
The one
share, one vote rule, called the proportionality principle, states voting power should match economic incentives, i.e., shareholders should be able to vote their opinion in proportion to their claim on cash flows from the firm. Sounds alluring, but consider why a percentage claim on cash flows from a firm (e.g., dividends) should entitle anyone to the same percentage claim on decisions affecting firm revenues, cash expenditures or debt levels? Cash flows are typically a very small percentage of revenues (e.g., 10-15%). Why should a percentage of cash flows be transferable to a vote on the many thousands of decisions of the firm often having little to do with cash flows?
Figure 1. The support structure for funding of unpredictable R&D. Investor education is key. Investor participation makes for more effective education. Investor retention is needed to make the education stick.
Proportionality is under attack on a number of fronts. It's not practiced in venture capital firms or in most LLC's. Even non-shareholding labor representatives claim a right to vote in firms of several European countries. It is not by far an indisputable principle.