— Google board tried to cover up sexual misconduct, shareholders allege
— Shareholder lawsuits over sexual harassment are putting Google executives on the defensive
Alphabet directors provided big severance packages to accused executives to keep their conduct quiet, lawsuit says
Shareholders today filed a lawsuit against Google parent company Alphabet, arguing that the company had breached its duty to shareholders when it approved large exit packages for former executives after determining that there were credible allegations of sexual misconduct, theguardian report.
The suit was filed this morning in San Mateo Superior Court by Alphabet shareholder James Martin.
The suit seeks three new independent directors for the Alphabet board, and an end to the dual-class voting structure of the stock — moves that would greatly diminish the power held by co-founders Larry Page and Sergey Brin. It also calls for executives who received payouts to return them to the company.
It also seeks unspecified financial damages. Google did not immediately respond to a request for comment.
The complaint is the second such suit to be filed this week. Two pension funds filed a similar lawsuit in San Mateo Superior Court on Wednesday, the San Francisco Chronicle reported.
Minutes from board meetings obtained by attorneys for the shareholder reveal the personal involvement of Alphabet directors in behavior that has harmed the company, the plaintiff’s attorneys Ann Ravel, Louise Renne and Frank Bottini said at a press conference.
“The directors’ wrongful conduct allowed the illegal conduct to proliferate and continue,” the complaint states. “As such, members of Alphabet’s board were knowing and direct enablers of the sexual harassment and discrimination.”
The shareholder, James Martin, is suing each of Alphabet’s current directors, a former director and several current or former executives on behalf of Alphabet itself, in what is known as a shareholder derivative lawsuit.
“Google and the board of directors have direct personal liability for covering up the wrongdoing and allowing it to continue for years, thereby significantly harming women employees at Google,” Bottini said. “They would never sue themselves … [so] the law allows a current shareholder to bring a case against the board.”
The suit seeks damages, including the return of more than $90m that was paid to two former executives in severance packages, as well as reforms to Alphabet’s corporate governance and share structure.
“There has been substantial evidence of sexual harassment at Google, and yet there hasn’t been the appropriate follow-through,” said Renne. “In fact, quite to the contrary, the perpetrators of the sexual harassment have been awarded handsomely … What Ann and Frank and I are saying is ‘Time’s up.’ Now it’s really time to start doing the right thing.”
Google did not immediately respond to a request for comment.
The allegations in the suit chiefly concern the board’s handling of Andy Rubin, the creator of the Android software platform who left Google in 2014.
In October, the New York Times reported that Rubin’s departure followed an investigation into a claim by a female employee that he had forced her to perform oral sex. Despite finding the allegation credible, Google allowed Rubin to resign with a $90m exit package, the Times reported.
News of the payout ignited unprecedented outrage among Google employees, thousands of whom staged a global walkout to demand change.
The lawsuit alleges that the board minutes show that the payout was approved by board members “since they apparently feared that if they fired Rubin for cause, he would sue Google for wrongful termination and all the tawdry details of sexual harassment by senior executives at Google would become public”.
Numerous Google executives have reportedly dated or had affairs with subordinates.
“The tone was, ‘It’s a free for all,’” said Ravel of the board minutes. “People who are not at the top are going to receive retribution, and everyone else gets a free pass.”
The minutes were obtained under state laws that allow shareholders to inspect certain corporate records. They are currently redacted, but Bottini suggested that he would ask a judge to unseal them.
“You won’t believe what’s in these minutes,” he said.
Among the reforms sought in the lawsuit is the elimination of Alphabet’s dual-class structure, which allows Page and Brin to maintain voting control over the company, despite the fact that they no longer own a majority of its stock.
“It’s time,” said Ravel. “What we have asked for are a lot of changes in corporate governance at Google, and that is really the ultimate purpose of this litigation.” theguardian.