Google’s parent Alphabet on Friday settled a shareholder lawsuit that accused it of covering up lavish exit packages to executives found responsible for sexual misconduct, saying it would overhaul workplace policies and boost diversity efforts.
The tech giant said it will spend $310 million over the decade to overhaul the system, and will now forbid severance packages to employees who are subject to any pending investigation for sexual misconduct or retaliation. In addition, Alphabet said it would limit confidentiality restrictions when settling harassment and discrimination cases and ban workplace romances between managers and subordinates.
The Silicon Valley company got hit with a slew of shareholder lawsuits in 2018, after The New York Times reported that the board of directors had approved a $90 million exit package for a star executive, Andy Rubin, even after an investigation deemed a sexual harassment claim against him credible.
This led to a global walkout of employees and some amendments of its policies relating to sexual misconduct in 2018.
Friday’s settlement comes nearly one year after the board of Alphabet formed a Special Litigation Committee of independent directors last year and hired the law firm Cravath, Swaine & Moore to conduct an investigation into sexual misconduct by executives last November.
The investigation included the behavior of David Drummond, a longtime company lawyer who kept his job even after details of an extramarital relationship he had with a woman who worked for him became public. He left Alphabet this year.
Eric Schmidt, the former CEO who reportedly was a notorious philanderer despite being married more than 30 years, left the board in 2019.
Alphabet said Friday that sexual misconduct accusations against senior executives will be investigated by a “rapid response” team, and they will be barred from amending their stock-selling plans while under investigation.
Penalties and training will be made more consistent. And Google employees will be able to publicly discuss the facts of their cases.
A new council to oversee diversity efforts will include executives including CEO Sundar Pichai as well as independent experts such as a retired judge and outside attorneys. The council will report quarterly to the leadership development committee of Alphabet’s board.
Julie Goldsmith Reiser, an attorney who handled the case for shareholders, said the commitments raised the bar beyond what any other company facing diversity and sexual harassment challenges has agreed to.
“It is a lot of tools that Alphabet will have in the toolbox to make its workplace better,” she said.
Several changes that already applied to Google also will be enforced Alphabet-wide, including making arbitration optional for employee and contractor sexual harassment claims.
The lawsuit from last year in Santa Clara County Superior Court in California accused Alphabet leadership of making misguided decisions around sexual misconduct issues that hurt the company’s reputation and share price, as Google and other companies faced a reckoning during the Me Too movement.