Not Ready To Retire Yet, Welch Joins CDR

As one of Forbes’ 400 richest individuals, recently retired General Electric Co. Chairman Jack Welch doesn’t need to work another day in his life. But the executive icon apparently craves challenges, which may explain his decision last week to join buyout firm Clayton, Dubilier & Rice Inc. as a special partner.

In this role, Welch will work anywhere from a few weeks a year to a few months. “We and Jack are open to him spending as much time as he can meaningfully put into the firm,” said Donald Gogel, president and chief executive at CD&R. This position marks Welch’s only consulting position at a buyout firm. However, Welch has said he plans to handle at least a half-dozen consulting jobs in other industries.

Having retired from GE with about $1 billion in stock, options and perks, including a $10.5 million annual pension, a $100,000-per-year board seat at GE and a consulting job at GE paying $17,000 per day with a retainer of $84,000, Welch is certainly well set financially.

But business is in his blood, and at Clayton he will oversee the turnaround of selected companies, which includes hands-on interactions such as hiring, firing and reorganizing.

“Jack’s role is to guide and mentor and support and teach us,” Gogel said. “His impact on our portfolio companies will be working with my partners to show us how to do things faster and better.”

Welch will counsel the firm on a range of issues, including changing the culture within its portfolio companies, management best practices, corporate governance, and performance improvment initiatives.

The partners at Clayton include some of Welch’s former GE colleagues and golfing pals, and the firm reportedly had been recruiting Welch for more than a year. At CD&R, he will receive an unspecified equity stake in the firm, plus bonuses from deals.

“From our discussions, I think [Welch] was attracted to our investment philosophy in that we always have had a balance between operating partners and financial partners,” Gogel said. “That model ensures that our type of investments will have a strong flavor of day-to-day operations to them, which is what Jack has spent his whole life doing.”

In a statement, Welch said the firm’s “demonstrated ability to deal with significant operating challenges and to focus on creating better businesses plays to my interests. Over the years I have worked closely with several Clayton, Dubilier & Rice partners and share their values. I know of no other firm that possesses the balanced combination of operating and financial talent that is required to address the relentless process of building stronger, better, more competitive global enterprises.”

Ken Ryancan be contacted at:Kenneth.Ryan@tfn.comDan Primack can be contacted