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Former US Vice President Al Gore (75 years old) is stepping down. She was dropped from Apple’s board of directors because of age restrictions the company imposes on its directors, and she also raises the issue of age discrimination in corporate America.
By no means are you 75 years old – or any age over 65 – Automatic exclusion of the United States Corporate leaders.
Consider this: The top 10 CEOs of companies in the Russell 3000 — led by Berkshire Hathaway’s Warren Buffett — ranged in age from 84 to 91 in 2022, according to The Conference Board and environmental, social and governance data analytics firm ESGAUGE. As of this writing, they are all still in their jobs.
In fact, mandatory retirement ages are more the exception than the rule in corporate America, and do not exist for US legislators, surgeons, or many other jobs. But they are present in many public safety professions.
Here’s a look at where they are most and least common, and why.
Boards of directors are likely to have mandatory retirement age policies
The existence of a mandatory retirement policy for directors is left to the discretion of individual companies. But the majority have it.
“In 2023, 69% of (S&P 500) boards reported having a mandatory retirement policy — down one point from 2022,” according to an August 2023 report from executive search firm Spencer Stuart.
The report indicated that among those who follow such policies, the vast majority (97%) set the retirement age at 72 years or older, while 57% set it at 75 years or older.
“Director retirement policies remain very common in corporate regulatory documents, as the need to modernize the board continues,” said Matteo Tonello, a managing director at the Conference Board, which advises members on governance issues.
This is largely due to boards needing to be diversified in many ways, Tonello said, citing gender and ethnic diversity as well as diversification in terms of qualifications and skills, such as experience in emerging technologies.
Tonello said it is difficult to determine how many companies impose mandatory retirement ages for CEOs and other senior leaders.
For one thing, some companies may have retirement age policies on paper but will ignore them when they want to keep someone.
“Boards often override it because of the unfavorable circumstances the company may face when the policy is enacted,” he said..
Those circumstances could be a company in crisis (or conversely, performing very well); Tight labor market for top talent; Or economic recession.
to For example: Target CEO Brian Cornell was 63 in 2022, when he and the board agreed he would stay on for another three years. The board said it would scrap its policy of discussing a CEO’s retirement when he turns 65.
And in 2021, in the midst of the Boeing 737 MAX crisis, Boeing CEO Dave Calhoun turned 64 years old. The company’s board of directors waived the mandatory retirement age of 65 and announced it would extend it to 70 for Calhoun.
But waiving a mandatory retirement age policy for one executive doesn’t mean the board won’t revive it for someone else.
“These policies have often disappeared from corporate governance principles or other regulatory documents. (This) does not mean they are invalidated, as there is no obligation to disclose them. Many boards may choose to keep them in place informally, (and) ) Use them only when appropriate.
Again, boards may not have to make the call often because many CEOs leave the company well before traditional retirement age. “The average age of the current CEO was 56 in 2023, down from more than 63 in 2017,” reports Challenger, Gray & Christmas, which tracks CEO exits.
Thanks to federal and state age discrimination laws, it’s generally illegal for companies to impose a mandatory retirement age on rank-and-file employees, said Thomas McKinney, a partner in the employment law firm of Castronovo & McKinney, LLC.
The Age Discrimination in Employment Act applies to all businesses with 20 or more employees. But the state could decide to apply the ban to a wider range of employers if it so chooses. For example, McKinney noted that New Jersey prohibits all companies, regardless of the number of employees they have, from imposing a mandatory retirement age on workers.
So why should companies kick their CEOs and board members out the door after a certain age?
There is an exception in the ADEA that allows companies to set the retirement age for anyone who is 65 or older if they are a loyal executive or high-level policymaker (which includes senior executives other than CEOs or board members) who will receive a non-forfeitable pension. Benefits of at least $44,000 per year.
Individual states may set minimum retirement benefits.
However, the ADEA does not apply to organizations of all types.
For example, McKinney points out that it does not cover partners and shareholders in closely held companies. So doctors or lawyers who work in a small practice may be required to surrender their business ID card when they are 65 or older.
but, There is no official required retirement age for surgeons when it comes to physical operations on patients. But the American College of Surgeons issued a statement in 2016 — which the American College of Surgeons still supports today — recommending that surgeons, “beginning at age 65 to 70,” voluntarily seek physical, visual, and cognitive testing, among other measures.
Many other public safety professions have mandatory retirement ages. For example, under federal law, commercial airline pilots may not fly commercially after age 65 (although there is legislative pressure in Congress to raise that age to 67).
Federal and state police officers are typically subject to mandatory retirement age as well, McKinney said.
In New York State, for example, state police officers with at least 20 years of service must retire after they turn 60. But US Capitol Police officers who hold the same service must retire at 57, although in 2020 they were temporarily exempted from that requirement.
Other federal jobs subject to mandatory retirement age are “firefighters, nuclear materials couriers, air traffic controllers, and Customs and Border Protection officers,” according to the U.S. Office of Personnel Management.
Reasons behind the mandatory retirement age
There may be various stated reasons for having a mandatory retirement age, such as opening the way for young talent to have more opportunities. Or, in the case of boards, as Tonello points out, there is often a desire to diversify and fill roles with different types of experience.
But the reason behind retirement age policies is often just a knee-jerk assumption.
“What lies behind these mandatory retirement policies and laws is the assumption that an older person is not qualified, competent or productive,” said Mary O’Neill, an attorney for the Equal Employment Opportunity Commission.
Or, in the case of public safety functions, ““There is an assumption that age is related to safety and physical competence,” O’Neill said.
But all these assumptions are based more on “myths, fears and stereotypes” than facts, she said, noting that conducting individual employee assessments is a better way to determine competency of all kinds – physical, mental and psychological.
“There will be some people who are 33 years old who don’t have the ability to do a job if you do an individual assessment,” she said.
And some people who are 65 may not get the degree either. But some will.
For this reason, advocates for older workers, such as AARP, argue that all mandatory retirement ages should be eliminated, even for difficult jobs involving public safety.
“Many scientific and medical studies see no need for such discrimination on the basis of age,” the association notes in its latest policy book on employment issues.
“Public safety would be better served by periodically testing the suitability of public safety employees, regardless of age, rather than relying on arbitrary age restrictions.”