GE's Ex-CEO Gives Up Perks as SEC Opens Inquiry

In the latest ripple effect of the recent wave of accounting scandals, Jack Welch, former CEO of General Electric, asked GE to take back some retirement perks made public in his recent divorce proceeding. Separately, the company received word of an inquiry into the matter by the U.S. Securities and Exchange Commission (SEC). So unusual were these events that one securities analyst dubbed it a case of "People Magazine comes to Wall Street."

In a statement announcing the SEC's investigation, GE said it believes it has complied with all disclosure requirements regarding Mr. Welch's benefits. The company explained that the contract was signed in December 1996 and filed with the SEC in March 1997.

GE's board had already agreed to modify the 1996 agreement a day before the company received word of the SEC's inquiry. In an article published in the Wall Street Journal, Mr. Welch explained, "The world has changed during the past year. Reports of corporate malfeasance fill the media… For GE and its board to be dragged into these stories because of a divorce dispute is just plain wrong."

The perks exposed to public scrutiny included use of the company's planes and an apartment overlooking Central Park in Manhattan. In the newly modified contract, Mr. Welch agreed to pay the company between $2 and $2.5 million a year for these benefits. He also gave back a consulting contract under which he was paid $86,000 for five days of work a year and offered instead to consult on an as-needed basis and teach courses at GE's management development center for free.

In effect, Mr. Welch has eliminated everything from the retirement package formerly granted by the company, except for traditional office and administrative support. Observers say the GE case sets precedent, and other ex-CEOs may be pressured into doing the same to avoid accusations of corporate greed and excessive pay.

-Rosemary Schlank

You may like these other stories...

For the first time in the five-year history of Vault.com’s rankings of the top 50 accounting firms to work for in North America, a firm has held the top spot as best accounting employer for two consecutive years....
With tomorrow being Tax Day, you might see some procrastinators at your office filling out forms, printing out paperwork, or getting last-minute tax advice from their accountant so they can meet the IRS’s filing...
You can read volumes on how to manage an accounting practice. But if you want the quick version, just read the following four points. Everything else is just commentary.  (These points come out of the 1997 book, The...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.