Corporate boards are still mostly white, mostly male - and getting even older

Corporate America's boardrooms have long been criticized for being too old, too white and too male. But while the race and gender makeup of corporate boards have come under scrutiny in recent years - with shareholders pushing companies to add women and minorities and the media calling out board homogeneity when companies try to tout equal pay - the age part of the "old boy's club" stereotype has gotten far less attention.

A new report from professional services firm PwC shows just how little age diversity there is among these pivotal figures who govern America's largest corporations. Directors under the age of 50 make up just 6 percent of the seats on S&P 500 boards - drop the age to 45, and it's less than 2 percent. There are more directors age 75 or older than those aged 50 or younger. And only a third of companies in the S&P 500 has at least one director under the age of 50 who is not also the company's CEO.

The report points to recent data from Spencer Stuart, the executive search firm, which even shows that the average age of a corporate director has actually gone up over the past decade, from 61 in 2007 to 63 in 2017. And it's also worse in the U.S. than elsewhere: Here, about 21 percent of directors are 70 or older; in other countries, 10 percent are at least septuagenarians.

That could start to shift, however, as companies are finally waking up to the benefit of having younger directors in the room.

"It's in the last 24 months, really, when [younger directors] have really popped in interest," said Paula Loop, who leads PwC's Governance Insights Center. "We're seeing a lot more focus around technology, cybersecurity, digital transformation and understanding social media and other ways of marketing." To get "fresh skills that are current today, it's going to be a sitting executive who can provide insight into what is going on in their day jobs," and those tend to be somewhat younger.

They're also increasingly recognizing how big a risk viral stories can be - the Starbucks incident in Philadelphia being only the most recent example - making directors with social media expertise more valuable in the boardroom.

"What you hear first is a desire for candidates with that 'digital native' in their profile," said Theodore Dysart, a vice chairman for the executive search firm Heidrick & Struggles. But "if you go and try to find someone who's an expert on social media, by definition, they're in their 30s or 40s at the high end. You can watch nominating committees start to squirm in their seat thinking about bringing people of that age in."

Meanwhile, the huge wave of millennial consumers is starting to reach their prime buying years, making familiarity with that group essential. And fewer sitting CEOs are serving on multiple boards as demands of the job have grown, forcing directors to look for younger nominees. As boards increasingly try to fill seats with more women and minorities, that's also likely to push the age of new directors lower, as the number of women and minorities in the most senior corporate roles remains stubbornly low.

PwC's own survey of corporate directors last fall shows that despite the lack of attention about the issue, 90 percent of directors say age diversity is important - more than said the same about either gender or race. And indeed, some companies have been adding younger directors: For instance, Kimberly-Clark elected OpenTable CEO Christa Quarles, now 44, to its board in 2016; her next youngest colleague is 53, according to the company's most recent proxy.

Recently, Estée Lauder elected Jennifer Hyman, the 37-year-old CEO of Rent the Runway, along with Jennifer Tejada, CEO of PagerDuty, 47, to its board, bringing its number of directors under the age of 50 to four. Her first public-company board seat, Hyman said in an interview she believes established companies are starting to turn to younger voices for their experience leading disruptive companies with less hierarchical workplace cultures.

"It was clear that they wanted to bring diverse and disruptive voices onto the board," she said in an interview. "When you are younger and you've had a less established career, you tend to think more in the white space of an industry instead of what can never work."

Many companies haven't been waiting for other directors to leave, but increasing the size of the board to add directors in their 40s or 50s: 62 percent of younger directors were added that way, PwC's analysis found. But Dysart said the desire for younger board members is even part of why some companies are changing their governance policies and setting up term limits that limit how long directors can stick around.

As that happens, he said, "I think people will get more comfortable with leaders who are a little younger." Up until now, companies without them who "brought someone in at their 40s is thinking that person could be on the board for 30-plus years."