Alphabet Inc. shareholders file lawsuit against board

Shareholders have rights, including the right to take action against officers or a board of directors if they are doing something shareholders believe is wrongful or outside the interests of the company.

This is the step shareholders are taking against Google's parent company, Alphabet Inc.

Exit payments, covering up misbehavior

According to reports, like this one in Bloomberg, shareholders are suing Alphabet Inc.'s directors for decisions they made regarding a former key employee, Andy Rubin.

The primary reasons for the lawsuit include the board's decision to approve a $90 million exit payment to Rubin as well as its efforts to conceal details of misconduct allegations against Rubin and other key employees.

Rubin was the subject of credible sexual harassment allegations. He was also alleged to have been involved in human sex trafficking. Another former executive, Amit Singhal, also faced sexual harassment claims while at the company. 

The shareholders' lawsuit argues that the company did not openly address the allegations or take action to penalize the former employees for their misconduct. Instead, the board approved massive payouts and allowed the men to resign quietly. The board also allegedly took steps to cover up the accusations against the former employees. 

The lawsuit itself is not about shareholders trying to secure a financial payout; it is an effort to call attention to behaviors they find harmful to the company. By filing a legal claim, shareholders hope to prompt change in Google's leadership and policies. 

Important takeaways

Business owners here in Albuquerque can learn some important lessons from this case. First, it highlights the fact that business owners are beholden to others when it comes to their decisions involving key employees. In this case, it is shareholders. In other cases, it could be other employees and customers who may be affected by such decisions.

Another lesson is that no one is above the law when it comes to business disputes. Any employee or executive can face legal action if he or she is accused of illegal conduct.

Finally, understand that the stakes of a lawsuit can increase considerably when there is a key employee involved. As such, parties on all sides of the dispute would be wise to have guidance from attorneys experienced in handling such matters.

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