Chief executives: fountain of youth versus wisdom of age

Last year, Joe Biden surpassed Donald Trump and Ronald Reagan to become the oldest sitting US president. At 78, Biden touts his advanced years as a selling point, telling Americans that with age has come ‘wisdom and experience’.

The White House is not the only office to welcome older occupants. America’s gerontocracy extends to corporate boardrooms too. Chief executive appointees have been steadily rising in age for more than a decade in the US. Appointments this year show no deviation from the trend.

The average age of a newly appointed S&P 500 CEO has jumped 10 years since 2005. Last year it was 54 — just one year younger than the average age of US presidents at inauguration. The average age of incumbent chief executives is even higher at 57 years.

For boards attempting to pick a new leader, experience is often held as a key qualification. Knowledge built up over years can feel like a safe bet. Berkshire Hathaway’s Warren Buffett flies the flag for nonagenarian leaders. Nor are under-50s the only group interested in changing corporate structures. Citigroup appointee Jane Fraser, 53, has already begun to shake up Citi’s work-life balance for employees.

Financial businesses especially tend to favour duration. At 60, the sector’s incumbent CEO age is higher than any other industry. Experience and connections will be important to Andrea Orcel, who was appointed chief executive of UniCredit in April. But Orcel’s 58 years make him younger than many of his banking peers. Jes Staley, chief executive of Barclays, is 64.

Rising executive ages follow demographic trends. But homogenous corporate leadership can pose a barrier to new ideas. The tech sector is notorious for prizing both innovation and youthful founders. Mark Zuckerberg, the youngest CEO in the S&P 500, is just 37 years old. The sector’s success means that on average, younger chief executives are outperforming their older contemporaries.

Data analysed by Lex shows that outsized gains for technology groups since the pandemic began has burnished the standing of younger CEOs with shareholders. However, the data is skewed by a few big outperformers such as Tesla, Etsy and L Brands, all of which are led by relatively youthful bosses.

The small sample size suggests that boards — where age is also rising — will continue to favour the virtues of experience over youth.

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