When Jack Welch retired as chief executive officer of General
Electric he did so to the hosannas of tens of thousands of
employees and hundreds of thousands of shareholders (not to mention
the business press). When it came to management styles and
practices his were considered to be the gold standard.
No one begrudged him his retirement package, stock options or
even his consulting contract to provide five days of work a year to
GE for $86,000. Since then, however, a good deal more has come to
light in the wake of his wife’s divorce suit (prompted by his much
publicized “friendship” with an editor of the Harvard Business
Review). Welch, it now appears, was so afraid of poverty that
he got GE to agree to embellish his retirement with a basketful of
perquisites including automobiles, use of a GE private jet, a New
York apartment, box seats at Red Sox games and various home
gadgets. All that seems missing is a lifetime supply of toothpaste.
It’s a good thing we have air conditioning. Without it he might
have demanded the services of a fan bearer, à la
the late Emperor Haile Selassie of Ethiopia.
What prompted this grasping for comparative trivia by a man
worth something on the order of $700 million (before the divorce
settlement)? Who knows, but it says much about the way he’s managed
his retirement.
Getting much bigger headlines are the unplanned retirements of
several other CEOs — those of such companies as Enron, Global
Crossing, ImClone, WorldCom and Tyco. Most of them—along with
various colleagues — have been accused or indicted of having
cooked the books, shortchanged employees and shareholders and been
all-around masters of greed. Take Dennis Kozlowski, the CEO of
Tyco, a conglomerate which owns several hundred businesses. He was
brought down by a scheme to defraud New York State of the sales tax
on some paintings he purchased. Compared to his high net worth, the
amount of the sales tax was relatively minor, but he had risen to
great heights in the business world and came to believe the
testimony of his sycophants that he was invincible.
The sales tax scheme led to larger investigations and, last
week, the indictment of Kowslowki and two confederates of looting
Tyco of $170 million! The Rigas family — father and sons — has
been accused of a similar crime at Adelphia, a cable television
company. Both companies are publicly traded. The penalty for
treating such companies as private piggy banks is a one-way ticket
to a publicly owned license-plate factory up river. Some
retirement.
Another type of CEO retirement that happens now and then
involves the executive who suddenly realizes he has nothing to fill
his days. I recall one CEO of a large U.S. company who retired a
few years ago, satisfied he had placed the right successor in his
office. His old chair was scarcely cold when he decided it was a
mistake. He spent the next year, as a board member, campaigning to
get rid of his successor. He succeeded. But what to do for an
encore? Golf seems tame by comparison.
The fourth way for a CEO to retire is quietly and with dignity.
He is comfortable putting the company in the hands of a carefully
chosen successor; he does not think all good judgment resides in
himself alone. He hands his successor the key to the office, says
“Call me if you need me,” and is gone. Walter Wriston, the former
CEO of Citibank, comes to mind as an example of this type. For
several years thereafter he wrote thoughtful pieces on broad-gauge
problems of mankind. He engaged in no public second-guessing about
his successors and went about his affairs with self-assurance and
dignity.
Whether they like it or not, the chief executives of large
publicly traded companies live in glass houses, not on isolated
islands. And, like it or not, they are members of a segment of the
leadership of the nation. Those CEOs who rode atop the dotcom and
telecom bubbles did not have enough seasoning in the business of
management to understand this. Others, such as Welch, did, but
forgot to take a foot off the gas pedal when it came time to turn
over the keys.
