BEFORE his marriage to Jane Beasley, Jack Welch, America’s most admired businessman, made a bargain — he would go to the opera and she would take up golf. A few years later he wriggled out of the opera obligation; she, by all accounts, became a very fine golfer. In Jane, according to his autobiography,
Jack: Straight from the Gut, the former chairman of General Electric had found the “perfect partner”: “tough, witty and 17 years younger than I am”.
After 13 years of marriage Jane remains a handsome woman with a first-class mind. But as the Welch marriage heads for the divorce courts, Jack may well be ruing the day he set eyes on this “tough and witty” woman.
So far the war of the Welches has been one-sided affair. In an era of increasing contempt for corporate fat cats, Jane Welch has been portrayed as the wronged woman and her husband as greedy and uncaring.
Dumped for a younger model, Jane has become the latest victim of “Neutron Jack”, the man said to have sacked 100,000 people at General Electric.
Last week Jack’s “friends” hit back. They told newspapers that adultery had stained Jane’s side of the marital bed too. According to the New York Post, Jane had taken up with an Italian bodyguard in an affair that predated Jack’s.
This is divorce on a grand scale. As well as making the tabloids, l’affaire Welch is being played out on the front page of The Wall Street Journal.
Welch’s personal fortune is valued at between $700m (£450m) and $900m. But the wrangle with his wife is likely to cause most damage to his position as America’s most famous and respected chief executive. Welch’s friends and former colleagues were not quoted directly in the Journal but they had a clear message for him: sort this out.
John Coffee, Columbia law professor, says: “There is no doubt that Jack Welch is the most respected chief executive in the United States.” He says the brouhaha surrounding the Welch divorce is evidence of a wider trend in how the country views its business leaders. “There are fewer and fewer cheerleaders to be found now. The chief executive is no longer a hero,” he says.
The national mood has certainly helped Jane Welch’s cause. Unlike many other women divorcing rich husbands, she has not been painted as a rapacious harpy — so far. As the case moves to court, the attention has not been on her greed, but on his. Welch’s offer of $35,000 a month — a fortune by almost anyone’s standards — and $20m in severance was rejected as paltry. Half his fortune is now on the line, a payment of at least $300m.
The Welch marriage ended last March after the revelation of Jack’s affair with Suzy Wetlaufer, former editor of Harvard Business Review. Wetlaufer, 42, met the 66-year-old while interviewing him for the magazine.
Apparently determined from the start to go down fighting, Jane Welch let it be known that she had called Wetlaufer to confront her about the affair. It was her first public shot in the high-profile battle. Her next move was masterly.
When Jack Welch married Jane Beasley in 1989, he was already head honcho at General Electric. She was an associate at Shearman & Sterling, a New York law firm. Both of them had a failed marriage behind them. At the time they signed a 10-year prenuptial agreement that would have given Jane $4.9m had they split before the decade was out. He might have been well past the 10-year deadline but Jack had hoped to at least reach an amicable split with his wife.
His first marriage had ended well, as far as divorces go. The couple hammered out terms in the living room of their Connecticut home using the local law firm of Schoonmaker, George & Colin.
Hoping for a similar resolution to this marriage, Welch suggested his wife choose one of that firm’s partners to represent her. Jane Welch opted instead for William Zabel. It was a decisive move. Zabel is a big-name divorce lawyer whose clients have included Michael Crichton, the best-selling author of Jurassic Park. Fittingly, Zabel has so far made Welch and his team look like dinosaurs.
His biggest move so far was to publish an affidavit last October revealing the imperial perks enjoyed by Welch, who had, until then, a reputation as one of American’s most down-to-earth bosses. The document made headlines all over the world.
In the affidavit, Jane Welch claimed that her husband’s retirement package allowed him unfettered use of corporate jets (a perk valued by an expert as being worth $291,677 a month). He also had a company-owned apartment overlooking Central Park, a limousine, a cook, free flowers, country-club memberships and a charge account at Jean Georges restaurant. He was also entitled to top tickets at the Metropolitan Opera, tennis tournaments such as Wimbledon, and for games played by the Knicks, Yankees and Boston Red Sox. The affidavit revealed that he didn’t even pay for his laundry.
The news embarrassed his former company and Welch fought back. “I want to share a helluva problem,” he said through an article in The Wall Street Journal. Times had changed, he conceded, and his perks were no longer appropriate. The Securities and Exchange Commission is looking at those perks.
Having lost the opening rounds, Jack’s team seemed to be looking at a settlement. The two sides reached an agreement on his wife’s monthly alimony on the eve of another court hearing in October. The details of the deal have not been disclosed but both sides say the terms are much higher than in Welch’s original offer. Welch is also said to have made another attempt at a final offer. His legal team values the offer at $130m over Jane Welch’s lifetime.
While the two sides appeared to be talking, Welch also decided to up the ante on his legal team. Schoonmaker has been joined by Daniel Webb, a prominent trial lawyer and a former United States attorney in Chicago.
Webb is a partner at Winston & Strawn in Chicago, one of America’s leading law firms. A heavy hitter, he has represented Philip Morris in tobacco litigation and has recently been hired by Microsoft. Just over a month after Webb’s appointment, details of Jane Welch’s alleged dalliance with the “Italian stallion” surfaced.
Neither side is talking now and Webb’s presence suggests that this is a case that could yet end up in court.
Welch has weathered personal attacks before. In the past he let his company’s performance answer his critics — GE’s shares increased 2,876% during his tenure. This is different.
Some of his friends are telling him this is a war he may have to lose in order to win.
