The One Place It's OK to Be Old Is in the Boardroom

The one place in business where executives don't have to worry about being judged too old is the boardroom -- if they're lucky to get a seat.

About 40 percent of directors at Standard & Poor's 500 Index companies are 64 or older, up from 33 percent in 2010 and 18 percent in 2005, according to new data from executive recruiter Spencer Stuart. Another new report from Ernst & Young's EY Center for Board Matters shows that almost 20 percent of board members are older than 68 and have served for more than a decade.

Although aging directors bring experience and stability, their sticking around for longer than ever means that fewer seats can open up for candidates more familiar with the latest technology, social media and changes in consumer tastes.

"Certainly people are living longer and healthier, but having a directorship shouldn't be a sinecure," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance and a law professor at the University of Delaware. "It's something you should work at for a time and then move on from so you don't keep new people from coming in with new ideas."


Retailers, for instance, have faced massive challenges with the explosion of online and mobile shopping in the past decade. Yet the boards of some chains are aging. At Dillard's Inc., for instance, excluding Chairman and Chief Executive Officer William Dillard, eight out of 11 directors are over 64, five of whom joined in 1997.

Retirement age -- typically 72 for board members -- has been edging up. This year, 34 percent of the 357 boards that specify a retirement age set it at 75 or older, compared with 30 percent in 2014 and just 5 percent in 2004, according to Spencer Stuart.

With very few companies setting term limits, board members are staying longer. Only 376 of 5,272 director seats changed hands so far in 2015, according to Spencer Stuart, down from 401 in 2002. They have their reasons for wanting to hang onto their job. The average S&P 500 director will earn $277,237 in pay and other compensation this year to attend about eight meetings, according to Spencer Stuart. That's up from $242,385 in 2012.

Only 13 companies have term limits for directors this year, none shorter than 10 years, Spencer Stuart found. Among these: Walt Disney Co. with a 15-year term limit, Procter & Gamble Co. with 18 years and Wal-Mart Stores Inc., which raised it to 12 years from 10 years in 2014, just before two of its boards members, both 67, were about it reach the limit.

Wal-Mart has brought much younger directors in recent years, including Kevin Systrom, the 31-year-old chief executive officer of Instagram, and Yahoo! Inc.'s Marissa Mayer, who's 40.

"The compensation, nominating and governance committee and the board believe a mix of longer tenured directors and new directors with fresh perspectives contributes to an effective board," said Randy Hargrove, a Wal-Mart spokesman.

Dillard's declined to comment.


The lack of board turnover also means fewer seats can open up for women, who represent 19 percent of directors currently, or minorities, with just 15 percent at the S&P's largest 200 companies.

One company that has most famously benefited from veterans is Berkshire Hathaway Inc., which has five directors in their 80s and 90s -- including the 84-year-old Warren Buffett. Berkshire, which also has four directors in their 50s, produced total returns of 168 percent from 2004 to 2014.

The experience that comes with age sometimes trumps knowledge of new trends, said James Post, a professor at Boston University's School of Management.

"With age, you have accumulated wisdom," Post said. "And that's important to have in the boardroom, especially since we've just lived through such a turbulent time in business with the Great Recession.'"

The number of older and long-tenured directors is likely to grow as many companies limit their top executives to one outside directorship. With fewer working executives available to become directors, boards are relying on retired ones. More than half of new directors elected last year are retired senior executives and professionals, compared with 39 percent in 2009, according to Spencer Stuart.

With increasing numbers of directors in their 70s, "the time for succession planning is now," said Jamie Smith, assistant director of EY Center for Board Matters. "Given the data we're seeing, boards shouldn't delay doing this."