trial. (The couple's lawyers didn't return calls.)

At Harvard, Wetlaufer has resigned her editorship but will stay on as a nonmanaging "editor at large," despite protests from some staffers. Last week the gossip was that Wetlaufer, divorced with four kids, may settle down with Welch. "People who know feel there are wedding bells here," says one source. (Wetlaufer's spokeswoman calls the relationship "serious" but "fairly new.") The match isn't perfect: Welch is a golf addict, and Wetlaufer doesn't play. However, Welch turned Jane into a club champion, and Wetlaufer's camp calls her "athletically adept."

Beyond the pain and embarrassment to all involved, the real long-term cost could be to Welch's reputation. His image as the best manager of the last 50 years is his biggest asset; people made his recent memoir a best seller because they think he's a guy worth emulating. Will they now? Management expert Warren Bennis isn't sure. He says younger generations are more focused on "work-life balance" and have shown trouble relating to the work-aholic lifestyle that led to Welch's success--and perhaps to his marital woes. A second divorce could make young workers feel even more out of step with Welch's values, he says. It's hard to say what Welch thinks: he's not commenting. But in a 1994 interview with NEWSWEEK, he shrugged off criticism as the price he pays as a business celebrity. "The higher a monkey climbs,'' Welch said, "the more his ass is exposed." Unless he wants a permanent spot in the gossip pages, he'll have to keep his better concealed in the future.