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Gut Check Time For Corporate America


So Jack Welch, the former head honcho of General Electric, has decided that the company's shareholders should no longer have to foot the bill for most of the pricey perks bestowed on him as part of his ultra-cushy retirement package. Welch's gravy train into the sunset includes an $80,000-a-month Central Park apartment, lifetime use of a company jet, maid service at his multiple homes, membership at an array of country clubs, limos, computers, furniture, and prime tickets to Wimbledon, the opera, the US Open, and every New York Yankees home game.

Welch doesn't think such lavish excess on the company's dime is wrong but, as he put it in a column in the Wall Street Journal, "perception matters." In other words, he hasn't had a change of heart, just a change of PR strategy. And surely it was a coincidence that Welch's column appeared the same day the Securities and Exchange Commission announced it had opened an investigation into Welch's compensation package.

Welch not only doesn't think there's anything "improper" about having shareholders pick up the tab for his maharaja lifestyle while keeping them in the dark about the deal, the only thing Welch sees as "plain wrong" is the bad press he and GE are getting. He seems to think that the public's outrage is just a phase -- a post-Enron temper tantrum that needs to be placated with some concessions and pats on the head. The GE light bulb clearly hasn't clicked on over his noggin.

Welch is far from the only corporate chieftain who can't seem to get his mind around the concepts of right and wrong. Even when indictments, charges and massive fines have been dished out, these people seem unable to admit they've done anything wrong.

Examples: Former Sunbeam CEO "Chainsaw" Al Dunlap agreed to pay a $500,000 SEC penalty for cooking the company books and accepted a lifetime ban from ever holding another top post at a public company. What he didn't do is admit any wrongdoing. . . .Disgraced $20 million-a-year telecom analyst Jack Grubman was similarly unrepentant, claiming in his letter of resignation that although he ruined clients by recommending stocks he knew were plummeting, he was "proud of the work" he and his Salomon Smith Barney team had done. Imagine how giddy he'd have been if he had left investors with the shirts on their backs. . . .And corporate giants AOL, Merrill Lynch, and Xerox also refused to admit to any bad behavior even though, since 2000, they all have had to pay hefty fines for deceiving the public.

The question is when are these folks going to start "fessing up to their wrongdoing? Some have speculated that the Welch controversy will lead to fewer perks for future execs -- but don't hold your breath. Corporate lawyers have made a loophole-riddled mockery of SEC disclosure rules -- so much so that we never would have learned about Welch's sweetheart deal if he hadn't found himself on the receiving end of his spurned wife's wrath.

Welch, who seems to like midsection metaphors, having titled his autobiography Jack: Straight From the Gut, says his decision to downsize his golden parachute while continuing to defend its propriety "sure feels right in my gut." If that's the case, he needs to schedule an emergency appointment with a gastro-intestinal specialist. As do his fellow overpaid brethren. It's gut-check time for all of corporate America.

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