Jack Is Paying For This

Graef Crystal has spent years digging through chief executives' pay packages, drawing attention to excess and vulgarity. The former compensation consult-ant turned pay critic thought he'd seen it all--until former General Electric chairman Jack Welch's soon-to-be ex-wife filed court documents in their pending divorce case last week. The papers reveal that much of the Welches' lifestyle is being paid for by GE shareholders. Among the company-provided perks: a $15 million Manhattan apartment, cell phones, satellite televisions, computers and security service at each of their six homes, a Mercedes and limousine service. "What does he do, tow the Mercedes behind the limo?" Crystal asks. "I'm surprised they didn't expense his toilet paper." In fact, they did: GE, the filing says, covers "toiletries" at the New York pad.

Welch and GE's board moved quickly to quell damage from the revelations. Both issued statements saying Welch's retirement contract has been publicly available since 1996; that's true, but details of exactly what GE was paying for are new. GE's board said it made the deal to keep Welch onboard to select his successor, and that his performance made it worth the price. Welch dismissed the hubbub over "a one-sided filing by one party in a contested divorce." Compensation pros point out that it's unclear how many of these perks he's actually using, but they say the deal is definitely lavish--especially because it continues until he dies. Still, a few other A-list CEOs do almost as well, according to compensation experts. Whether publicity over Welch's deal forces directors, who are already under pressure to ask tougher questions in the wake of Enron et al., to start paying more attention to overly generous retirement deals remains to be seen.

Until the court papers made front-page news, the Welches had hoped to work out their divorce in private. Those plans apparently evaporated when Jack canceled Jane's credit cards and denied her access to some of their homes, so she took off the gloves. "It's Armageddon when you do something like this," says Raoul Felder, the Manhattan divorce lawyer. The escalation would seem to increase the acrimony between the couple, who split after Jack began commingling his assets with the editor of the Harvard Business Review. But if Mr. Welch were Felder's client, he'd "try to put this case away as quickly as possible," Felder says. That might mean a bigger settlement for Mrs. Welch. Meanwhile younger CEOs may draw a valuable lesson from the episode. While Jack Welch got his board to grant him nearly every benefit known to man, he forgot to ask for the one that might have saved him more mon-ey than all his other perks put together: company-paid marriage counseling.