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Commentary > The Dobbs Report
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A Major Adjustment
Will Jack Welch's actions set a trend in reducing excessive compensation?
September 16, 2002: 7:40 PM EDT
By Lou Dobbs, Lou Dobbs Moneyline

NEW YORK (CNN) - Let's talk about Jack Welch.... Welch is the most praised CEO in the history of modern business, he guided General Electric's growth into the world's largest industrial corporation... from a market capitalization of $13 billion when he took over, to almost $400 billion when he retired last year. He built up a personal fortune estimated at nearly a billion dollars.

And that was fine with seemingly everyone when investors, big and small, were making a lot of money, even when the gains were only on paper. It's not so fine now: GE's market cap has fallen by a third, and seven trillion dollars has now been lost in the equities markets.

And now Welch is being portrayed by some as poster boy for corporate excess and personal greed because a messy public divorce led to the revelation of a lavish retirement package that Welch says should be properly called a retention bonus. Welch, who is so used to adulation, is clearly at a loss to understand the criticism, and still has not come, intellectually, to terms with the vilification of his and GE's values. But Welch's instincts for the marketplace lead him to adjust, even if reluctantly, to a very different world a year after he left GE. This new world is one of lower stock prices, lower profits if any, fewer jobs, and lowered confidence in corporate America and the markets.

Did Jack Welch make his decision out of concern for his personal standing or his regard for the company he served for 41 years....? His personal fortune, now lower by a third than when he retired, and one presumes about to be cut by almost half again after his divorce, is still inextricably intertwined with the fortunes of General Electric... and remarkably, GE's remained influenced by their now-retired CEO. Whatever his reasons, they lead to the right result... and I believe could set a trend in reducing not only the excessive compensation of retired CEOs, but those still in their jobs. Hopefully, Welch will now take up that cause, and make a further contribution to not only GE, but all of business. That's what I'd call a happy ending to a brilliant career.  Top of page




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