Corporate India's boards get younger, but top companies stick with experience

Corporate India’s boardrooms are getting younger – but the country’s top listed companies continue to buck the trend.

The average age of directors across NSE-listed companies has declined to 56.54 years as of August 4, from 58.92 years a decade ago—as of March 31, 2017—while the number of board seats held by those under 40 has more than tripled, showed data compiled for ET by primeinfobase.com.

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However, boards at Nifty 100 and Nifty 500 companies have grown marginally older, with their average age rising to 61.28 years and 60.5 years, respectively, as of August 4, reflecting a continued preference for more experienced directors.

Those under 40 held 2,261 directorships across all 3,003 NSE-listed companies as of August 4, more than triple the 750 directorships recorded across 1,577 companies as of March 31, 2017. The surge is more evident among independent directors. The number of under-40 independent directorships across all NSE-listed firms surged more than fourfold to 1,040 as of August 4, from 230 as of March 31, 2017.

The data points to a broader shift towards younger directors.

Overall, directors under 40 currently make up more than 10% of all directorships at NSE-listed firms, up from 6% a decade ago. Directors under 45 comprise nearly 17% of all directorships, up from 11% a decade ago.

The trend, however, is far less pronounced at the top. Nifty 100 companies have just 19 directorships held by those under 40 – about 2% of the total 959 directorships – up from 12 (1.1%) out of 1,082 a decade ago.

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Monica Agrawal, chairperson and country head-India at global consultancy Sheffield Haworth, said this reflects the maturity stage of Indian companies.

“The Nifty 100, 500 are more mature companies, and they have more experienced boards,” she said. “Therefore, they like to hire more of their type and vintage. New-age companies are actually looking at board members they feel can add more value on a domain-specific perspective, younger AI leaders, younger tech leaders, younger marketing and digital folks.”

That, she said, is the biggest reason for the age gap.

“Even on the board searches that we do, the typical age profile for Nifty 100 companies is folks who are between age of 60 and 65,” she said. “For younger or new age companies, they’re okay for anybody who’s between the age of even 45 till about 60.”

The contrasting trend is primarily a composition effect, said Pranav Haldea, managing director, Prime Database Group.

“The sharp increase in the number of listed companies over the last few years, particularly younger promoter-led and new-age businesses, has brought down the overall average age of boards,” he said.

“In contrast, Nifty 100 and Nifty 500 companies continue to place a premium on experience, with board refreshment largely occurring through seasoned industry leaders and former CXOs rather than younger professionals," Haldea said.

Board veteran Shailesh Haribhakti, chairman of Shailesh Haribhakti and Associates Chartered Accountants, said this is largely because Nifty 100 and Nifty 500 companies are more complex and require experience gained over multiple business cycles to maintain balance.

“Disruption can be so swift and all-consuming that you need a little more careful evaluation to counter,” he said.