GE Settles with SEC Over Jack Welch's Perks
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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.
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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.
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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.
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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."