Employees of Google parent Alphabet Inc. are teaming with investors in a push to tie executive pay to progress on workplace diversity.
Irene Knapp, a software engineer for the web-search giant, will present a proposal at Wednesday’s annual shareholder meeting in Mountain View, Calif., on behalf of Zevin Asset Management, which submitted the measure. They’re requesting Alphabet consider related metrics in incentive plans, with a focus on diversity and inclusion in the workforce.
Criticism has grown internally that executives aren’t doing enough to address workplace harassment, said Liz Fong-Jones, a longtime employee who has backed a petition to create better policies and procedures, including cracking down on “malicious leaks” that have targeted individuals.
Those concerns came to the fore after another engineer, James Damore, wrote a 3,000-word memo assailing the company’s affirmative action policies and suggesting that women are biologically less qualified than men for tech jobs. He was fired, and he sued Alphabet for wrongful termination. In a separate lawsuit last year, the company was accused of paying women less than their male peers.
“Executives can be motivated by money,” Fong-Jones said. “There needs to be a clear signal from the shareholders that they value inclusion.”
Google promotes lively internal communication, letting staffers complain about anything from the quality of the snacks in the micro-kitchens to workplace sexual harassment, sexism, bigotry or racism. However, it has been rare for employees to speak out publicly against the company.
This is changing as Google has grown and become entwined in increasingly controversial matters. More than 4,000 employees recently demanded that the company’s artificial intelligence technology not be used for military purposes. Several staffers resigned, Google said it would let a Pentagon artificial intelligence contract expire next year, and Chief Executive Sundar Pichai is preparing an ethical charter for Google’s artificial intelligence this week, in part to appease staff concerns.
Speaking out during Alphabet’s annual shareholder meeting is also highly unusual for Google workers. Both episodes highlight the growing power of the company’s employees. Google relies on talented engineers and spends a lot of time and money keeping them. That gives workers more leverage.
Alphabet investors don’t necessarily have that much clout with the company. At shareholder meetings, they typically bring proposals on a wide variety of issues, including pay, environmentalism and the firm’s political positions. Executives hear them out, then reject the proposals, showing that the company is still firmly controlled by its founders.
Although executives this year are more attuned to grievances, particularly those from employees, Zevin’s proposal has little chance of passing, given that Google’s billionaire co-founders Larry Page and Sergey Brin have more than half the voting power. In opposing the plan, the company said in a filing that it wouldn’t “enhance Alphabet’s existing commitment to corporate sustainability,” noting that Page collects a salary of just $1 a year. A spokeswoman said the firm had no comment beyond the statement in the filing.
Proxy advisors Institutional Shareholder Services Inc. and Glass Lewis & Co. are split on the proposal. ISS supports it while opposing the nominations of compensation committee members L. John Doerr and K. Ram Shriram “due to poor stewardship” and “a lack of performance-conditioned compensation.” Glass Lewis said it believes the company already considers such initiatives in its business decisions.
Alphabet’s other top executives get salaries and perks and participate in the company’s incentive plans. Over the last three years, Pichai and Chief Financial Officer Ruth Porat have received reported pay of $302 million and $70.8 million, respectively, most of it from stock grants, according to data compiled by Bloomberg. Those awards don’t factor in performance metrics.
Tech companies are hardly leaders in this area, but some are more committed than others. Microsoft Corp. has about 17% of annual bonuses linked to culture and organization leadership goals, which include promoting diversity. Intel Corp.’s annual cash bonuses are tied in part to diversity-based hiring and retention goals. Qualcomm Inc. and IBM Corp. mention inclusion considerations in their qualitative assessments of executives’ pay.
Investors care about environmental, social and governance issues, said Andy Jack, a partner at Covington & Burling in Washington, where he co-chairs the law firm’s Clean Energy and Climate industry group.
“Boards and compensation committees would be well advised to review their company’s published ESG [environmental, social and governance] targets, understand how the targets relate to the company’s overall business strategy and reflect on whether compensation programs should incorporate any specific incentives to promote achievement of the ESG goals,” Jack said.
Ritcey and Barr write for Bloomberg.