Joe Biden’s inauguration is a good occasion to reflect on rigid age limits. Why companies should not chase the old from the yard, but do better.
Isn’t it a paradox? In the US, a 78-year-old has just taken on one of the most stressful jobs in the world – and here in Germany, significantly younger supervisory board members are having to take their hats off in rows. Joe Biden’s start as US president is thus a good reason to discuss age limits. And that is what we have done.
The result: we are convinced that rigid limits of 70 or 72 years of age are an aberration. After all, medical progress is increasing the number of fit 80-year-olds. In addition, those who have formally aged are sometimes much younger in the head than representatives of the next generation – or can “compensate for speed deficits through greater care, experience or better risk assessment”.
The decisive criterion for retirement should therefore not be age, but board membership: After ten to twelve years, supervisory board members are generally part of the system they are supposed to oversee – and thus out of place.
The young savages on Germany’s supervisory boards
To give an example: Fresenius supervisory board chairman Gerd Krick (82) should have quit in his mid-70s from a corporate governance perspective – but not because of his age. The problem is rather that Krick moved from the boardroom to the supervisory board back in 2003. The upcoming handover to ex-DZ Bank CEO Wolfgang Kirsch therefore comes too late.
In addition, Gerd Krick has failed to bring young supervisory board members onto his board and to supplement the concentrated experience in a targeted manner – for example with digital expertise. Former Siemens board member Michael Sen, who is to be elected to the supervisory board in May, will be the youngster on the board at the tender age of 51.
Other grandees of their guild have done better. Back in 2013, Ulrich Lehner brought the then 37-year-old XING founder Lars Hinrichs onto the supervisory board of Deutsche Telekom(where he brought a breath of fresh air). U-40s also joined the supervisory boards of Kion and Indus. We are convinced that this will also make the old people better!
Unfortunately, many investors and shareholder advisors tend not to appreciate such effects. This is perfectly understandable: rigid age limits and other blanket criteria that they can simply tick off make life easier for them. But unfortunately, they do not make companies any better.