The Realities of Age & Tenure on S&P 500 Boards

01/31/2014 Directors Institute

Directors in the U.S. as a whole continue to grow older, and the data below indicates a continuing trend in that direction. The average age of boards of directors in the S&P 500 is steadily shifting from younger than sixty, to sixty-four and older. The average age of a S&P 500 director in 2013 is 62.9 years old, from 60.3 a decade ago.

Part of the reason why average board member age is climbing is board entrenchment. Average tenure of a director is around eight and one-half years, nearly at the ISS recommended maximum of nine years.

Entrenchment is further facilitated by a general lack of restrictive term limits. About a third of S&P 500 companies do not address term limits at all in their respective charters. Just under two-thirds explicitly have no term limit, and a small, steadily-decreasing percentage of companies do set some sort of term limits.

Of the small group of companies that do set term limits in 2013, none sets a limit lower than ten years, nor a limit higher than thirty years.

Mandatory retirement ages also reflect the increasing age of the U.S. boardroom, as the age limits have shifted from mostly 70, to 72 or 75 and higher over the last decade among boards that have a mandatory retirement age.

ⁱ All data are from the Spencer Stuart Board Index 2008 through 2013, except where otherwise noted.
ⁱⁱ ISS Governance QuickScore, “A tenure of more than 9 years is considered excessive.”
©2013 Institutional Shareholder Services Inc.