Jack the lad pays $180m to keep his divorce, and a whole heap of dirty linen, out of court

Click to follow

Jack Welch, the former chairman of General Electric and for years one of the most revered figures in American industry, is at least $180m (£110m) poorer this weekend. Yet, he also has reason to celebrate. He can strike out the "divorce court" entry in his diary for tomorrow morning and stay at home.

Gossip writers, on the other hand, are dealing with an unexpectedly disappointing denouement to a juicy story of marital betrayal and financial greed. The divorce trial between Mr Welch, 67, and his now ex-wife, Jane Beasley Welch, was meant to start in a Bridgeport, Connecticut, court on Monday. Not any more. An out-of-court settlement was announced at the end of last week.

Not all of the details were kept secret, however. Ms Beasley had already refused an offer from Mr Welch of $130m in cheques over the years ahead. According to newspaper reports yesterday, that sum was pumped up to $180m to get the case closed. And there will be other benefits.

Mr Welch, for example, is obliged under the settlement to pressure his former employers at GE to hand over to Ms Beasley the keys to the Manhattan apartment they had given him upon his retirement two years ago. If he fails in that endeavour within 60 days, he will have to pay her an extra $15m instead.

In theory, Ms Beasley, who used to earn $1m a year herself with a Wall Street brokerage house, could have done even better. She had been fighting for half of Mr Welch's entire fortune, variously put at anywhere between $400m and $800m. But with the settlement, she too is spared that battle.

Now, the piles of pre-trial depositions given by both sides detailing the mess of their 13-year marriage will be collected together and destroyed. They will have included fresh intelligence on the affair between Mr Welch and a Harvard Business Review editor that caused the union to come asunder, as well as the extraordinary package of financial benefits given to him by GE in his retirement.

But they may also have provided embarrassing evidence that Ms Beasley was something short of the perfect spouse herself. She was widely reported to have carried on her own affair with the chauffeur of one of her ex-husband's closest friends, a top executive with the Fiat car company.

In spite of the last-minute reprieve, the reputation of Mr Welch has already suffered extraordinary damage. Not only was there the fall-out from the revelations in early 2002 of his affair with the editor, named as Suzy Wetlaufer, which started when she interviewed him for her publication. Almost worse were the details of that retirement package, so generous that it sparked a federal investigation.

It was Ms Beasley who took the lid off the financial nest-feathering in filings to the court last September. These papers showed that Mr Welch was still getting riches from his former company that even some still-employed chief executives would never have enjoyed.

Admittedly, over 20 years at the helm - where he was voted the "most admired CEO of our time" - he had built GE into one of the most important companies in the world, with businesses ranging from aircraft engines to the NBC television network. Yet Wall Street was shocked to learn that after stepping down he was still getting a salary plus an extraordinary array of benefits.

According to the court papers, they included "lifetime access to company facilities and services comparable to those which are currently made available to him by the company" and those benefits are "unconditional and irrevocable".

The perks amounted to a lifestyle of untold luxury. Mr Welch was to enjoy the use of an $80,000-a-month company apartment in Manhattan, courtside seats at the US Open Tennis tournament (and also, by the way, at Wimbledon), box seats at Yankees and Red Sox baseball games, membership fees at numerous country clubs in the US, free bodyguards and other security services. And the company would also pay his bills at one of New York's most exclusive restaurants, run by celebrity chef Jean Georges.

He was even allowed to continue using a company Boeing 737 to jet around the world free of charge. In her financial statements to the court, Ms Beasley contended that the free access to the aircraft was surely worth at least $3.5m a year to her husband.

The embarrassment for both Mr Welch and GE was deep. "I never expected my divorce to be entirely private, although I had hoped for that," Mr Welch said at the time. Both he and the company vigorously defended the retirement package and denied claims that its details had been kept secret from shareholders. GE insisted that it had been negotiated six years prior to Mr Welch stepping down and that it had been filed with the appropriate authorities.

Mr Welch did, however, agree to give up some of the perks. He took on the expenses of living in the New York apartment, for example. He did so, he said, in part to avoid further damage to GE, saying that he regretted seeing "a great company with the highest integrity dragged into a public fight because of my divorce proceedings".

Friends of the couple voiced relief this weekend that the airing of still more damaging information had now been avoided with the sudden settlement. "The trial would have been very messy and hurt both of them very much," one said. "We're glad they came to their senses."

Comments