Alphabet Investigating Sexual Misconduct Claims Against Executives

Alphabet Inc.’s (NASDAQ: GOOG) board of directors has opened an investigation into the company’s handling of sexual harassment and other misconduct complaints against current and former executives. The company has formed an independent subcommittee that will investigate, as well as hired an external law firm to look into the matter. The move comes after several shareholder groups filed lawsuits alleging that company directors breached their fiduciary duties by covering up the sexual misconduct claims.

The matter came to a head after a series of reports over the past year alleged sexual harassment by high-level Google and Alphabet executives. The company’s chief legal officer, David Drummond, was accused of having an extramarital affair with an employee years ago. Android creator Andy Rubin left the company in 2014 after an internal investigation determined that he had carried on an inappropriate relationship with a subordinate. Former senior search vice president Amit Singhal, who spent 15 years with Google, was also accused of sexual harassment and decided to leave the company in 2016.

Rubin negotiated a $90 million severance pay package on his way out the door. Singhal was given a payout that ultimately amounted to $15 million. Both payouts were approved by Google’s Leadership Development and Compensation Committee. Drummond, who has continued on in his top role at Alphabet, was paid $47 million last year.

The shareholders, which includes individuals along with various labor unions and pension funds, are suing Alphabet directors and executives for allegedly breaching their fiduciary duties and engaging in corporate waste. They have called for Alphabet to stop future workplace conduct issues by improving governance and oversight. They also call for Alphabet directors to pay damages to Alphabet over the large severance payments made to Rubin and Singhal.

Alphabet’s board expects the internal investigation to be completed by next month. Alphabet was expected to respond to the allegations in the lawsuit by Nov. 8, but both sides agreed to move the company’s response deadline to Dec. 13 to allow for the completion of the investigation. The lawsuit is being heard in Santa Clara County Superior Court in California.



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