Barrett Publishes Report on Age Diversity and Boards of Directors

Friday, March 24, 2017TOPICS: Research

Annalisa Barrett, clinical professor of finance

Annalisa Barrett, clinical professor of finance in the University of San Diego School of Business, has published a new report on age diversity on boards of directors

The finds there is little age diversity within the boardrooms of S&P 500 companies. The 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 60s.

The study, titled Age Diversity Within Boards of Directors of the S&P 500 Companies, was conducted by Barrett through Board Governance Research and was funded by the Investor Responsibility Research Center Institute (IRRCi).

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 60s. 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 percent) of the S&P 500 boards have only three decades represented on their boards, most commonly directors in their 50s, 60s and 70s. Only 5 percent 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 that 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 percent) of the directors studied with tenures more than 10 years joined their respective boards when they were in their 40s or 50s.

Barrett teaches courses in finance to undergraduate students, including financial management, financial statement analysis and personal finance. She also co-teaches a course in corporate governance in the MBA program. In addition, Barrett is the faculty advisor to the Finance Club, providing guidance and support to the students majoring in finance and seeking employment in the field after graduation. Her research interests focus on corporate governance, board practices and compensation; she regularly publishes in practitioner journals. She attends numerous conferences in the governance and compensation industries and has been a presenter and panelist at several conferences over the last decade. Barrett has been quoted in national press as an expert on corporate governance matters and her research has appeared on the front page of the Wall Street Journal. She was named one of the first "Rising Stars of Corporate Governance" by the Millstein Center for Corporate Governance and Performance at the Yale School of Management in 2008.

Contact:

Amy Schmitz
amyschmitz@sandiego.edu
(619) 260-4658