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. Last Updated: 07/27/2016

Divorce Files Spill Beans on Fat Cat Jack

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WASHINGTON -- When Jack Welch stepped down last year from General Electric, he was a legend. Had you invested $1,000 in GE when Welch took over as CEO in April 1981, you could have cashed out 20 years later with more than $53,000. Hey, what more do you need to know?

Year in and year out, GE made the earnings numbers Welch promised Wall Street. The company is twice the size it was a decade ago and is now America's fifth-largest company, with annual revenues of about $130 billion.

Welch was lionized. His strategies were written up as Harvard Business School case studies. His employment contract was held up as model of simplicity and good corporate governance. When people called him Neutron Jack -- because his wholesale firings, like neutron bombs, removed the people yet left the buildings -- it was in admiration.

But as you'll surely hear quite often this week, Sept. 11 -- and then Enron, WorldCom and the other naked corporate emperors -- changed all that. Now the press lionizes firefighters, while CEOs are marched around in handcuffs.

Enter the wife. Janet Welch has filed for divorce, and the court papers reveal that Jack's contract was not simple, clear and good corporate governance: It was secret, sleazy and "irrevocable for life."

It was long known Welch is worth $900 million and that he draws a $9 million annual GE pension. But it's news that GE pays for his Manhattan apartment (rent: $80,000 a month) and all costs associated with it -- from the laundry bills and newspaper subscriptions to the food in the fridge and the flowers in the vases. GE pays for Welch's car and driver, his floor seats to Knicks games, his box at the Metropolitan Opera, his boxes at Red Sox and Yankee games, fees to his four country clubs, and more.

"It is appalling to me that Jack Welch's flowers are being paid for by retired firemen and teachers who are GE shareholders and don't know this is going on," one expert on corporate governance told The New York Times.

Amen. And imagine how appalled they'll be if it turns out the rest of GE is run "the Welch way." After all, it's surprising to see that 40 percent of GE's earnings come from its financial-services subsidiary. During the Great Depression, it extended credit to consumers wanting to buy GE refrigerators. Today it is a murky behemoth. Business Week reported last month that "[GE's finance unit] remains a mystery to most investors. Many still have a hard time figuring out how it makes its money."

P.S. Two weeks ago, I reported the state of Maryland was gearing up to poison a pond to kill the Asian snakehead fish; rest easy, the state's biologist reports they're all dead.

Matt Bivens, a former editor of The Moscow Times, is a fellow with the Nation Institute. []