Tuesday, March 21, 2017
NEW STUDY FINDS LITTLE AGE DIVERSITY WITHIN CORPORATE BOARDS
80 Percent of S&P 500 Boards Have Average Age in 60s; Little Difference By Company Size and Industry
Recent Director Turnover Has Not Resulted in More Age Diverse Boards
NEW YORK, NY (March 21, 2017) – A new report finds that there is little age diversity within the boardrooms of S&P 500 companies. The new analysis also finds that the median average age for all boards is 62.4 years, and that the average is persistent across companies by size and industry segment. While technology firms do have the youngest average board age, with a median of 61.3 years, it is barely a year less than the median of all S&P 500 firms. In all, some 80 percent of boards have an average age in the sixties. These findings are contained in a new study, Age Diversity Within Boards of Directors of the S&P 500 Companies, conducted by Board Governance Research LLC and funded by the Investor Responsibility Research Center Institute (IRRCi). The report examines the age diversity within each board of the S&P 500 companies by industry, company size (market capitalization) and company age (years since the company’s initial public offering).
Download the full study here.
Register for a webinar here on Tuesday, March 28, 2017, at 3 PM ET to review the findings.
“The news in this report is how little variation in average board age there is. One would think that some fields like technology would skew much younger, but it does not,” said Jon Lukomnik, IRRCi executive director. “As with other types of diversity, change seems to come slowly to the boardroom.” “We found that few companies are tapping into the potential benefits of having directors with a wide variety of ages serving on boards,” said Annalisa Barrett, report author, chief executive officer and founder of Board Governance Research, and clinical professor at the University of San Diego. “Surprisingly, recent director turnover has not improved the age diversity of the boards studied. One might conclude that corporate boards are not taking age diversity into consideration when identifying director candidates.”
The report’s key findings include:
- There is little dispersion in the average age of directors between different S&P 500 company boards. The median average age of all boards was 62.4, and 80 percent of boards have an average age in the sixties. Fewer than 2 percent of S&P 500 boards have an average age of more than 70 or less than 55.
- Within individual boards, more than half (55%) of the S&P 500 boards have only three decades represented on their boards, most commonly directors in their fifties, sixties and seventies. Only 5% of S&P 500 companies have directors from five or six different decades serving on their boards.
- In general, board age diversity does not vary significantly by company size or by industry segment. However, boards in the Information Technology industry have the most age diverse boards (a standard deviation of 8.1 years), while Utilities companies have the least age diverse boards (standard deviation of 6.1 years). Information technology firms also have the youngest average board age, with a median of 61.3 years, but that is only about a year younger than the median of all S&P 500 firms. Real estate firms boast the oldest average board age, with a median of 63.4 years, a year older than the index median.
- Companies which have been publicly-traded for more than 50 years have the least age diverse boards (standard deviation of 6.5 years, compared to the index average of 7.2 years).
- More director turnover, as measured by the number of director changes made between 2014 and 2016, did not result in more age diverse boards in most cases.
- The vast majority (77%) of the directors studied with tenures over ten years joined their respective boards when they were in their forties or fifties.
Download the full study here. Register for the webinar here.
The Investor Responsibility Research Center Institute is a not-for-profit organization headquartered in New York, NY, that provides thought leadership at the intersection of corporate responsibility and the informational needs of investors. More information is available at the IRRCi Website.
Media Contact: Kelly Kenneally Investor Responsibility Research Center Institute +1.202.256.1445 kelly@irrcinstitute.org