Jack Welch, Fmr. Chmn. & CEO of General Electric
This is a partial transcript from Your World with Neil Cavuto, September 16, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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NEIL CAVUTO, HOST: Jack Welch is giving it back, figuratively and literally, the former GE chairman and CEO, responding to critics who called his retirement package too generous and too much. Writing in today's Wall Street Journal, Mr. Welch wrote that he has asked the GE board to modify his contract and eliminate everything but traditional office and administrative support. The rest, well, he'll pick up the tab: the corporate apartment, the sporting tickets, the whole lot.
Why did he do it? Let's ask him. With us now, Jack Welch.
Jack, good to see you.
JACK WELCH, FMR. CHMN. & CEO, GENERAL ELECTRIC: Neil, it's great to be here.
WELCH: You know, it was not an easy decision. I'm in the middle of a divorce, and the company I gave 41 years to is being dragged into the divorce. And I love the people and the whole company too much. Everything I've ever done is for shareowners and for the employees for 41 years.
I want it to be by. So I thought it was the way to go. I wrestled with it for a week, and I wrote my thoughts down today in the Journal.
CAVUTO: Now, one might look at this and say, "All right, well, if he's giving all of that stuff up, then maybe there was something wrong with it."
WELCH: I addressed that today. Neil, that's the furthest thing from the truth.
What's misunderstood about this whole thing is, it wasn't a retirement package. I didn't have a band, go to the podium and get the gold watch and say, "Here's your retirement package." This was negotiated in 1996 when other companies were coming after me. It was well publicized.
Now, I wanted to stay in GE, so let's not kid ourselves, but I was getting attractive packages. I had just come off a quintuple bypass. The board said, "We'd like some money for you. We'd like to lock you up, and we'd like you to stay until you retire in December of 2000."
I said, "I don't need the money. I'd like to get something in kind when I retire."
So they said, "Well, let's negotiate something like that."
So I said, "Just like me keep flying the planes and use the facilities, as I am now, and I'm fine."
CAVUTO: Now, the facilities, did they include -- here's where I want to get some things straight...
CAVUTO: ... the Trump hotel, an $86,000 a month apartment, was that true?
WELCH: No, that's not the price of it, but let's not get into the details. It was partial use of the apartment.
CAVUTO: So that was a corporate expense.
WELCH: It was a corporate apartment.
CAVUTO: And when they wanted to re-up you back in '96, you had the choice between taking some of these benefits or taking a lot of cash up front and you opted for some of these benefits.
WELCH: To keep them later on, right.
CAVUTO: OK. Now this whole divorce thing has dragged all this out in the open.
CAVUTO: Are you surprised that it's all been dragged out in the open?
WELCH: I am surprised. I am. But, you know, divorce is a more difficult thing than one expects.
CAVUTO: Are you surprised it's as difficult as it's right now?
CAVUTO: Let's talk a little bit about some of the other allegations that came out: that you got all these free meals, that you had all these free personal tickets, that you had cooks.
WELCH: Neil, I don't want to go into them all. But I didn't have a cook. I haven't been at Wimbledon in a decade. I don't go to the opera. I have been at one Red Sox game in 162 games. I haven't been to a Yankee game...
CAVUTO: But you love the Red Sox.
WELCH: I love them. Neil, it's just part of a divorce proceeding. Let's get off that and what I did. I mean, I don't want to get into my divorce. I'd give anything to have my divorce private. And I...
CAVUTO: But, I don't want to belabor this point, but you knew that someone of your stature and wealth and success, something like that would never be private, right?
WELCH: Well, I hate to say that I failed twice. But I had a first marriage that was settled in the living room in about two hours with my wife in a private fashion. So I was surprised. I was surprised.
CAVUTO: You realize by agreeing to say, "All right, I'm going to pay whatever amounts to $2 million to $2.5 million a year," for the same benefits you were getting free sends a message that maybe you did feel that they were not right in this environment.
WELCH: I not for an hour felt they were wrong. I felt I had a contract. Just like you have a contract with Fox. Roger Ailes and you, or whoever it is, negotiate your contract and you have a contractual thing.
You know, one of the things that concerned me very much about giving up this contract and modifying it, was what does it say about contracts in America? What does it say about employees in your newsroom and other newsrooms that have sign-up bonuses, that have retention bonuses?
What this was was a retention bonus. "Jack, you won't retire, you won't go to another company, and instead of giving you money, we'll give you in kind benefits that you'll receive after your retirement."
Now, in this environment, anything looks bad for corporate executives. People use words like "greed" and other words. That's the last thing it was.
This is a guy who was part of a team, that had a great run with a great team, was successful with the team, and got requested by the board to stay on...
CAVUTO: But now, Jack, they're lumping you with Ken Lay. They're lumping you with Jeff Skilling. They're lumping you with all these corporate...
WELCH: No. I'm not...
CAVUTO: Does that anger you?
WELCH: I'm not lumping myself there. I don't feel that.
CAVUTO: What do you think of the media that does?
WELCH: Look, I'm not into challenging that. People are going to judge me for what I do. I did things in this move that by no means was 90-10.
I talk to a lot of people, a lot of very smart people, many of whom felt, "Don't do this. This is the sanctity of a contract, this is a relationship, this means something."
CAVUTO: Well, what did Jeffrey Immelt tell you? Obviously you presented this to him last Thursday, right? He agreed to it. Why did he agree to it?
WELCH: No, I think Jeff thought it was right for the employees. And I think it is, too. I've been deluged with employee e-mails. My most important constituency, the employees, I think in general they feel very good about it.
Although there were many that said...
CAVUTO: Very good that you did this?
CAVUTO: Did you get anyone who said, "Jack, don't do this; it looks bad that you're acknowledging that it's bad."
WELCH: Yes, I did. No, no, no, I didn't get one of those yet. I've gotten some that said, "Jack, what are you giving it back for? You earned it. It was part of the deal."
CAVUTO: How do you feel about the perception that changed? Here you're the most deified CEO on the planet, everyone thinks you're great, and now it's sort of like the post-Clinton syndrome. After he got out, the pardons and everything else, and it sullied a lot of stuff. Do you feel you've been sullied?
WELCH: Do I feel I've done anything wrong? Absolutely I do not feel that way.
But that's not what this is about. This is about a different time and a different era, Neil. This is about a different moment in time. And in this moment in time people are angry, they've lost trillions of dollars in the stock market, people are hurt, the post-dot-com bubble, company stocks are down, looks like some guy is getting some benefits he didn't deserve.
Many people didn't understand it was an employment contract. Many people thought, "Oh my God, this was a golden watch on retirement."
CAVUTO: You fixed it after the fact.
WELCH: Yes. It's nothing to do with that. It's a whole different environment this was set in, Neil.
CAVUTO: I should disclose here I am still a GE shareholder even many years after leaving CNBC, so I should disclose that.
You've enriched a lot of shareholders, Jack Welch. What, $400 billion over your tenure?
CAVUTO: So do you feel a little bit like, "Hey, I've done a lot; this ain't fair"?
WELCH: Look, the debate that I struggled with, as I tried to write about it, but it was about a team that did that. I didn't do that all alone. It was a team of people that did it.
I'm not bitter about this. I've thought about this and I've thought about public perception. And perception matters. And so I'm comfortable with myself about this decision.
Do I think it was right that I got the benefits that I negotiated for an employment contract? Absolutely right. Do I think in these times doing this? I think it's a symbol, a recognizing of the times, and hopefully divorcing the company I worked for 41 years from my personal life.
CAVUTO: Well, you know, the United Shareholders of America, they love you, they think you delivered for your shareholders, great, great, great, but that these pay packages, yours included, they say, obscene, overdone; the time has come to rein these in. What say you?
WELCH: I say it's a free market. We have a capitalistic system. It's a free market. I remember when you were with CNBC and the Fox News Network was smart enough to steal you away with a very attractive package. Now, CNBC was either too cheap under my time or not, but we didn't keep you.
It's a lot more than money. It's an environment. It's a show. It's a lot of things.
The free market system has its flaws. It has its excesses. It has its swings. But give me a better system. Let's not level things, because you get so many unintended consequences.
I'm part, like so many others are, of an American dream. Started with nothing. Worked hard. Get it all. You, too. And we achieved what we wanted to achieve.
CAVUTO: Do you think there should be a limit on what someone makes?
WELCH: No, I don't begrudge Barbra Streisand. I don't begrudge other stars. I don't begrudge network stars.
CAVUTO: When you hear of the Dennis Kozkowskis at Tyco with these $100 million packages, what do you say about that? Where do you draw the line?
WELCH: Look, you're talking about something else, I think.
CAVUTO: Very much so.
WELCH: OK. I'm not talking about compensation earned in the free market system, openly disclosed by all the rules and regulations of the deal. I'm not talking about that.
When you start moving to what people are accusing people of, it's the flaw of the market. The market will correct it. It'll fix those flaws.
You know, when we went to a $1 million pay cap, we had more unintended consequences from that than we ever expected. The share owner groups were crying out for more option, more options. Cap salaries. Then stock market took off, options went up and salaries got very high.
CAVUTO: And the rest is history.
Let me ask you, and I don't want to belabor the personal, but Suzy Wetlaufer.
CAVUTO: Still seeing her?
CAVUTO: You intend to marry her?
WELCH: We are moving step at a time. But we're happy.
CAVUTO: How long do you think this whole divorce process could take?
WELCH: If you could tell me how to fix it, Neil, I'd be a very happy man. I'd like to have it over. I'd like to have it amicable. I have no hard feelings. I'd like to just end it.
CAVUTO: There are a lot of divorce lawyers that have watched this very closely, and they say, "Jack Welch, when all is said and done, he's going to be out $300 million or $400 million, at a minimum."
WELCH: Don't forget, all my wealth is tied up in GE stock. And we can evaluate GE stock today versus when it was at its peak. And we'll see what the numbers are when the numbers come out, OK? And we're not into numbers right now.
CAVUTO: Does all this make you bitter?
WELCH: No. I'm a lucky guy. I'm a very happy guy. I'm a lucky guy. I got great kids. I'm looking forward...
CAVUTO: How do the kids feel about all this?
WELCH: Obviously no kid likes to see his father in the paper being called this or that, the next thing. But they lived through Neutron Jack, they lived through other periods in life, and they know where my compass is centered. And they're happy for me. They spent the summer with me, had a wonderful time with them.
CAVUTO: Jack Welch, good seeing you again.
WELCH: Thanks, Neil.
CAVUTO: The former chairman and CEO of General Electric, Jack Welch.
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