Google shareholder sues board, alleging cover-up of sexual misconduct claims

Johana Bhuiyan, Los Angeles Times on

Published in Business News

When Google was revealed to have paid large severance packages to executives accused of sexual misconduct, outrage swelled, criticism piled on and employees stopped working and walked out of their offices.

Months later, the company is still dealing with the repercussions.

A shareholder on Thursday sued the company's board of directors, alleging they engaged in a "multi-year scheme to cover up" sexual harassment allegations -- resulting in hundreds of millions of dollars of losses for investors.

Plaintiff James Martin claims the board "made a conscious and intentional (and bad-faith) decision to conceal the sexual harassment at Google" and approved the decision to give severance packages worth millions of dollars to former star executives including Andy Rubin, known as the "father of Android," and Amit Singhal, who oversaw Google's search efforts for 15 years.

The consequences include what attorneys representing Martin estimate to be hundreds of millions of dollars in lost revenue and market cap as a result of the payouts, the subsequent reputational cost and the loss of productivity during the global walkout employees staged in November after Rubin and Singhal received those severance packages.

As confidence in public tech companies and stocks in general waver, shareholders may be eager to assign blame for the company's stock woes. But Google and its parent company Alphabet have been navigating a wide swath of controversies aside from its handling of harassment complaints, including now-canceled plans to build a censored search engine in China and a contract to analyze drone footage for the U.S. Department of Defense, which the company has chosen not to renew after employee backlash.

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Still, the decision to stake the fiduciary claim on the company's alleged mishandling of sexual misconduct cases points to an increasingly mainstream view that such cases are rampant throughout the industry.

Since former Uber employee Susan Fowler told her personal account of harassment and mismanagement at the ride-hailing company, the tech industry has been grappling with the question of sexism. With the growing momentum of the #MeToo movement in Hollywood, sexual misconduct claims are getting the kind of attention they didn't before.

Now, shareholders are beginning to act on their frustration.

The lawsuit is one of the first instances in which shareholders of a major tech company took action to hold the firm accountable for its handling of sexual misconduct complaints.


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