Intel (NASDAQ:INTC) announced the election of Jim Goetz to the company’s board on Nov. 14. While the news did little to move INTC stock, I believe it will benefit the company in the long-run.
Intel’s Board Is Very Young
Jim Goetz brings experience and talent to the board while keeping the panel’s average age on the younger side. Goetz is 54. He is the sixth new independent director to be added to the board since the end of 2015.
“Jim has a keen understanding of how technology is evolving and a strong track record helping technology companies capitalize on disruptive innovation,” said Intel Chairman Andy Bryant. “Jim has helped create and grow a number of technology companies and product lines to market-leading positions, both as an entrepreneur and as an investor. Jim’s technical insight, substantial operating experience, growth mindset, and deep private and public company board experience, all will further strengthen Intel’s board.”
While silver-haired individuals were once in high demand by Fortune 500 companies, I applaud Intel for opting for youthful exuberance over age and more experience.
The average age of Intel’s board is now 58.4, up from 58.3.
That’s because Workday (NASDAQ:WDAY) CEO Aneel Bhusri, who served on Intel’s board since 2014 and was its lead independent director, stepped down from the panel on November 1. Bhusri, according to Intel’s proxy, is one year younger than Goetz.
By comparison, the average age of IBM’s (NYSE:IBM) board of directors is 64, a full six years older than the Intel board.
I don’t think it’s a coincidence that, over the past five years, IBM stock has delivered an annualized total return of just 0.18%. Over the same period, Intel stock has an annualized total return of 12.94%.
Serving on the board of a Fortune 500 company takes time and energy. While diversity, in terms of gender, race, etc., is critical to the performance of a company’s stock, I also believe that the lower the average age of a board, the better served shareholders will be over the long-haul.
That’s not to say I believe in preventing people in their 70s from serving on boards.
But the demands on board members today are so high that age can play a factor in the success or failure of boards.
The Findings of Corporate Boards
According to a December 2018 article from World Economic Forum contributor Kiran Aziz, half of the members of global workforce are millennials. As a result, younger, more tech-savvy board members are in demand to serve on corporate boards.
“Companies are starting to recognize the need for younger board members, who can relate to their peers,” Aziz wrote.
However, a PwC report on age diversity in the boardroom found that just 6% of the directors serving on the boards of S&P 500 companies are under the age of 50. Intel has one board member under 50, five in their 50s, three in their 60s, and one over 70.
The most significant finding of PwC’s report is that younger board members tend to bring different skills to the board room, skills that can accelerate companies’ growth. Furthermore, 95% of directors 50 and under have active careers, which means they’re plugged into what’s happening in their fields of expertise.
Interestingly, 37% of directors under the age of 50 are women, while overall 24% of those serving on the boards of S&P 500 companies are women.
The Bottom Line on INTC Stock
In mid-October, I argued that Intel’s free cash flow makes INTC stock a buy.
The fact that Intel’s board is young also makes it an attractive stock to own for the long haul.
My only pet peeve is that only two of Intel’s ten board members are women. In this day and age, despite the reality that more men work in tech than women, it’s got to do better.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
