CEO ages at hire

by  Tyler Cowen in

This is a profound trend. The average age of incoming CEOs for S&P 500 companies has increased about 14 years over the last 14 years.

From 1980 to 2001 the average age of a CEO dropped four years and then from 2005 to 2019 the averare incoming age of new CEOs increased 14 years!

This means that the average birth year of a CEO has not budged since 2005. The best predictor of becoming a CEO of our most successful modern institutions?

Being a baby boomer.

Here is more from Paul Millerd.

Comments

Hazel Meade

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More evidence that there really is an old boys network. And that social networks really matter.

derek

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The CEO represents shareholders, so it is also indicative of the investor age and who they consider suitable.

So basically

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Mutual fund and pension fund managers.

Evidence

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Or evidence of better recruiting and hiring practices? The best candidates for the job are selected more often.

Or maybe it's evidence of a global cabal of boomers?

Or maybe it's evidence that younger people have a preference for other types of work?

Or maybe it's evidence for .insert your favorite ideology here.

JWatts

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"More evidence that there really is an old boys network. And that social networks really matter."

You mean an old boys network that suddenly showed up 14 years ago?

International Pants Apparatus

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Amazing that you were able to deduce gender from the chart. Nice work!

The Dweeb Above This Comment Lacks Apparatus in Pants

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The gender percentage of CEOs will shock you, IPA. Shock and horror.

raj

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I have no issue with the idea that there is an old boys club, but it isn't at all clear to me why it should have aged so dramatically. I mean, given that there was also an old boys club 14 years ago.

Mark Z

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That came into existence in the mid 2000s? Why were they putting CEOs out to pasture once they hit their late 50s before that?

M

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Maybe we had a revolution on age discrimination over the last 14 years, and these results reflect less advantage due to bias, not more.

Surely if so, the Woke can't complain that this is bad?

The trend line doesn't look like it is 14 years over 14 years though, more like 10. I'd like to see change in measures of dispersal as well.

M

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Some of this may also be that CEO has become a less attractive big money job relative to consulting income that peaks at young ages, so the ones still in it tend more to be Boomers and Silents who got on the CEO train early in life.

We're assuming that this is due to filters preventing post-Boomers from advancing, but it may be that they are advancing, but not within the CEO path. Tyler and Alex have frequently made claims that CEO pay does not keep pace with "value creation", and it may be that younger folk who previously would have aspired to CEO-dom also feel the same way (whether or not this is a misconception on their part!).

Hazel Meade

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Also it will be super interesting to see if boomer favor their millenial kids in handing over succession - if the average CEO age drops 20 years in the next decade or so it may indicate they are skipping Gen X and favoring their own kids (millenials being the baby boomer "echo").

Mr_B

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Gen X will remain the invisible generation.

Boomer CEOs will stay in power until they die.

RPLong

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Better check that math. Gen-Xers are the children of Baby Boomers. Some Millennials are, and some aren't.

Basically incorrect

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Obviously the oldest boomers could have had kids that would be the tail end of Gen X, but speaking 'generationally' Hazel is correct.

The Boomers are generally thought to be those born from 1946 to 1963, Gen X 1964 to 1979, and Millenials 1980-1996. The Boomers and Millenials are big cohorts, lots of parents having lots of kids. Gen X is a smaller cohort, being mainly the kids of the 'Silent Generation' (1928-1945) which was also a smaller cohort.

Sure, some of the Boomers born in 1946-1948 surely had some kids born in the 1970s. But the generational math is basically Boomers are the parents of Millenials, Gen X the parents of Zoomers (Gen Z, 1997-?)

I am a Gen X parent of two Gen Z kids, and I've looked into this stuff way too much LOL

RPLong

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This is crazy. I have three siblings. We're all Gen-Xers, and we're all born to the same two Baby Boomers. All the fellow Gen-Xers I knew growing up were like me, children of Boomers.

I don't deny that some overlap exists, but the way you're looking at it assumes that the Silent Generation and the Baby Boomers waited as long to have children as later generations have. Not so.

It's not so much crazy

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As it is fuzzy and inexact. Is someone born in 1979 really so different from someone born in 1980? 1962 vs 1964? Basically the big population bumps are middle of Boomers, middle of Millenials.

But yes I was unfair to say you were 'basically incorrect'. It would have been better to say Hazel was 'basically correct' calling Millenials the children of Boomers.

JWatts

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"Sure, some of the Boomers born in 1946-1948 surely had some kids born in the 1970s."

My parents cohort were born in the early 50's and had kids in the late 60's/early 70's. By age 25 most of them had a couple of kids. Growing up most of my friends parents were roughly 20 years older than we were.

M

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Yeah, but the central point of relevance, getting back to Hazel's idea, is that as 15 year generations don't line up with 20-25 year reproductive spans, about 1/2-1/3 of "Boomers" kids will be "Gen X". So if there was any effect of the favouring of "Boomers" kids as she postulates, we would already see it.

I'm not so sold either than this isn't due to expansion in dispersal either - this may be due to a modest uptick in 80+ CEOs now compared to what had previously, explaining the whole phenomenon, and if so, those are gonna be "Silents".

Ted Craig

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I'm starting to wonder if we're going to have a Gen X president or if it will skip from Boomers to Millennials.

Captain Slime

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The Silent Generation never sat in the Oval Office. But they did walk on the Moon.

JayT

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Biden and Sanders still have a chance to represent the Silent Generation!

Javier Perez de Quaoar

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Geezerhood is no obstacle. Given the lousy democratic field I think it's time for Jimmy Carter to announce. CARTER 2020!

Ricardo

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Generational definitions are silly and arbitrary. Barack Obama was 13 years old when Saigon fell but qualifies as a "baby boomer" for those who define it as people born between 1946 and 1964.

Mark Z

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Given that CEOs don’t name their successors like Mafia bosses, we can safely assume the answer is no. Even most large privately owned firms don’t have family members as CEOs. In fact, nepotism is surprisingly hard to do well for executive positions in the modern world: even Mafia bosses almost never manage to get their sons to succeed them. And when they do, it doesn’t last long.

EverExtruder

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I wonder if this counts as evidence of stagnation of sorts...just one more data point among many. Harkening back to another Tyler post on 'increasing complexity' of tasks could you not view this metric as representative of experience trumping knowledge/innovation, aka the 'risk off' play? The older, the wiser, the more you've been there before, the more your network is strategically positioned to help you out of jams that knowledge and innovation can't.

At least for me, that's what I can see in this graph, that and an understanding that 'scaling' can only take you so far.

Blimey

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"The older, the wiser, the more you've been there before, the more your network is strategically positioned to help you out of jams that knowledge and innovation can't."

Yes but taken to the degree seen today it borders on corruption. The banks that deserved to fail couldn't because they found their "network strategically positioned" in the Congress and the White House.

bryan willman

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I wonder how much this a kind of "politics of dependability" issue - that key stakeholders (large shareholders, boards, key employees) won't tolerate a CEO who they don't find predictable in certain key ways (one of which, oddly, might be support for new markets.) In other words, they might want a "pirate captain" - but *their kind of* pirate captain.

This isn't unique to being a CEO. Note that for a number government certs (for example being an A&P mechanic) you have to show some period of working experience. You'd can't pass a test and check (like you can for pilot!) - you have to serve through a kind of apprenticeship.

Likewise, since the colgan crash, you can't be an ATP (airline pilot) without some 1500 hours of flying experience (very expensive all but legally impossible to get in less than about 2 years.)

In short, for many jobs, you have to have Reassuring History that you are the Right Kind of Captain - even for a Pirate ship.

Paul

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OK boomer! In your face, millennials!

More like...

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In your face Generation X. The millenials are still kinda young to be CEOs.

Glenn

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Proof of, but I hope the last throes of MAGA; death rattle of old WASPs...

Danno

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Ok. Now what is the median age?

Tom T.

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I had the same thought. There might be a couple of 99-year-old hires who are skewing the distribution.

peri

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That's hard to square with the earlier thread where people were saying per pupil expenditures rising steadily for decades reflected an improved or at least deservedly more costly K-12 education. Boomers should be at a disadvantage by this logic, with their bargain-basement schooling.

My Boomer friend (1955) went to high school in the RGV. The biology teacher used to lead them on a field trip to the mountains of Mexico to tag butterflies. She herself went into STEM, avant la letter, twice, leaving her first career to retrain and join the exciting new world of computer programming. Was never out of work for as much as a day as a programmer, for thirty-odd years. Indeed she's worked since she was about sixteen, though some of her early jobs (relieving home health caregivers as a kid, spending the night with the invalid for the princely sum of $1; manufacturing artificial fireplace logs) were maybe not that inspiring. I can only imagine how much better she would do now with the river of Title 1 money flowing toward Valley schools. And without that cursed Boomer sense of entitlement ...

Lol

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"Boomers should be at a disadvantage by this logic, with their bargain-basement schooling."

Are you retarded?

peri

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Might well be, as too dim to grasp how Boomers, being graduates of such indifferent schools, back in the day when we evidently hadn't the least idea how to rate what was appropriate to spend on public schools, could have maintained their Machiavellian hold on power (being so ill-educated and all).

Lol

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If you think it is brains the boards are after? Do you also it was brains which kept all thosr commissars on job from 1917 to 1991?!

peri

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Take Nancy Pelosi. Not sure if she's a Boomer, or a Silenter - but think of all the eager young people who have passed through her employ, none able to take the reins of power from her. She doesn't seem all that bright, to listen to her - but maybe she's the brains of the outfit. Ditto even Trump, even as he appears to be laboring under an addiction, or some mental disturbance, ditto Bernie the cranky get-off-my-lawn socialist. Is there some baseline competence or commonsense or canniness that goes with having grown up in another America, that is gone? There's the young mayor - who totally squandered his campaign, and the goodwill America felt, which was akin to relief: our would-be first gay president looks and acts like an Eagle Scout. He should be tucking those oldsters into bed.

Lol

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You think Trump vs Clintonnwas some kind of intellectual Clash of Titans?! Pelosi controls a corrupt machine. No other explanation is necessary.

peri

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It could be a clash of mediocrities and it would still leave hanging the socially awkward question, is there something wrong with the kids?

Ragnar Danneskjold

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I wonder if there's a bias in this measurement. One, the S&P500 may be older companies than the overall market. I thought there are a number of new IPO companies with CEOs younger than traditionally has been the case. But they probably don't immediately go into the S&P500. In addition, these technology companies don't generally "hire" CEOs, but rather go public with a founder or cofounder as CEO. Sometimes these "idea" founder types are happy to later hire an "old hand" CEO to do the gruntwork that a CEO has to do.

There are other possible factors - 20 years ago the cool thing to do was do a join a start up tech company rather than go to get an MBA or wear suits to work or whatever (About 46% of CEOs have MBA degrees, Harvard the largest single school). It's also possible that the prior generation of CEOs are staying in their jobs longer (retired older) and often replacement CEOs are hired by promotion from within (about 70% are internal hires). If the retiring CEO is older, then the person who has been waiting for that job will also be older.

There was also a spike up in age for CEOs in 2019, the biggest spike in the past 15 years, which seems weird.

Here is the ultimate source of the data, without the whining.
http://www.cristkolder.com/media/2438/volatility-report-2019-americas-leading-companies.pdf

Hopaulius

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The article linked by TC is vague about what is meant by “new” or “incoming” CEO. It’s possible that they are including in their statistic CEOs who have gone from one company to another. If this is the case, one factor not mentioned is that there are fewer startup companies to generate CEO positions. Overall, the article is a hit piece on boomers, gathering and interpreting statistics in such a way as to declare that the boomers have rigged the economy to benefit themselves and deny hope to younger generations.

Bill Kilgore

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My first guess on this one- the priorities of the CEO have changed pretty dramatically over the last couple decades. Once, you wanted someone to actually run the businesses, thus a younger, more dynamic figure made sense.

Currently, your CEO of a publicly traded company is spending 99% of his time goos, er "monitoring" the stock price, or essentially managing his companies relationships with big investors. For that job, an old guy who knows everyone, and has worked with them all, makes sense.

Bill

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What surprises me about the chart is that, from my experience with CEOs, most are out between the ages 58-62. And, I did find this research: "On average, CEOs step down at age 62, relatively young by today's standards." " https://hbr.org/2018/09/the-ceos-guide-to-retirement

So the chart says they are getting hired at 58, and other evidence is that they retire at 62.

???

Bill

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You must be watching Putin with his shirt off again.

Did you know that one disinformation tactic is to disrupt rational discourse.

Javier Perez de Quaoar

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It's interesting this comment gets to stay up considering that some rather tame juvenilia of mine was deleted last week.

Steve Sailer

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Peak of the Baby Boom was around 1957 so a large cohort to draw from.

Steve Sailer

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A better way to do this would be to model % of annual birth cohorts hired as CEO.

My impression from other fields is that the 1940s-born tended to be especially lucky because (e.g., 3 Presidents born in 1946) because few born in 1930s, allowing an open field for young men to get ahead.

Steve Sailer

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One possibility is this trend reflects highly capable Late Boomers getting stuck below the CEO rank behind more privileged Early Boomers until recently.

Beans

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Not just fewer born in 1930s but a major World War helped cull the field so to speak. Boomers benefited from being bigger than the generation before and the generation after and discovered their political power earlier than the other generations due to the draft.

John J

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Someone told me of a set of surveys GM took of Corvette owners. Survey 1, the average age of the owners was 55. Survey 2, taken 5 years later, the average age was 60. Not a good trend either.

Hopaulius

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Ditto the Harley. A sea of gray heads.

Fred

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If I were on the search committee of a Fortune 100 company, I would look for a 50-55 year old. Old enough to have experience and maturity, young enough for energy and passion.

Peter

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This is what happens when there is a lack of new business creation. Gen-X, Y, and Z need to go out and strike out on their own otherwise they must settle for terrible wages working for incumbents. Unfortunately they are saddled with mortgage-level debts when they graduate college and compared to the Boomers will have to pay another even larger mortgage to live near where they work. Not to mention regulations galore that 50-100 year old businesses didn't have to worry about until they got much bigger. The remaining stragglers are picked off by automation and outsourcing which is very efficient at removing entire rungs from the economic ladder. The global protests and populist revolts including the election of Trump happened for a reason.

Big business and private equity should do their part to invest in the next generation and create more opportunity. Cutting costs, mass layoffs, and playing it too safe is slowly sleepwalking the world into a powder keg situation. In the age of cheap money, they can't find any ideas that could grow even 6-7%? There's got to be at least a dozen promising leads in each and every industry being overlooked as we speak.

Bam Bam

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The median age of the Senate is also 60 years old. What a coincidence that sexagenarians are all over the levers of society imposing their outdated views on everyone. Still better than the Presidency which is contested by a gaggle of septagenarians.

Jason

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I've followed Tyler's work for many years. Interested in engaging

Jason

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If anybody is interested in hearing a podcast with Paul Millerd, we interviewed him a while back on the future of work

http://bothand.libsyn.com/27-the-future-of-work-with-paul-millerd

JMCSF

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Connor Sen made this point but just like the Great Recession derailed millennials' career launch, it (and the 02 recession) also derailed many Gen X careers who otherwise might have developed to be CEO candidates.

Andrew E

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This is fascinating. Compare this trend to the trend in sports where competition is less fixed. Sports teams are choosing much younger people to run their teams.

Mr. Econotarian

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58 is the new 45!

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