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Shareholders sue Alphabet’s board members for protecting senior execs accused of sexual harassment

5 min read

Alphabet shareholder, James Martin, filed a lawsuit yesterday, against Alphabet’s board of directors, Larry Page, Sergey Brin, and Eric Schmidt for covering up the sexual harassment allegations against the former top execs at Google and for paying them large severance packages. As mentioned in the lawsuit, Martin sued the company for breaching its fiduciary duty to shareholders, unjust enrichment, abuse of power, and corporate waste.

“The individual defendants breached their duty of loyalty and good faith by allowing the defendants to cause, or by themselves causing, the company to cover up Google’s executives’ sexual harassment, and caused Google to incur substantial damage”, reads the lawsuit.

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The lawsuit, filed at the San Mateo County court, San Francisco, seeks major changes to Google’s corporate governance. It calls for the non-management shareholders to nominate three new candidates for election to the board, and elimination of current dual class structure of the stock, which in turn, would take away the majority of the voting share from Page and Brin. It wants the former Google executives to repay the severance packages, benefits, and other compensation that they received from Google. Additionally, it also seeks for the Alphabet directors to pay for the punitive damages caused to Alphabet due to their engagement in corporate waste.

Apart from the lawsuit filed by Martin, Alphabet’s board got hit with another lawsuit this week, on behalf of the two additional pension funds, the Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund, who own the Alphabet stock. The lawsuit makes similar allegations like the one filed by Martin, accusing Alphabet’s board members of ‘breaching their fiduciary duties by rewarding male harassers’, and ‘hiding the Google+ breach from the public’.

The news of Google paying its top execs outsized exit packages first came to light back in October 2018, when the New York Times shared its investigation on sexual misconduct at Google. It alleged that Google had protected Andy Rubin, creator of Android, and Amit Singhal, ex-senior VP, Google search, among other senior execs after they were accused of sexual misconduct. Google reportedly paid $90 million as an exit package to Rubin along with a well-respected farewell. Similarly, Singhal was asked to resign in 2016 after accusations of him groping a female employee at an offsite event surfaced in 2005. As per the NY times report, Singhal received an exit package that paid him millions. However, both, Rubin and Singhal, denied the accusations.

As a part of their response to Google’s handling of sexual misconduct, over 20,000 Google employees along with vendors, and contractors organized Google “walkout for real change” and walked out of their offices back in November 2018 to protest against the discrimination, racism, and sexual harassment encountered within Google. The employees laid out five demands as part of the Google walkout, including an end to forced arbitration in case of discrimination and sexual harassment for employees, among others. In response to the walkout, Google eliminated its forced arbitration policy in cases of sexual harassment, a step that was soon followed by Facebook, who also eliminated its forced arbitration policy. Sundar Pichai, CEO, Google, wrote a note that where he admitted that he’s ‘sincerely sorry’ and hopes to bring more transparency around sexual misconduct allegations.

The ‘Google walkout for real change’ Medium page responded to the lawsuit today, stating that they agree with the shareholders and “anyone who enables abuse, harassment and discrimination must be held accountable, and those with the most power have the most to account for”.

The response also states that currently, a small group of “mostly white” male executives makes decisions at Google that significantly impact workers and the world with “little accountability”. “We have all the evidence we need that Google’s leadership does not have our best interests at heart. We need to change the way the system works, above and beyond addressing the wrongs of those who work within the system,” reads the post.

The lawsuit filed by Martin partly relies on non-public evidence i.e. Alphabet’s board meetings in 2014 (concerns Rubin) and 2016 (concerns Singhal), that shows the board members discussing severance packages for Rubin and Singhal. However, this part was heavily redacted from the public on Google’s demand. Both the meetings, the full board meeting along with the leadership development and compensation committee meeting, are covered, in the evidence that shows approved payments to Rubin.

The lawsuit states that Google directors agreed to pay Rubin because they wanted to ‘ensure his silence’. This is because Google feared that if they fired him for cause, then he would publicly reveal all the details of sexual harassment and other wrongdoings within Google. Moreover, Google also asked the victims of sexual harassment to keep quiet once they found out that the sexual assault allegations were credible.

“When Google covers up harassment and passes the trash, it contributes to an environment where people don’t feel safe reporting misconduct. They suspect that nothing will happen or, worse, that the men will be paid and the woman will be pushed aside”, quotes the lawsuit.

For more coverage, check out the full suit filed by Martin and the two pension funds.

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