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Jack Welch Caves In
[September 16, 2002]

By Nicholas Provenzo

On Friday, the Securities and Exchange Commission launched an informal investigation of General Electric after former CEO Jack Welch returned a portion of his retirement compensation in response to public outcry that his compensation was "excessive." Welch, considered to be one of America's top executives, returned compensation that included a Manhattan office and use of the company's corporate jet.

In a column in The Wall Street Journal on Monday, Welch disclosed he had offered to give up many of those benefits, which received wide attention after their disclosure in court papers related to his divorce.

"In today's reality, my 1996 employment contract could be misportrayed as an excessive retirement package, rather than what it is -- part of a fair employment and post-employment contract made six years ago," he said.

"... In these times when public confidence and trust have been shaken, I've learned the hard way that perception matters more than ever. In this environment, I don't want a great company with the highest integrity dragged into a public fight because of my divorce proceedings. I care too much for GE and its people."

Just what exactly does Welch gain by renouncing his compensation package? Not a thing. Welch's twenty years of leadership moved GE from a $13 billion maker of appliances into a $480 billion industrial conglomerate. The value of his presence at GE is undisputed. Only someone completely ignorant of what a CEO does could claim with a straight face that Welch didn't earn every cent he was paid. And yet these are precisely the kind of people calling the shots these days and precisely the kind of people Jack Welch caved in to.

If Welch really cared about his public perception, he would have had enough pride to defend his compensation. For years CEO's have been under fire for their pay. If Welch would have simply answered his critics by saying "I earned it and to hell with anyone who thinks otherwise," he would have done more to demolish the anti-wealth creating mentality than a thousand essays by others.

It says a lot about a man when he can't justify his pay. It means that he thinks his compensation is some kind of a game instead of the fair trade of one value for another. And it says even more when one of our great capitalists can't defend capitalism.


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