Alphabet board smacked with sueball for paying off Google execs accused of sexual harassment Another day, another anti-Google lawsuit – this time over claims Alphabet, adtech monolith Google's holding company, "failed to take meaningful steps to address a pervasive culture of harassment and discrimination". The case, brought by the Northern California Pipe Trades Pension Plan and Teamsters Local 272 Labor Management …
Ooh, I could be onto a record for downvotes here! I guess we'll just have to see what the court says, but this is why companies have shareholder meetings to vote on the action of the board.
What's that you say? No one sued Microsoft over AQuantive, Nokia, Skype? Or Jeffrey Immelt for his bad bets? Investors lost billions as a result of those decisions and they still didn't sue. Makes you wonder…
I guess you missed the bit about it's the shareholders that are suing.
I didn't miss it. The whole point about AGMs is that shareholders get to vote on the actions of the board. That boards are often not held accountable is another matter (something to do with the majority of shares now being held by a couple of funds and founders holding all the votes) but the AGM should be considered as the court for shareholders.
Shareholders are not entitled to executive who will never make a bad decision - if you become a shareholder your also share the risks that a company - and you - may lose money because of several factors. To sue, you would have to demonstrate they acted to willfully damage the company.
But sexual harassment and hush money are a wholly different thing. If they wasted shareholder money paying people who could be simply fired because they had broken law, or company rules, you're actually damaging shareholder interests - it looks the mantra "maximize shareholder value" than becomes "maximize executives self-interests".
What damages more a company? The news that an executive is fired because caught breaking the rules, or the news that he was paid to leave the company in an attempt to keep everything quiet and avoid any liability? A later suit could cost shareholders even more if the company is found to have willfully ignored and/or covered such behaviours.
Maybe fifty years ago that could have been kept hidden - not now anymore.
There is a tricky difference between guilty enough to be asked to leave and being guilty enough to be fired without compensation. For the first one, the issue is whether it's worth trying to keep the person or it's easier to pay whatever they were going to cost you in the few next years. For the second one, the issue is whether it's worth a wrongful termination lawsuit, where you need to convince the court that the firing was justified, which generally requires a much higher standard.
In this particular case, the guy had unfortunately just been awarded $150 millions to reward him for his accomplishments (according to the NYT article). So the guy had a good argument that this money was owed to him, never mind that he was only supposed to receive it over the next few years. He could convincingly argue in court that Google was trying to get rid of him on a flimsy excuse so that they wouldn't have to pay him (see the lawsuits from Oracle sales rep canned before receiving their commissions). And then, possibly, they would have to give him back his job and/or even more money as damage.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2025
