GE: SEC Probing Welch's Compensation

(CBS)  General Electric Co. said Monday federal securities regulators are investigating its employment and post-employment contracts with former chief executive Jack Welch, who had come under fire for receiving lavish benefits before and after his retirement.

The announcement comes hours after Welch, the legendary executive who led the sprawling conglomerate for 21 years before retiring a year ago, said he had given up free use of company planes, a company apartment and other generous benefits in his retirement agreement after facing withering criticism since the perks were disclosed.

In its own statement, GE said the request from the Securities and Exchange Commission was received on Friday, a day after the GE board had already voted to modify Welch's post-employment contract to withdraw most of his perks.

GE said it would cooperate fully with the SEC request.

Welch will now only receive use of an office and administrative support - benefits that GE said have been provided for decades to all retired GE chairmen and vice-chairmen.

Welch said he is giving up some of his perks because of the unfavorable perception they may have created for the company he led for more than two decades.

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

"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," he wrote.

GE spokesman Gary Sheffer said Welch would reimburse the company for the value of any services and facilities he has used since his retirement on Sept. 7, 2001 — an amount Welch estimated at $2 million to $2.5 million.

"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," Welch wrote in his Journal column.

There was no additional comment Monday from Welch. Messages were left at his GE office and with the attorney representing him in his divorce.

Welch's announcement comes amid a series of disclosures involving alleged misbehavior by top-level executives at companies such as Tyco International, Adelphia Communications and ImClone Systems.

Terms of Welch's compensation package received wide attention two weeks ago after divorce papers were filed for his wife, Jane.

Her lawyer, William Zabel, told The New York Times that Welch had been providing his wife with $35,000 per month in support, but that she was seeking more because that was far below the couple's previous standard of living.

The divorce papers said GE paid for all expenses at the Manhattan apartment, including food, wine, cook and wait staff, laundry, and furnishings, the Times said. In addition, the company provided for Welch's travel expenses, entertainment, private car and driver, and computer equipment, the documents said.

That filing put a man who many Wall Street and academics see as one of the most influential business leaders of the 20th century in some uncomfortable company.

Welch said the divorce papers "grossly misrepresented many aspects of my employment contract with General Electric." He denied, for example, that he has a cook, and said he always paid for personal meals.

In Monday's column, Welch said he reached an agreement in 1996 under which he opted to take a package of benefits extending into his retirement instead of taking a "special one-time payment of tens of millions of dollars" to remain as CEO until turning 65 in December 2000.

During his two decades as GE's leader, the company expanded from a $13 billion maker of appliances and light bulbs into a $480 billion industrial conglomerate. It has 313,000 employees in more than 100 countries.

Welch said he will continue to consult and teach for the company.

GE said the terms of Welch's compensation were contained in a 1997 filing with the SEC and that the company "believes it has complied with all disclosure requirements regarding Mr. Welch's benefits."