Directors to Watch

It’s no secret that directors skew toward an older demographic. After all, most boards are looking for individuals who possess a career’s worth of experience and wisdom—executives who have battle scars and gray hair to prove it. In fact, the average age of today’s corporate director at a large company is about 60, according to research from executive compensation firm Pearl Meyer & Partners and the National Association of Corporate Directors (NACD). A recent trend, however, suggests that companies are looking for a few good men and women who aren’t part of the Greatest Generation or born during the Baby Boom. 

Two concepts are driving this shift: technology and diversity. The more that companies come to rely on technology—and just about every company is an Internet firm these days in one way or another—the more it will seek deep tech knowledge in the boardroom. That means young, Silicon Valley types who are in their late 30s or early 40s and possibly have already founded two or three companies. These individuals have been staples for some time on boards in technology-heavy industries like computing, media, and financial services, but now every company is looking for a technology edge.

The second catalyst, diversity, is being broadened beyond gender and race. Boards are looking for individuals with different perspectives and backgrounds. They want to tap into new ideas and avoid groupthink. “You want someone who is going to question the status quo, so a balance of newer directors who probe and those who have been around for awhile and really know the business, is a good thing,” says Rick Lacher, a managing director at investment banking firm Houlihan Lokey. “A lot of it is just smarts,” he says. “They are really bright and they get it, even without as much experience as others might have.”

Theodore L. Dysart, a managing director at executive search firm Heidrick & Struggles, says there is an increasing tendency to select younger directors. He says many boards are looking for board members with unique skills and knowledge in certain areas. “If you have niche expertise, you’re more likely to get on a board at a younger age.” For generalists, he says, there is a deeper pool, so companies have the luxury of picking from individuals with more experience.

While there are no hard and fast rules about how young is too young to be on a board, recruiters generally say that most companies have no problem considering candidates in their late 40s. Candidates in their early 40s raise eyebrows, and recruiters get a lot of pushback on candidates in their 30s. “Anyone who is under 45 is going to generate a lot of questions from clients,” says Dysart.

For a greater perspective into this trend, Directorship decided to take a close look at 50 directors under the age of 50 on the boards of Fortune 500 companies. We assembled an advisory committee of research partners and industry experts that included The Corporate Library, Heidrick & Struggles, Houlihan Lokey, Nasdaq, and Pearl Meyer & Partners, to help us select individuals who will be putting their mark on Corporate America for generations to come.

We’ve grouped these “Directors to Watch” into categories to define some of the most common proving grounds for youngish directors. Some are Stanford grads, like Jerry Yang and Larry Page, who changed the face of business with internet companies they started in garages and grew to behemoths. Many of them are former or current private-equity managers or financial whiz-kids, such as Gary Cohn at Goldman Sachs or Mellody Hobson, who resides on the board of Starbucks. “These are fields that have a true culture of meritocracy,” says Dysart. “You move ahead quickly based on your skills.” In other industries, typically older ones such as manufacturing, the ability to rise to the top is influenced more by tenure. Others are heirs of company founders and some are just quick studies. Retail companies including Wal-Mart, Target, and The Gap seem to have a disproportionate number of under-50 directors. The theory, according to the experts, is that these industries thrive on catering to new customers, fashion trends, and fads; having a few younger people as directors can help keep the board from becoming “clueless.” “You can’t have an aging customer base in retail,” explains Heidrick vice chairman Melanie Kusin.

If the old boys club is dead, the next generation of leaders is very much alive and kicking.