Yahoo Finance Major NC companies relax mandatory retirement ages for board directors, CEOs
Age limits in American politics are rare. No such caps exist to be president, serve in Congress or sit as a federal judge.
If either Joe Biden or Donald Trump is elected this November, they will be the oldest U.S. president to begin a term in office. In North Carolina, judges have retirement ages, but most other elected officials do not.
However, mandatory retirement ages are commonplace among corporate boards of directors. In 2023, 69% of boards for companies on the S&P 500 set required retirement ages, according to a report from the consulting firm Spencer Stuart.
The list includes many of North Carolina’s largest corporate employers. IBM and MetLife expect their board directors to retire at 72 years old. Pfizer sets its age at 73. Four of the state’s major banks — Bank of America, Truist Financial, Wells Fargo, and First Citizens Bank — each have directors retire by age 75.
“There’s limited number of seats on the board, and so these retirement ages just allow for good, natural turnover,” said Sekou Bermiss, a professor of strategy and entrepreneurship at the UNC Kenan-Flagler Business School.
Companies have always had the discretion to keep directors past their retirement thresholds. And many have pushed back their retirement ages in recent years.
Under the Age Discrimination in Employment Act of 1967, it is illegal to enforce mandatory retirement ages for most workers at companies with at least 20 employees. However, the law exempts “Bona fide executives or high policymakers,” thereby allowing mandatory retirements for such positions to begin at age 65.
NC companies push back retirement ages
A concern surrounding older board directors isn’t age itself, said Xu Jiang, an accounting professor at Duke University’s Fuqua School of Business; the life and profession experience these members bring to companies can be a benefit. Instead, Jiang argued it’s the length of service that can cause issues.
“Research has shown that if board members stay longer when the current CEO is in place, they are more likely to get entrenched with management and not perform their duties with shareholders,” Jiang said. “Board members who spend more time with the CEO tend to become yes-men.”
Board directors oversee corporate governance and strategic planning. They work with senior executives, including the CEO, to represent shareholder interests in publicly traded companies. Board members serve part-time, but at larger corporations, they earn six-figure salaries.
Typically, directors have had separate careers as high-ranking executives, government or military officials. Companies recommend individuals to serve on their boards, and shareholders ultimately elect them.
Like Congress, corporate boards are getting older. The percentage of directors between 66 and 70 years old increased from 20.8% in 2019 to 24.1% last year, according to data from the research firm The Conference Board and analytics firm ESGUAGE. Within the same period, the percentage of directors in their forties fell.
As the wealthiest individuals in the U.S. enjoy rising life expectancy, the parameters for appropriate retirement ages have shifted, too. Executives are living longer and working longer. Some argue their experience is hard to teach.
In 2018, Bank of America increased its directors’ retirement age from 72 to 75 to “expand the available pool of potential director candidates and maintain a balanced mix in the length of director tenures.”
As of at least 2018, Cisco’s policy stated no person could be elected to its director board after their 70th birthday. Today, the company says its board will “take into consideration the age” of anyone 72 or older who seeks to be elected, reelected or nominated to the board.
Since 2008, Wells Fargo has elevated its mandatory board retirement age from 65 to 72 to 75. The company has also eliminated any age retirement policy for its chief executive officer.
Truist Financial’s board retirement age is 75, up from 70 in 2008. The Charlotte company has also ended its CEO age requirement.
Some companies, like Lenovo, don’t have required retirement rules. With its North American headquarters in Morrisville, Lenovo instead has a third of its directors retire at each annual general meeting, though they can be reelected.
Fidelity Investments, which has around 8,300 employees in North Carolina, is privately owned and declined to share details on whether it has a board retirement age.
“Our Board of Directors represents a variety of backgrounds, experiences and skills that best serves the needs of our customers, associates and business,” a Fidelity spokesperson said.
And at the Cary software analytics company SAS Institute, 81-year-old CEO Jim Goodnight is one of two board members along with the firm’s other cofounder, 76-year-old John Sall.
“SAS does not have a policy on mandated retirement age for our Board,” company spokesperson Shannon Heath said in an email. “Such a mandate is not a common practice among private companies like SAS.”
Retirement policies for executives are less common, Jiang said.
“Most S&P 500 companies, they don’t have a specific policy,” he said. “But, it is very common for CEOs to actually retire around that age (late 60s to mid 70s.)”
There are notable exceptions. Stephen Schwarzman remains CEO of the investment firm BlackRock at 77. And Warren Buffet is the CEO of Berkshire Hathaway at 93.
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