I'm only a tiny, tiny fraction, so why should I do that?
So Berle and Means said that,
while in practice we have shareholder democracy,
in practice the democracy is imperfect.
It's really self-perpetuating Boards of Directors.
So their book was extremely important historically.
And what it led to is new regulation that tried to allow for takeovers of companies.
What Berle and Means said, is there's a lot of companies were ill managed and
managed for the interest of the board of directors because they just owned,
effectively owned, they can't pay themselves big amounts of money.
They can pay fairly generous salaries, they can hire their friends and
give them nice jobs as sort of ripping off the company.
The shareholders, some of them might hear about this and get upset but
it's hopeless.
You can't influence the votes of so many people.
So they made it easier, 1935 the Securities and Exchange Commission
under authority of the act that had just created it in 1934,
established rules for proxy contests.
So that people who wanted to change the governance of the company could reach
the shareholders and ask them to sign a contract to let you vote on my behalf.
You would give them the right to be a proxy for
you at the shareholder's meeting.
And they made it, companies didn't want to help