AP7 reaches settlement with Alphabet on alleged mishandling of sexual misconduct

Sweden’s AP7 has reached a settlement with the parent company of Google over the way it allegedly handled sexual harassment within the company.

The fund originally began proceedings against Alphabet in January 2019 and following reports of sexual harassment within the company. AP7 worked with its lawyers to investigate the reports of sexual misconduct at Alphabet and the board’s mishandling of that misconduct.

As a result of its investigation, AP7 demanded that Alphabet’s board take further action to investigate and remedy the misconduct. AP7 sued Alphabet and certain directors and officers when the board failed to timely respond to AP7’s demand. AP7 believes the settlement is in the best interests of Alphabet and its stockholders.

The settlement involves extensive corporate governance reforms and a substantial funding commitment that are designed to address and prevent sexual misconduct, harassment and retaliation at Google, prevent wrongdoers from being rewarded for their misconduct, and enhance the board’s oversight function.

”This settlement feels great both for the sake of the employees at Google and for the sake of the shareholders. Sexual harassment affects many more than those directly affected. In order for us as owners to be able to drive change through legal proceedings, special conditions are required. This case shows that it can be a very effective way under the right circumstances,” AP7 CEO, Richard Gröttheim, said.

As a result, Alpabet will adopt and maintain for at least five years a robust program designed to prevent and address sexual harassment, misconduct and retaliation. The programme will enhance Alphabet’s anti-sexual harassment and retaliation policies, trainings, reporting channels, investigations and procedures for disciplinary action and remediation.

In addition, employees including senior executives, who are being investigated for engaging in sexual harassment, misconduct or retaliation, or whose employment has been terminated upon a finding of substantiated misconduct, will be prohibited from receiving severance or the accelerated vesting of unvested equity awards and from modifying any 10b5-1 trading plan.

Alphabet will also establish and maintain for at least five years a Diversity, Equity and Inclusion Advisory Council to oversee its efforts to promote a workplace free from discrimination, harassment and retaliation. The council’s members will include Alphabet’s CEO Sundar Pichai for the first year, as well as three outside experts in diversity, inclusion, equity and anti-sexual harassment.

The board’s Leadership Development and Compensation Committee will oversee management’s efforts to promote a respectful workplace. The committee will receive reports and recommendations from the Advisory Council, as well as data on claims of sexual harassment, discrimination and retaliation at Google and the results of Google’s employee survey that will include questions related to culture, respect, diversity, equity, inclusion and leadership.

The board’s Audit Committee will oversee compliance issues with respect to sexual misconduct. The committee will receive updates on, among other things, cases brought to a newly-created ‘rapid response’ team that will investigate certain serious allegations of misconduct, including against senior executives.
Alphabet will also commit USD 310m over 10 years to workplace initiatives and programmes focused on diversity, equity and inclusion.

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