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U.S. tourists flock to luxury shops in Europe

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American luxury shoppers traveling in Europe splurged at designer stores as the U.S. dollar and the euro hit parity on Wednesday

American luxury shoppers travelling in Europe feel as if they’ve hit the jackpot.

For the first time in twenty years, the euro and U.S. dollar are nearly equal in value.

The weak euro is tempting Americans like Shawna Wilson to splurge.

“Because the euro and the dollar are about the same, it definitely encourages us to spend. It’s like it’s on sale here, so we’re having no problem shopping.”

TOURIST FROM COLORADO AND MOM, SHAWNA WILSON, 49.

Wilson is among many American tourists flocking to Paris’s Avenue Montaigne this week, a strip of luxury stores which fronts designer brands such as Louis Vuitton, Chanel and Gucci.

“I am very excited that our American dollar is so strong, just when I am coming to Europe.”

TOURIST FROM NEW YORK CITY AND RETIRED TEACHER, SUSAN WEINBERG.

For Americans, purchasing a Chanel bag here could be cheaper by a thousand bucks, with savings from the exchange rate and tax refunds at the border on the way home.

But Erik Norland, senior economist at the CME Group in London, warns it’s not as simple as it seems.

“My own personal observation with luxury brands is that the prices of those goods tends not to vary from one country to another as much as you might expect. Another thing for Americans to consider, if they’re expecting bargains in Europe, is that in Europe in general there is much higher value added taxes there are in the U.S. Now that said, Americans who do shop over here can often get value added tax rebates when they leave. So that’s also something to look into as there might be a lot of calculations to make in terms of trying to find bargains. And it may not be as straightforward as people think.”

CME GROUP, SENIOR ECONOMIST, ERIK NORLAND.

On the flip side, European luxury shoppers like Sebastien Pozzi from Lyon, France, will feel a pinch at home – and while traveling to the U.S.

“Maybe we won’t buy anything. In France, it’s really expensive, that kind of brands, like Chanel, Dior. And here today… normally it could be cheaper in the U.S., but with the exchange rate, it’s not possible. It’s too expensive for us.”

TOURIST FROM LYON, FRANCE, SEBASTIEN POZZI.

Some analysts say the parity could last for at least a couple of weeks.

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Money

Boeing CEO to depart with lucrative exit package despite chaos

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Boeing CEO Dave Calhoun is set to step down from his position at the end of the year, walking away with a substantial payout despite challenges faced during his tenure.

Here are the key points:

  • Massive Payout: Despite Boeing’s stock price plummeting by 43% since Calhoun took over as CEO in 2020, he is poised to receive a $24 million payment upon his departure.

  • Additional Compensation: Calhoun holds options that could potentially earn him an additional $45.5 million if his successor manages to boost Boeing’s share price by 37%.

  • Comparative Compensation: Calhoun’s compensation during his tenure exceeds that of CEOs in similar industries, despite Boeing’s stock underperforming in comparison.

Boeing CEO Dave Calhoun’s impending departure at the end of the year has sparked controversy as he stands to walk away with a substantial payout, despite the company’s tumultuous journey under his leadership.

READ MORE: Boeing CEO to step down

Despite inheriting a company reeling from the aftermath of two deadly 737 Max crashes, Calhoun’s tenure has been marred by further setbacks, including the recent Alaska Airlines door blowout incident that further tarnished Boeing’s reputation.

Boeing offers CEO $5.3 million incentive to stay through recovery …

With Boeing’s stock price plummeting by 43% during Calhoun’s time at the helm, questions arise about the correlation between executive compensation and company performance, especially in the face of such significant challenges.

‘Raised eyebrows’

Calhoun’s lucrative exit package, valued at $24 million, has raised eyebrows among shareholders and industry observers alike.

Additionally, the potential for Calhoun to earn an additional $45.5 million based on the future performance of Boeing’s shares has intensified scrutiny over executive compensation practices.

This sizable payout contrasts starkly with Boeing’s stock performance, which has significantly underperformed compared to both industry peers and broader market indices, highlighting the dissonance between executive rewards and shareholder value creation.

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Money

It’s been a record year for CEO compensation

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In 2023, Broadcom’s CEO Hock Tan was granted a stock award worth $161 million, propelling him into the realm of highest-paid CEOs.

However, as the company’s share price surged, the value of Tan’s award skyrocketed to approximately $1.3 billion, outpacing even the shareholders’ annual returns.

Tan’s compensation reflects a broader trend among top executives in the tech sector, where awards of restricted stock and stock options surged in value alongside company share prices.

Notably, CEOs like Charles Robbins of Cisco Systems and Shantanu Narayen of Adobe also saw substantial increases in their compensation, doubling in some cases.

The disclosure of such equity growth in executive compensation is a new requirement by the Securities and Exchange Commission (SEC), providing shareholders with insights into the changing value of executives’ awards throughout the year.

CEO pay is on the rise.

New heights

Overall, CEO pay at major S&P 500 companies reached new heights in 2023, rebounding from slower growth in the previous year. The median pay for these CEOs rose to $15.6 million, up from $14.1 million in 2022, reflecting a surge in equity awards.

Broadcom clarified that Tan’s stock award is designed to span five years, with no plans for additional equity grants or cash bonuses during that period.

Tan’s compensation, which amounts to approximately $33 million annually over five years, is contingent upon his continued tenure and specific share price targets.

While the initial valuation of Tan’s restricted shares stood at $160.5 million, the surge in Broadcom’s share price prompted the company to reassess the likelihood of meeting vesting conditions.

This reassessment suggests that Tan may not receive all the shares initially granted.

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Money

Market forecast: weather whirlwinds influencing investments

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Prime conditions for commodity investments arise from global weather shifts, geological tensions, and rising interest rates.

With global weather patterns causing disruptions in traditional supply chains, coupled with geopolitical tensions over natural resource access, and the anticipation of higher interest rates impacting financial markets, the conditions for commodity investments have reached exceptional levels.

Amidst this backdrop, Farrer Capital has emerged as a standout player, leveraging its unique ‘blue ocean’ approach to capitalize on price dislocations and scarce competition in the market.

Mark Wyld from MW Wealth joins the show to share his insights on the inclement weather impacting the market.

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