The Retirement Welch Built
Earns $1.4 Million a Month
By RACHEL EMMA SILVERMAN
Staff Reporter of THE WALL STREET JOURNAL
What does the world's most famous retired CEO spend in an average month for food and beverages, including wine?
Answer: $8,982.
Clothes? $1,903. Gifts? $52,486.
These and other intimate details of the personal finances of John F. Welch Jr., former chairman and chief executive of General Electric Co., spilled out Wednesday in the latest episode of Mr. Welch's divorce proceedings. In an eight-page financial affidavit filed in a Connecticut court, Mr. Welch offered a rare look into the lifestyle of a highly compensated executive.
Mr. Welch, who headed GE for 20 years before his retirement in September 2001, outwardly avoided an ostentatious public image and insisted that he didn't revel in his wealth. The affidavit totted up his personal assets at $456.2 million and revealed that his current total monthly income -- as a self-employed retiree -- is $1.41 million, after taxes. It placed his total monthly living expenses at $366,114, based on his actual expenses last year.
Though skeletal, the numbers paint a vivid picture of life at the pinnacle of American wealth. Mr. Welch spends $5,480 a month on country-club memberships. Total "personal expenses" come to $13,258 a month. That includes the clothes, the food and drink, and $425 on "personal care" and $1,482 on vacations and rental cars.
Monthly expenses on "shelter" pay for two homes in Connecticut, two in Florida and one in Nantucket, Mass. Total: $51,531. The estimated value of all that real estate, plus a sixth property, in Lenox, Mass.: $30.7 million.
The lavish lifestyle of Mr. Welch and his estranged wife, Jane Beasley Welch, was first depicted in broad terms in a financial affidavit she filed last month. In that document, Mrs. Welch said the $35,000 a month that her husband was currently providing her was "patently inadequate" to maintain their marital standard of living.
In a new financial affidavit of her own that was filed Wednesday, Mrs. Welch said that her current total monthly income after taxes is $11,360. She valued her own assets at $8.29 million, excluding items such as jewelry whose value hasn't been assessed yet. Her liabilities, consisting of 2002 unpaid income-tax estimates, totaled $4,600.
Four Broad Areas
The affidavit Mr. Welch filed Wednesday covers four broad areas: his income, expenses, assets and liabilities. According to the affidavit, he nets $357,128 a month from his GE pension and is earning a further $377,000 a month, after taxes, from the consulting business he started after retiring from GE. Most of the rest of his monthly income comes from dividends and interest. He also gets $1,000 a month, after taxes, in Social Security payments.
The affidavit also notes that Mr. Welch might be entitled to a payment from GE in March under its long-term incentive plan, but it doesn't specify the amount.
The largest share of Mr. Welch's monthly living expenses is the $200,000 a month in estimated payments to GE for personal use of company benefits, according to the affidavit. Mr. Welch also pays $20,000 a month in accounting and financial- and tax-planning fees.
The document reports that he paid an estimated $614 a month to charitable and political causes, but a footnote adds that Mr. Welch's foundation made charitable contributions of $3.1 million in 2001.
The majority of Mr. Welch's assets, meanwhile, are tied up in his securities, including GE stock, which are valued at about $249 million in the affidavit. His bank accounts are valued at only $274,000.
Mr. Welch's assets also include $14.2 million invested in limited partnerships. The net value of his stock options as of Sept. 16, according to the affidavit, is estimated at about $72.7 million. Mr. Welch also values his deferred salary at about $22 million, and his deferred incentive compensation at $29.3 million.
Mr. Welch's total personal assets of $456.2 million are about half the gross domestic product of Monaco. The total GDP of Grenada, by comparison, is $394 million.
Mr. Welch puts his known liabilities at about $16.7 million, including $15.2 million in debts to the trusts for his four children and estimated tax balances for 2002 of $1.5 million. He also listed as a liability the money he plans to pay GE for certain benefits.
Though granted the use of numerous company facilities in an employment contract signed in 1996, Mr. Welch and GE came under fire when Mrs. Welch revealed many details of the GE-provided benefits, including Mr. Welch's personal use of a company apartment in Manhattan, in a filing last month. Soon after the document was filed, Mr. Welch said he would pay for his personal use of most company facilities and services.
Mr. Welch also notes that he has as much as $219.75 million in "other obligations," covering an agreement he made in 1987 with his first wife, Carolyn, under which they agreed to distribute 50% of the market value of their net assets when they die to their four children.
A three-day hearing is scheduled for next week in Bridgeport, Conn., Superior Court to determine how much "temporary alimony" Mr. Welch should pay the current Mrs. Welch during the remainder of proceedings.
In a prelude to that hearing, both Welches appeared in the courtroom for the first time together Wednesday. Mr. Welch was dressed in a pinstriped suit and a diamond-patterned tie; Mrs. Welch wore a black suit. Mr. Welch won a motion to add a high-powered corporate attorney, Dan K. Webb, of Winston & Strawn in Chicago, to his legal team.
On his way into the hearing, Mr. Welch said he hoped Mr. Webb will "help us settle this. The last thing you want to do is be in court. Settle it and get on with your life." Mrs. Welch declined to comment.
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