WASHINGTON/BOSTON – General Electric (GE) and the Securities and Exchange Commission settled the industrial giant's failure to disclose former CEO Jack Welch's (search) lavish retirement package with a cease-and-desist order on Thursday.
In a case that highlighted the massive compensation awarded to corporate America's CEO elite, the SEC slapped GE with a cease-and-desist order, but imposed no other sanctions.
The Consumer Federation of America (search) expressed disappointment at the settlement, with its investor advocate Barbara Roper saying: "It certainly does seem like a missed opportunity" for the SEC to make a strong statement about executive pay and the right of shareholders to know about it.
Welch, after retiring in September 2001, was widely criticized for his retirement perks. These included a luxury Manhattan apartment, office space in New York and Connecticut and access to GE aircraft and a chauffeured limousine.
The scope of his package came to light in court documents filed by his former wife in a 2002 divorce battle.
"From 1997-2002, GE failed to fully and accurately describe the retirement benefits Welch was entitled to receive from the company," the SEC (search) said in announcing the settlement.
GE neither admitted nor denied wrongdoing, as is customary in SEC settlements. It said in a statement that the settlement "represents a constructive conclusion" to the matter.
GE said Welch paid the company a total of $3.7 million for services used between October 2001 to September 2003.
"The whole scandal surrounding Welch's retirement package exposed a flaw in SEC disclosure requirements on executives' retirement benefits," said Brandon Rees, a research analyst in the Office of Investment at the AFL-CIO, a labor group.
None of GE's five most highly compensated officers, including CEO Jeffrey Immelt, has an employment contract that includes guaranteed perks like Welch's, GE said.
"Shareholders have a clear interest in knowing how public companies compensate their top executives," said Paul Berger, SEC associate enforcement director in a statement.
"Compliance with SEC disclosure rules ensures that shareholders are provided a full and accurate understanding of senior executives' compensation arrangements."