Small Decline in Average Tenure of Independent Directors
- The average tenure of independent directors on S&P 500 boards is 8.2 years, a slight decrease from 8.6 five years ago. The median tenure has declined as well in that time, from 8.4 to 8.0. When non-independent directors (such as the CEO) are included, the average tenure is 8.7.
- On the majority of boards, 62%, the average tenure of independent directors ranges from six to 10 years.
- 19% of boards have an average tenure of 11 or more years, compared with 22% in 2012. 19% have an average tenure of five years or less, up from 14% five years ago.
- The longest average board tenure is 19 years, and the longest-tenured independent director has served 43 years.
- 36% of independent directors have served on their boards for five years or less, 25% have served for 6-10 years, and 21% for 11-15 years. 18% of independent directors have served on their boards for 16 years or more.
Average Board Tenure
Director Term Limits Remain Rare Tool for Promoting Turnover
- 24 S&P 500 boards, 5%, specify a term limit for non-executive directors, a modest increase from last year when 19 boards (4%) had director term limits. 65% of boards explicitly state in their corporate governance guidelines that they do not have term limits, and 30% do not mention term limits at all.
- Of the 24 boards with a specific term limit, four cap director tenure at 20 years, one at 18 years, 12 at 15 years, five at 12 years, two at 10 years.
- Rather than set term limits or a mandatory retirement age, some boards report that they consider whether individual directors should be re-nominated during the evaluation process.
Boards with Term Limits*
*Data correct as of our May 19, 2017, cut-off date.
For the First Time, More Than Half of Boards with Mandatory Retirement Set It at 73 or Older
- About three-quarters (73%) of S&P 500 boards report having a mandatory retirement age for directors, which has remained consistent for more than five years. 11% report that they do not have a mandatory retirement age, and 16% do not discuss mandatory retirement in their corporate governance guidelines.
- Mandatory retirement ages have been increasing, with nearly all companies that have them (96%) setting mandatory retirement at 72 or older, compared with 67% 10 years ago.
- Among boards with a retirement age, 42% set it at 75 or older, an increase from 39% last year and 11% in 2007. Four boards have a retirement age of 80.
- The most common mandatory retirement age is 72, set by 44% of S&P 500 boards with a retirement age.
Mandatory Retirement Age
N = Boards that have set a mandatory retirement age: 358 for 2017, 354 for 2012, 376 for 2007.