In the era of the #MeToo movement, high-profile corporate executives getting sacked for bad behavior has become almost commonplace. New developments with Google suggest those reverberations could extend beyond the tech titan’s C-suite. The company’s shareholders are rising up to ensure that, moving forward, the board of directors handles these types of matters transparently, sensitively and with the best interests of employees and shareholders in mind.
The story starts with last year’s revelation by the New York Times that despite a credible sexual harassment complaint against Android software creator Andy Rubin, Google gave him $90 million in compensation when he departed the company in 2014. (Rubin has denied any wrongdoing.) According to the report from the Times, Larry Page, the Google founder, went so far as to ask Rubin to resign following an investigation into another employee’s claims that Rubin had sexually coerced her. In the end, Rubin and the company agreed to the lavish buyout, which was to be paid out over the course of four years.
Not surprisingly, that and examples of payouts to other executives accused of sexual harassment became a major black eye for the web giant. More than 20,000 employees and contractors walked out of work in November in protest.
Now shareholders are going after the board of directors of Alphabet, Google’s parent company, in response to the board’s role in the scandal. Multiple lawsuits were filed this week charging that by approving the exit agreements, Alphabet breached its fiduciary duty to stockholders.
In one suit, plaintiffs Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund maintain Alphabet’s actions regarding both the sexual harassment claims and a data breach violated state and federal law. The data breach involved the Google Plus social networking application. The pension funds are arguing that the company’s “’culture of concealment’ … has permitted serious problems to fester at Alphabet.”
Meanwhile, shareholder James Martin is suing Alphabet in hopes of forcing the company to improve its corporate governance practices – any damages recovered by the plaintiff would go back to Google. His complaint names Page and Google co-founder Sergey Brin among a number of other defendants. “The conduct of Rubin and other executives was disgusting, illegal, immoral, degrading to women and contrary to every principle that Google claims it abides by,” Martin said in the complaint.
Google’s troubles serve as a reminder to public companies that repercussions from bad behavior and sexual misconduct go well beyond the immediate individuals involved. While it is unfortunate that revelations of such abuse are, alone, often not enough to motivate companies to systematically overhaul policies and procedures, the onslaught of shareholder lawsuits may indeed get the message across.