Law360 reported that on Thursday, a California Superior Court judge preliminarily approved Google parent Alphabet to fund a $310 million diversity initiative to settle a 2019 derivative shareholder lawsuit, Martin v. Page, et. al., claiming some of the company's officers and directors breached fiduciary duties "for their active and direct participation in a multi-year scheme to cover up sexual harassment and discrimination at Alphabet." As a result, the misconduct "caused severe financial and reputational damage to both Google and Alphabet."
The lawsuit quoted a Google employee who described the company's corporate culture, "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 women will be pushed aside."
Through an internal investigation, Google confirmed claims about sexual harassment by senior executives, including Amit Singhal and Andy Rubin, the creator of Android mobile software. Allegedly, Rubin also participated in human sex trafficking and paid tech lobbyists "to oppose legislation in Washington...to combat human sex trafficking" and to "derail the passage of a bill to protect girls from online sex traffic." Rather than take disciplinary action against these senior executives and timely disclose the harassment, Alphabet directors and executive officers protected Singal and Rubin, allowing them to quietly resign and giving them $45 million and $90 million, respectively as part of their severance packages.
The lawsuit outlined that Alphabet and Google:
- failed to implement and maintain adequate internal controls at Alphabet;
- fostered a culture that permitted rampant sexual harassment and discrimination at Google;
- actively participated in the cover-up of Google executives’ sexual harassment; and
- failed to ensure that Google complied with rules and regulations regarding sexual harassment and discrimination.
This settlement will not only change and improve the culture at Google, but it will set the standard for culture change at tech companies throughout Silicon Valley.
- Ann Ravel, Renne Public Law Group attorney
In its settlement, Alphabet:
- Maintained that its officers and executives named as defendants in Martin v. Page, et. al. denied and "continues to deny any attempt to commit any violations of law, any breaches of fiduciary duty owed to Alphabet, or any wrongdoing whatsoever," and "that at all relevant times, he or she acted in good faith and in a manner that he or she reasonably believed to be in the best interests of Alphabet and its stockholders."
- Will implement corporate governance and workplace enhancements.
- Adoption of guiding principles: commitment, care, transparency, fairness & consistency, and accountability,
- Limit "use of confidentiality restrictions when settling sexual harassment and retaliation claims, including allowing complainants to discuss underlying facts and circumstances of incidents and the reporting process."
- Update Audit Committee to the "Audit and Compliance Committee," which will monitor and enforce Alphabet’s sexual harassment and retaliation compliance programs.
- Ensure that its Nominating and Corporate Governance Committee of Alphabet’s Board "conducts a thorough evaluation of each member’s performance, participation, and skill set," and will maintain its practice considering underrepresented people of color and women as candidates.
- Update the charter of the Leadership Development and Compensation Committee explicitly mandating the oversight of "management’s efforts to promote a workplace environment that is respectful and free from employment discrimination, including harassment and retaliation."
- Require not only the Board to receive sexual harassment and fiduciary duty training, but also employee sexual harassment training "by tracking compliance by business unit and report training compliance deficiencies to the Board and ensure annual review of Google’s sexual harassment training materials by relevant stakeholders."
- Will establish a Diversity, Equity and Inclusion (DEI) Advisory Council, which will oversee the creation, implementation, and ongoing operation of the initiatives and systems that support diversity, equity, and inclusion.
- Will fund a set of workplace initiatives and programs in the amount of $310 million for 10 years to promote diversity.
Fortune reported that Ann Ravel, an attorney from Renne Public Law Group who led parts of the settlement negotiation, said, “This settlement will not only change and improve the culture at Google, but it will set the standard for culture change at tech companies throughout Silicon Valley.”
It also published a statement in a blog post from Google vice president of people operations Eileen Naughton, "Recent years have involved a lot of introspection and work to make sure we’re providing a safe and inclusive workplace for every employee. That doesn’t stop here and you’ll receive reports on our progress as we move forward."
CNBC stated that in an email to Google employees, CEO Sundar Pichai wrote, “I hope these commitments will serve as a strong signal to all of you that we are not going back in time.”