202 InManagersWeTrust
argument would relate these different sorts of companies to their
respective average sizes. Smaller companies may need or warrant less
in the way of formal governance (such as board review of director
performance) than do larger companies. But that argument relates
to the dot-com governance debate only to the extent that dot-coms
are on average smaller than non-dot-coms, something that may or
may not be true and so is ultimately irrelevant.
The key issue for any kind of business also remains the same,
whether new economy, old economy, future economy, or whatever.
It is what constitutes good governance, and the answer varies with
company specifics, including potentially to which category a com-
pany belongs. Just as a one-size-fits-all governance template is in-
appropriate for the run of non-dot-com companies, it is inappropri-
ate for dot-coms.
In fairness to the advocates of new governance rules for new
economy companies, they were forced into this strange stance (that
dot-coms as a group were both alike and special) because governance
gurus had so whipsawed old economy companies into governance
uniformity that prevailing governance practices did not make sense
for many dot-coms (for the same reasons they never made sense for
many old economy companies).
It is therefore a colossal waste of time even to discuss whether
governance principles should be different. Of course they should,
but not because of anything special about dot-coms as such but
instead because every business organization is special.
YOUR VOICE A T THE TABLE
Persuading boards to listen to shareholders is an ideal corporate gov-
ernance method, but legal and practical limits frustrate this simple
vehicle. Apathy and collective action problems limit the sharehold-
ers’ voice, but this explains only part of the problem.
Most state laws authorize corporations to establish procedures
governing shareholder proposals at annual or special meetings. The
SEC imposes additional rules.^9 As a matter of practice, management
on average strongly prefers rules that enable it to omit shareholder
proposals from proxy statements.
Using the “shareholder proposal rule” has led to substantial pol-
icy changes at many major corporations. For example, beginning in