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Former US Vice President Al Gore (75) resigns Apple has age restrictions for directors that have led to them being demoted from the board of directors, raising the issue of age discrimination in corporate America.
Never 75 years old or older than 65 years old — U.S. automatic disqualifiers corporate leaders.
Let's think about it. The 10 oldest CEOs of Russell 3000 companies, led by Berkshire Hathaway's Warren Buffett, were between 84 and 91 years old in 2022, according to The Conference Board and ESG data analysis firm ESGAUGE. As of this writing, they all still have jobs.
In fact, retirement ages are more the exception than the rule in corporate America, and there are no retirement ages for U.S. legislators, surgeons, and many other professions. But many public safety professions do have them.
Here's a look at where they're most and least prevalent and why.
Boards are most likely to have a mandatory retirement age
It is up to each company's discretion whether to establish a mandatory retirement system for directors. But the majority have them.
“In 2023, [S&P 500] An August 2023 report from executive search firm Spencer Stewart found that boards reported having a retirement plan, down one point from 2022.
Among companies with such policies, the majority (97%) set the retirement age at 72 or older, and 57% of them set it at 75 or older, according to the report.
“Director retirement provisions continue to be very common in companies' organizational documents as the need for board renewal continues,” said David E., managing director of the Conference Board, which advises members on governance issues. says Matteo Tonello, who is working on the project.
Tonello said the main reason for this is that boards need to be more diverse in many ways, including diversity in gender and ethnicity, as well as in terms of qualifications and skills, including diversity in emerging technologies. He pointed out that it is becoming more common.
Tonello said it's difficult to quantify how many companies impose mandatory retirement ages for CEOs and other senior executives.
First, some companies may have written retirement age rules but ignore them if they want to keep someone employed.
He said that “boards often override policies because of the adverse circumstances that the company may face if the policy is activated.”.
In such a situation, the company may be experiencing a crisis (or, conversely, it may be doing very well). The labor market for senior talent is tight. Or an economic downturn.
for example: Target CEO Brian Cornell He would have turned 63 in 2022, when he and the board agreed to stay on for another three years. The board announced it would eliminate its policy of discussing retirement once a CEO turns 65.
And in 2021, in the midst of the Boeing 737 Max crisis, Boeing CEO Dave Calhoun The company's board of directors announced that Mr. Calhoun's 65-year retirement age will be waived and extended to 70.
But eliminating retirement for one CEO doesn't mean the board won't reinstate it for other CEOs.
“These policies often disappear from corporate governance principles and other organizational documents. [That] However, this does not mean that they have been revoked, as there are no disclosure obligations associated with them. And while many boards may choose to maintain them informally, [and] Use it only when it is convenient,” Tonello explained.
However, because many CEOs retire well before traditional retirement age, the board may not need to call them as often. Challenger, Gray & Christmas, which tracks CEO departures, reports that the average age of departing CEOs has increased from 63+ in 2017 to 56 in 2023.
Thomas McKinney, a partner at Castronovo & McKinney employment law firm, said federal and state age discrimination laws generally make it illegal for companies to impose a retirement age on their employees. He said there is.
Age discrimination in employment laws apply to all businesses with 20 or more employees. However, states could decide to apply the ban to a broader range of employers if they wish. For example, McKinney pointed out that New Jersey prohibits all businesses from imposing a retirement age on workers, regardless of the number of employees.
So, why is it okay for companies to let CEOs and directors retire after a certain age?
There is an exception to the ADEA that allows companies to provide benefits to bona fide executives or high-level policy makers (including senior executives other than CEOs and board members) who are 65 years of age or older and who stand to receive non-forfeitable retirement benefits. Retirement age can be set. Benefits worth at least $44,000 per year.
Each state may set lower thresholds for retirement benefits.
However, ADEA does not apply to all types of organizations.
For example, McKinney points out, it does not cover partners or shareholders of privately held companies. Therefore, doctors and lawyers working in small clinics may be required to submit proof of employment if they are over 65 years old.
but, There is no officially mandated retirement age for surgeons when it comes to physically operating on patients. However, the American College of Surgeons issued a statement in 2016, which the ACS still stands by, that requires surgeons to voluntarily undergo physical and visual examinations “starting at age 65 to 70.” It is recommended that cognitive tests be conducted.
Many other public security positions have a retirement age. For example, under federal law, commercial airline pilots can no longer fly commercially once they turn 65 (though there is a legislative push in Congress to raise that age to 67).
Federal and state police officers are also typically eligible for retirement, McKinney said.
In New York state, for example, state troopers must retire at age 60 after at least 20 years of service. But Capitol Police officers with the same tenure must retire at age 57, a requirement temporarily waived in 2020.
Other federal jobs eligible for retirement include “firefighters, nuclear material transporters, air traffic controllers, and Customs and Border Protection officers,” according to the U.S. Office of Personnel Management.
Reasons behind the retirement age system
A variety of reasons may be cited for establishing a retirement age, including opening up a pipeline of opportunities for younger talent. Or, as Tonello pointed out, in the case of boards, there is often a desire to diversify roles and fill roles with different types of expertise.
However, the underlying reasons for retirement age policies are often based on far-fetched assumptions.
“Behind these retirement policies and laws is the assumption that older people are less qualified, less capable, and less productive,” said Mary O'Neill, an attorney with the Equal Employment Opportunity Commission. .
Or if you work in public safety, ““There's this assumption that age has something to do with safety and physical ability,” O'Neill said.
But all such assumptions are based on “myths, fears and stereotypes” rather than facts, she said, adding that conducting personal assessments of employees is important for all aspects of physical, mental and psychological health. He pointed out that this is a better way to judge the ability of a species.
“If you evaluate them individually, you might have a 33-year-old who doesn't have the capacity to do the job,” she says.
Also, some people may not reach the grade even at the age of 65. But some people do.
That's why older worker advocacy groups like AARP argue for eliminating all retirement requirements, even for demanding jobs related to public safety.
“A growing body of scientific and medical research shows that this kind of age-based discrimination is unnecessary,” AARP notes in its latest position paper on employment issues.
“Public safety would be better served by regularly testing the physical fitness of public safety personnel, regardless of age, rather than relying on arbitrary age limits.”
