The Berle-Dodd debate and the transcendent issues it raises remain of central relevance today, as people disagree about whether corporations should prioritize shareholder value or promote social objectives. Equally resonant are the more mundane topics the thesis addresses— such as director selection, board size and shareholder engagement. While contexts have shifted, including the rise of institutional investors and the complexities of proxy voting, the underlying challenges persist.
The Weinbergs anticipated other developments, such as the importance of occupational diversity on boards, John asserting that“ the wider the variety of occupations and experience, the greater the benefit to the corporation.” Although their use of masculine pronouns reflects the norms of the era, the emphasis on diversity— now including gender and racial diversity— was ahead of its time. Sidney’ s 1949 endorsement of board gender diversity reflected his years of experience serving alongside the remarkable Marjorie Merriweather Post on the General Foods board.
Post was an extraordinary businesswoman who transformed the cereal company founded by her father, C. W. Post, into an industry powerhouse through a series of savvy mergers and marketing prowess. Post’ s 1936 appointment to the General Foods board was so notable for its time that it was reported on the front page of The Wall Street Journal. With a hands-on approach, she took the company beyond the cereal business and exerted influence through strategic investments. Post’ s success in the maledominated corporate world proved that leadership and boardroom success were not exclusive to men, setting a powerful example for women in business. Sidney witnessed Post’ s business acumen firsthand, likely influencing his views on the value of women in the boardroom decades before this came to be widely appreciated.
Another prescient argument concerned director compensation, which differed greatly between the 1940s and today. While directors were often unpaid during that time, they now receive substantial remuneration, with NYSE company directors averaging $ 300,000 annually. John and Sidney appreciated this, arguing for well-compensated directors to meet the growing demands of the role— an argument that remains highly relevant.
The Weinbergs’ analysis of the legal underpinnings of corporate governance also holds true today, with only minor updates. Discussion of the board’ s statutory authority, the business judgment rule and the role of directors as a collective rather than individuals reflect principles that continue to shape governance. Above all, Sidney’ s repeated emphasis on the importance of information flows and John’ s mention of an“ implicit” duty for directors to stay fully informed are foundational. The latter was codified in the landmark 1985 Smith v. Van Gorkom case.
Modern readers will also appreciate the emphasis throughout the Weinberg works on functions rather than features: John’ s thesis and Sidney’ s speech use the word“ Functions” in both their titles. They focus on substance and purpose, not symbol or ritual. For example, John’ s thesis details the chairman’ s role and context
Sidney Weinberg, October 1942.
while today many people advocate splitting the chair and CEO roles without a similar probe; the thesis focuses on functional skills, backgrounds and traits of ideal directors( the“ desiderata”) while today’ s governance often prioritizes skills matrixes, meeting length and recordkeeping. His partial solution was a professional cadre of directors, serving multiple non-competing organizations and earning their living from board service. The proposal mirrors the current trend toward professional board members.
The thesis stresses the value of the“ discerning question.” According to a contemporary scholar the thesis cites, Harvard Business School Professor John Baker,“ the most effective directors... are those who ask the most discerning questions.” That belief persists, as prominent critics, led by Harvard Business School Professor Myles Mace in his 1971 book,
Library of Congress
26 FINANCIAL HISTORY | Summer 2025 | www. MoAF. org