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Thu, May 30, 2002 - Page 21 News List

Jack Welch and others making out like bandits

GOLDEN RETIREMENT The ex-General Electric CEO gets a US$9 million pension, or 800 times more than one 39-year veteran of the company


For retired General Electric Co Chairman and Chief Executive Officer Jack Welch, like many others who once led large US companies, these are the golden years.

Welch gets a US$9 million annual pension. Each day he offers General Electric some advice he earns another US$17,000.

He was able to contribute a portion of his salary into a deferred-compensation account on which the world's largest company by market value guaranteed 10 percent annual interest.

Big-league CEOs often award themselves lifetime benefits that would be the envy of many Americans. The companies say it's the only way they can attract top talent and reward performance.

Shareholders want the payouts reined in at a time when the stocks and earnings of many companies are falling.

"We're seeing more and more abuse in this area," said Patrick McGurn, director of corporate programs at Institutional Shareholder Services, which advises many of the largest US fund managers on corporate governance. "Executives are getting the long end of the stick."

Welch's former peers will fare almost as well.

FleetBoston Financial Corp Chairman Terrence Murray gets US$5.8 million annually after he retires at year's end. Bernard Ebbers, ousted as WorldCom Inc's CEO last month, can rely on a US$1.5 million annual pension and medical benefits for life.

International Business Machines Corp will pay ex-chief Lou Gerstner's car, office and club membership expenses until 2012.

"It doesn't make a whole lot of sense," said James McGlynn, who manages the US$65 million Summit Everest Fund and owns FleetBoston shares.

"Who's setting these plans where everybody's getting all this money?"

Critics blame the companies' boards. In many cases, the directors are CEOs themselves, with little incentive to restrain compensation, they say.

"It's one big buddy system -- you scratch my back, I'll scratch yours," said Larry Margel, the former chief actuary at Towers Perrin, a New York-based company that advises companies on compensation.

Gary Sheffer, a spokesman for General Electric, said Welch's pension is justified because of the US$375 billion gain in market value he helped create over two decades. The company raised the pension for all retirees six times during Welch's tenure, the last time in April 2000, he said.

That doesn't sit well with General Electric retiree Helen Quirini, who worked at a plant in Schenectady, New York, for 39 years. She figures her pension of US$765.40 a month is about 1/800 that of Welch's.

Quirini, who began at General Electric in 1941, said she remembers when the lowest-paid worker made about 1/20 that of the top executive.

"Is any person worth 800 times as much as another person?" Quirini asks.

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