Jack's Toughest Deal
For all the explosive tabloid revelations in the bitter divorce battle between Jack and Jane Welch, you'd think they would need security guards to keep them apart. First came the former GE chairman's admission of an affair with the editor of the Harvard Business Review. Then Jane made him the poster boy for excessive CEO pay by revealing in court papers the lavish perks-for-life deal GE gave him. But when the sparring partners finally got together last week in a tiny 15-seat courtroom in Bridgeport, Conn., the scene played out more like a board meeting than a title fight. Wearing a pinstripe suit, Jack Welch filed an affidavit that disclosed he is now worth nearly half a billion dollars, down one third from last year thanks to GE's stock plunge. And he expects to pocket $17 million a year in retirement, mostly from his generous GE pension and consulting business. Jane's filings stated her annual income is $136,320 and the additional $35,000 a month Jack pays her now is "patently inadequate." As the proceedings concluded, Jane, in a smart black suit, strode across the courtroom to express regret to her soon-to-be ex that it had come to this. Then the combatants shook hands.
That gesture could have signaled a thaw in the contentious case. Late last week the Welches issued a joint statement expressing optimism they "can reach an amicable resolution" ending their 13-year marriage. They also canceled a court hearing scheduled for this week because they had reached an undisclosed deal on Jane's temporary monthly alimony. Sources close to the Welches tell NEWSWEEK they now plan to stay out of courtrooms and settle this behind closed doors.
That must be a relief for Jack Welch, whose messy public divorce is hitting his pride and pocketbook hard. And for now, it seems that Jane, the former corporate lawyer, is besting the legendary CEO. After she lifted the veil on Jack's perks-for-life deal, he gave them all back, agreeing to pay GE $2.5 million a year to use the Manhattan penthouse, the corporate jets, the limos. Jane's plea for more money forced Jack to suffer the indignity last week of telling a judge how he spends each penny of his fortune. "Jane has been terribly clever," says Raoul Felder, Rudy Giuliani's divorce lawyer. "It's been death by media for Jack Welch as all of the perks and pay have come out."
The airing of Welch's laundry--not necessarily dirty, but expensive--is costing him his precious privacy. We've learned, for example, that Welch spends $8,982 a month on food and beverages, including wine (he must be spilling some of that on clothes--he spends $1,903 a month on his wardrobe). His monthly vacation budget of $1,482 is relatively modest. Then again, he does have six homes, worth more than $30 million combined, in exclusive locales like Nantucket. Monthly "shelter expenses'': $51,531. And Welch will have plenty of opportunities to golf with his fellow retirees since he's spending $5,480 a month on country-club memberships. Welch gives $614 a month to charity, but his foundation handed out $3.1 million last year.
By the time he settles up with Jane, Jack is likely to add another big expense to his budget. How much will Jane get from the man who has everything? She hasn't said what she wants--at least publicly--other than to reject his opening $15 million offer as "insulting." Jack's lawyer Samuel V. Schoonmaker III says his client has offered Jane "many multiples of $15 million," but she's turned it down. Jane is not constrained by a prenup since the one she signed expired on their 10th anniversary. So she might like the terms of another famous GE divorce. In 1997 GE exec Gary Wendt had to fork over one quarter of his $80 million fortune to his wife of 32 years, Lorna, because a court ruled she helped build his career. But Lorna Wendt's lawyer, Arnold Rutkin, argues Jane is not entitled to such a big chunk of Jack's fortune because she's his second wife. "This guy was already a multimillionaire when they got married," says Rutkin.
The biggest cost to Jack Welch, though, likely will be his tarnished image. Welch picked a poor time for a high-finance family feud. He now joins all the fallen corporate heroes. "He might end up being the poster child for the fallacy of the charismatic CEO," says Ellen Ratchye-Foster, a PR pro with Fallon Worldwide. "This willingness to pursue such a disastrous course of action is going to be the highlight of his obituary." Then again, he can always hope for kinder final words in the Harvard Business Review.
