Plus, James Garner is so fun to watch!
The movie (and the book) tell about a time when things were changing in finance, in large part because people had the computing power to analyze companies and cash flows. Before VisiCalc, or Lotus 1-2-3, or Excel, it was a hard process done mostly by hand. Suddenly, analysts could unlock value in new and different ways.
One result was volatility in the market as people played out different valuation scenarios and assumptions.
Another, which was of more interest to my students, was that the LBO era led to increases in executive compensation. Some of this was due to LBOs. Some was due to increases in cash compensation to reduce executive interest in LBOs. Some of it was due to increased stock compensation, as a way to connect executive interests with those of shareholders.
At the same time, the work on unlocking value from the company for shareholders (and, by extension, executives) led to more uncertainty for workers. Why invest in plants in the US if it is cheaper to move manufacturing overseas? Why invest in plants when contractors can do it? Why promise increased pay for seniority if it’s cheaper to get rid of people?
The key to compensation became value, not work.
It’s all interesting, yes? What do you think?
