Updated from 3:12 p.m. EDT

Jack Welch's pledge Monday to give up certain postretirement perks from former employer

General Electric

(GE) - Get Report

is one of the strongest indications yet that shareholders no longer will tolerate excessive compensation packages.

Welch, writing in an op-ed piece in

The Wall Street Journal

Monday, said he is relinquishing the free use of company planes and a Manhattan apartment because of the negative attention that the retirement contract has recently elicited. Although he believes the agreement is proper and fair, Welch acknowledged that "perception matters more than ever."

Welch estimated that he would pay GE between $2 million and $2.5 million a year for his formerly gratis perks. He also said he would consult on an as-needed basis and regularly teach courses at GE's management development center at no cost to the company or shareholders.

"In this environment, I don't want a great company with the highest integrity dragged into a public fight because of my divorce proceedings," Welch said in his column. (The reference is to a divorce filing by his estranged wife in which she claims GE is paying for an "extraordinary" lifestyle for the ex-CEO.)

Welch also defended his benefits, saying they were given in lieu of cash compensation offered during his term as CEO. But the move to pay for them can only have a chilling effect on other corporate boards thinking about outsized pay packages for top executives.

High Life

Shares of GE tumbled on Friday amid revelations about how much GE was paying for Welch's lavish retirement lifestyle. The Securities and Exchange Commission said Monday that it had launched an investigation, and GE plans to cooperate.

"All the corporate governance issues and especially issues about executive compensation are really coming to a head," said compensation expert Doug Sayed of Applied HR Strategies. "I think this is just symptomatic of everything that is going on."

Welch's concessions are all the more remarkable considering that he hasn't been accused of any wrongdoing while CEO; quite the opposite, in fact. After all, the former GE head is one of the most revered executives of his generation, and he increased shareholder value significantly during his tenure. Still, some investors say the retirement bonuses were an embarrassment to GE.

"Here's a guy who's worth hundreds of millions of dollars and the company is paying for flowers for his apartment," noted Brett Gallagher, head of U.S. equities at Julius Baer Investment Management, which owns GE stock. "A select group of individuals have already been amply rewarded and shareholders are not tolerating this when they're losing millions daily in the market."

Open Outcry

Executive compensation has become a hot-button issue recently given the numerous cases of corporate malfeasance and fraud. Executives at

Adelphia Communications

(ADELQ)

and

Tyco

(TYC)

have both been accused of using their firms as personal piggy banks.

Still, it's worth noting that executive pay actually fell by double digits last year for the first time in seven years, according to a study by

Standard & Poor's

and

BusinessWeek

.

It isn't clear yet what, if any, legal measures will be taken to moderate high level compensation, but some believe that changes are likely, purely as a result of market pressure.

Just last week, New York Federal Reserve President William McDonough called on top company officials to take pay cuts, saying that compensation should be adjusted to "more reasonable and justifiable levels."

McDonough noted that chief executive pay has risen in publicly traded companies to 400 times that of production workers on average, from 42 times two decades ago.

Darcy MacLaren, director of research at Safeco Asset Management, said pressure to alter compensation packages has been coming from shareholders, the media and from within companies. "I think many of them are saying, 'Look, we don't need to do this and in fact, we look stupid if we do,'" she said.

Still, she added that some companies haven't got the message yet and are actually increasing payouts.

SPX

(SPW)

, for example, recently gave CEO John Blystone an extra 500,000 shares of restricted stock amid concern that he would leave to head up Tyco.

"Apparently they hadn't decided they needed to go the other way. I think there are still a lot of companies that just don't get it yet," MacLaren said.