Google Board Sued for Hushing Claims of Executive Misconduct
Investors claim the board failed its duties by allowing harassment to occur, approving big payouts and keeping details private.
(Bloomberg) -- Alphabet Inc.’s directors were sued by shareholders for approving a $90 million exit payment to Andy Rubin, the creator of the Android mobile software, while helping cover up his alleged misconduct and similar misbehavior by other executives.
The investors claimed the board failed in its duties by allowing harassment to occur, approving big payouts and keeping the details private. The complaint targeted the company’s top executives and committee members, including co-founders Larry Page and Sergey Brin, venture capitalist John Doerr, investor Ram Shriram and Alphabet Chief Legal Officer David Drummond, among others.
“Rubin was allowed to quietly resign by defendants Larry Page and Sergey Brin after an internal investigation found the allegations of sexual harassment by Rubin to be credible,” according to one complaint filed Thursday in California state court. “While at Google, Rubin is also alleged to have engaged in human sex trafficking -- paying hundreds of thousands of dollars to women to be, in Rubin’s own words, ‘owned’ by him.”
Another suit, filed on behalf of the Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management Pension Fund, made similar claims.
Rubin created Android, now the world’s most popular operating system, and ran the powerful mobile division at Google for years before leaving the company in 2014. In October, The New York Times reported that Google executives approved a four-year, $90 million pay package for Rubin after an employee accused the executive of sexual harassment.
The findings about Rubin reverberated inside the technology giant. In November, thousands of Google employees staged a work walkout to protest the company’s approach to workplace sexual misconduct, prompting management to change some of its policies.
The shareholder suits are the first critiques aimed directly at the Alphabet board. The New York Times reported that members of Google’s board approved Rubin’s stock grant in 2014 after an inquiry into the allegations against him began.
A group of Google employees behind the walkout released a statement on Thursday saying they support the shareholder lawsuits. "We have all the evidence we need that Google’s leadership does not have our best interests at heart," they said.
Google was also accused of handling the resignation of executive Amit Singhal in a similar fashion, allowing him to “quietly resign” in 2016 amid sexual harassment claims. Google never disclosed the reason for his departure, though he was also paid millions in severance, according to the complaint filed on behalf of Alphabet shareholder James Martin.
Singhal was fired from Uber Technologies Inc. in 2017 for failing to disclose the allegations he faced at the Mountain View, California-based company, where he was the longtime head of the powerful search division.
The board’s audit and compensation committees, comprising nine members, along with Page, Brin and Schmidt, reviewed the findings of an investigation into allegations against Rubin in 2014. All nine directors were informed that "the allegations were credible," according to the complaint.
“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," the shareholder said in the complaint.
Singhal didn’t respond to a request for comment.
"This lawsuit, like much of the recent media coverage, mischaracterizes Andy’s departure from Google and sensationalizes claims made about Andy by his ex-wife," Ellen Winick Stross, a lawyer for Rubin, said in a statement. "Andy left Google voluntarily. Andy denies any misconduct, and we look forward to telling his story in court."
Google told staff in October that it dismissed 48 people for sexual harassment in the past two years without exit packages.
Representatives of Google and John Doerr declined to comment. John Hennessy, the board chairman, and board members Ann Mather, Roger Ferguson and Diane Greene didn’t respond to requests for comment.
The Martin lawsuit was filed Louise Renne, a one-time San Francisco City Attorney and former member of the city and county’s Board of Supervisors who’s now in private practice. Her co-counsel, Ann Ravel, was a commissioner for the Federal Election Commission under the Obama administration.
The complaint is a derivative case filed on behalf of the company against its board of directors, which means any damages recovered by the plaintiff would go back to Google. The goal of the suit is to improve corporate governance, according to Renne.
The case is Martin v. Page, 19-cv-00164, California Superior Court, San Mateo County (Redwood City).
--With assistance from Ellen Huet and Gregory Jarrett.
To contact the reporters on this story: Mark Bergen in San Francisco at mbergen10@bloomberg.net;Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net;Kartikay Mehrotra in San Francisco at kmehrotra2@bloomberg.net
To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, ;Jillian Ward at jward56@bloomberg.net, Alistair Barr
©2019 Bloomberg L.P.