Tasty Taxes

The Old Farmer's Almanac says that in biblical times, people paid their taxes with herbs such as anise, and in medieval Europe, some used honey to pay their taxes. Since I live in New England, I'm sending the IRS a crate of lobster and clam chowder. I'll let you know how it goes.

– Teresa M. Hanafin

When Trust Services Included Immortality

 From an April 1959 issue of The New Yorker:

[An old post that seemed worth repeating.]

Tech Influences Investing

Here in the early 2020’s, social media and apps offering free trades are reshaping the investment scene. Economist Robert Shiller in the Times sees it as deja vu all over again: "Early in the 1920s, people played the market as a grand game, abetted by technological innovation and new mass media.”

The high tech? The stock ticker. "In 1923 the Trans-Lux company came out with the 'movie ticker' — a large illuminated screen showing rapidly changing stock prices.” No longer were stocks dull certificates that rich uncles kept in their safe deposit boxes. Anyone could go to a brokerage and watch stock prices soar and dive in almost real time. The Money Game was on!

The new  media was radio. "The world entered homes electronically, giving people an immediate sense of the possibility of new technologies and access to a global narrative about financial success.”

From September, 1919 to September, 1929, Shiller estimates, stocks returned an inflation-adjusted average of 20 percent a year. After that.... 

With stocks having already returned an average of 12 percent, after inflation, over the ten years ending March 2021, it’s hard to believe investors have six or eight years of 20 percent returns to look forward to.  “We shouldn’t be surprised,” writes Shiller, "if uncomfortable feelings about the market grow to unmanageable proportions."

CEOs Have Lucrative Coattails

 CEOs of the largest US corporations made more than ever last year, The Wall Street Journal estimates. Even corporate chieftains who took salary cuts when the coronavirus erupted tended to make up the difference through growth in the equity portion of their compensation. 

When CEO's do better financially, so do their immediate subordinates. Public corporations must report the compensation of the five most highly compensated executives. These summaries indicate that even those at the bottom of the five-exec totem pole have little cause for complaint.

Last year, to cite a few more or less random examples, number five at Verizon enjoyed total compensation of $7.8 million. At Pfizer, $8.9 million. Citi, $9.4 million.  Compensation for the number ones at those companies ranged from $19 million to $23 million. 

For the top tier of the wealth management business, all this new wealth indicates a bright future. Unless it's too generous to last. The Wall Street Journal notes that shareholders at some companies aren't happy with current compensation levels:

About 1 in 6 companies holding shareholder votes since Sept. 1 have gotten less than 70% support for say-on-pay votes, according to an analysis of S&P 500 companies by Equilar. Among the same companies last year, by contrast, about 1 in 12 had such stiff opposition.

Although only advisory, a poor showing in a say-on-pay vote often prompts boards to restructure pay packages—or more.

If CEO pay gets pressured, so will the compensation of those riding their coattails.