May 17, 2023

Today's Topics

Hello! Does the word "ketchup" have the letter "e" in it? Google's AI model Bard isn't convinced it does — maybe the robots won't win. Today we're exploring:

  • CEO pay: Exploring the pay packets of America's top execs.
  • Trademark tuesdays: Taco Bell is lawyering up.
  • Balance: Consumers did something unusual in Q1, they didn't pay down their credit card debt.
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Data reported by The Wall Street Journal reveals that the median pay package for S&P 500 CEOs fell to $14.5 million in 2022, down 1% from a record $14.7 million the previous year — the first decline in a decade.

The highest-paid of the highest-paid was Sundar Pichai, CEO of Alphabet, who was awarded a staggering $226 million last year, 96% of which was from stock options. Alphabet employees are famously well compensated — the typical worker at the company made some $280,000 last year — but even in that context Pichai's figure is astonishing, with his pay more than 800 times what the median employee made.

Michael Rapino, CEO of Live Nation Entertainment, was awarded a package which was worth nearly $140m — a fact unlikely to do him any favors with Congress and frustrated Taylor Swift fans, with both having criticized the ticketing company in recent months. Elsewhere, Netflix’s co-CEOs both made the top 10 in total pay, but in different ways. Reed Hastings received almost all of his compensation through stock awards — earning a base salary of just $650,000, considerably smaller than Sarandos's $20 million salary.

Delayed gratification

Company boards love to stuff executive pay packets with stock awards, rather than salaries, because it (theoretically) aligns the incentives of shareholders and the top brass. However, because those awards typically vest over years, the CEO pay that gets reported has, historically, just been a moment-in-time snapshot. That’s something the SEC recognized, introducing a new measure of executive pay for the first time called "compensation actually paid", which takes into account share price gains and losses. Under this new measure, Pichai’s pay would fall to only $116m, while Rapino's would drop to $36m.

Trademark Tuesdays

Taco Bell revealed yesterday that it has begun a legal fight to undo the trademark on the term “Taco Tuesday” — a legal protection that much smaller rival Taco John has owned for more than 3 decades.

The primarily Midwest-based chain has held the trademark since 1989, a fact that clearly doesn't sit right with Taco Bell execs, who have filed petitions via the US Patent and Trademark Office, arguing that Taco Tuesday should belong “to all who make, sell, eat and celebrate tacos”.

Living más?

Reportedly coined by a Taco John’s franchisee in the early 1980s as an effort to boost sales on the chain’s slowest day of the week, the company has taken a pretty hard-shell approach to defending the trademark through the years. In response to the challenge, CEO Jim Creel branded Taco Bell a “big bad bully” before announcing that Taco Tuesday prices would be available every day for the next 2 weeks.

It isn’t really a wonder that Taco John’s defends its trademarked coinage so staunchly either, given how the term’s usage has taken off in the US. Indeed, compared to other attempts to commercialize specific days for food-based promotional purposes, “Taco Tuesday” has bested the competition for years, continuously soaring above “Wing Wednesday” and “Meatless Monday” every week in Google searches.

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WE O U $17T

The New York Fed recently released its first-quarter report on household debt, revealing that American households now owe someone a staggering $17 trillion.

The majority of that is tied up in home mortgages, with the remainder split across student loans, car loans and credit cards — with the latter, and smallest of those 3 categories, particularly striking.

Credit card debt remained at a record level of $986 billion, defying the usual trend of post-holiday debt reduction. Indeed, this is the first time in over two decades that credit card balances haven't decreased in the first quarter — a period when many cut back on spending after the holiday period of October-December.

All told, credit card debt rose 17% in the last 12 months, a potential sign that consumers are turning to credit cards to cope with mounting daily expenses as inflation continues to bite. Another concern are the rising delinquency rates, with ~4.6% of credit card debt transitioning into "serious delinquency" — where debt remains unpaid for 90+ days — up from just 3% during the same period last year.

Save to spend

This current situation stands in contrast to the pandemic, when US consumers, buoyed by stimulus checks and lockdown savings, managed to pay off $160bn of credit card debt between the end of 2019 and March 2021.

More Data

• The Metaverse could boost the global economy by $3.6 trillion every year, according to new research funded by... Meta.

• Martha Stewart will, at 81, become the oldest star to grace the cover of the annual swimsuit edition of Sports Illustrated.

Gen Z fashion giant Shein has raised another $2 billion in funding, but at a valuation that's down by a third since the last funding round (still some $66bn).

• China’s youth unemployment rate has just risen to 20.4%, the highest point on record.


• A deep-sea mapping company has taken 700,000 images of the titanic to create a completely unique 3D digital scan of the wreckage.

• Charting how Tucker Carlson’s dismissal has already made a big dent in Fox News’s ratings.

Off the charts: The CEO of the company behind one of the fastest growing products in history was in Congress calling for more regulation this week. What tool does the company own, which we charted about in December? [Answer below].

Answer here.

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