Last October, an investigative report detailed how Google shielded top executives like Andy Rubin following accusations of sexual misconduct. Instead of being explicitly fired, their departures included massive compensation packages. Alphabet shareholders today filed suit against the board of directors claiming “breaches of fiduciary duties.”
Today’s lawsuit names Larry Page, Sergey Brin, Eric Schmidt, and other members of Alphabet’s board as defendants. Representing shareholders, it alleges breach of fiduciary duty, unjust enrichment, abuse of power, and corporate waste.
The New York Times in October reported that Google’s internal investigation into Andy Rubin found that the allegations of sexual harassment were credible. However, despite the Alphabet CEO determining that the Android creator had to leave, the board gave Rubin a $90 million exit package as part of what the suit calls a “hero’s farewell.”
Instead of disciplining these senior executives, however, the Individual Defendants protected them. The Individual Defendants failed to timely disclose the harassment, and then attempted to cover up the harassment when news reports began to suggest that egregious sexual harassment and discrimination had occurred at Google.
Page at the time of the departure said, “I want to wish Andy all the best with what’s next!” Additionally, Google invested millions of dollars into Playground Global. These packages are usually designed to avoid individuals from directly competing, with some including explicit non-compete agreements.
The suit also criticizes the similar fashion that Google handled Amit Singhal’s departure. Leading Search before he left, there were also credible allegations of sexual misconduct against him, but he received a quiet departure and exit package.
The Directors’ wrongful conduct allowed the illegal conduct to proliferate and continue. As such, members of Alphabet’s Board were knowing and direct enablers of the sexual harassment and discrimination. Thus, the Board not only violated California and federal law, it also violated Alphabet’s ethical standards and guidelines and caused massive employee protests and revolts to occur when the truth came to light.
In terms of damages, the shareholders demand a reform of corporate governance and internal procedures, as well as the appointment of three independent directors to the board. It also asks for an end to Non-Disclosure Agreements and eliminating forced arbitration.
After a Google Walkout that drew 20,000 employees, Sundar Pichai announced a series of changes inside the company. This includes making arbitration optional for sexual harassment and assault claims, detailed reports, more training, and a revamped investigation process. The organizers of that protest issued a comment today:
We welcome today’s shareholder lawsuits, and are grateful to those who brought them. Among other things, the lawsuits claim that by covering for and rewarding known sexual abusers such as Andy Rubin and Amit Singhal, Google’s Board of Directors and others in Google leadership abdicated their fiduciary duty to Google as a whole and weakened the company by driving away qualified employees.