April 22, 2014
Google Facing Several Resolutions on Corporate Governance
by Robert Kropp
The tech giant's 2014 proxy statement reads like a compendium of corporate governance issues.
Second of a two-part series.
A shareowner resolution filed at Google by Walden Asset Management reveals the extent of the
company's lobbying activities, as well as questionable associations with the US Chamber of Commerce
and especially the American Legislative Exchange Council (ALEC).
Google is “one of
the top five corporate lobbyists in the past two years with federal lobbying expenditures exceeding
$30 million,” the resolution states. Furthermore, “Google reportedly sits on a task force of the
American Legislative Exchange Council (ALEC) which has launched a 'high priority campaign' to
repeal renewable energy standards in states.”
The press release provide by Walden includes
a link to Google's 201
4 proxy statement, which reveals a number of shareowner resolutions aimed at improving the
company's corporate governance practices and transparency.
Including the resolution on
lobbying expenditures filed by Walden, there are five addressing various aspects of Google's
corporate governance. To the surprise of no one, the company's management opposes all of them.
Long-time shareowner activist John Chevedden has been in the news this year, as several
companies sought to bypass the Securities and Exchange Commission's regulations by filing suit to
have resolutions filed by him and approved by the SEC excluded from their proxy ballots. A judge in
Massachusetts ruled in favor of Chevedden and Co
rpGov.net founder James McRitchie, who had filed a resolution calling for an independent Chair
at EMC. And a judge in New York ruled in favor of Chevedden, granting him a dismissal of a lawsuit
brought against him by Omnicom.
At Google, Chevedden has filed a shareowner resolution
taking on the company's dual-class stock structure, an arrangement widely criticized by corporate
governance advocates but common among media and technology companies. “Our company has dual-class
voting where each share of Class A common stock has one vote and each share of Class B common stock
has 10 votes,” the resolution states. As a result, the two founders of Google control more than
half of the company's voting power.
At Google's 2013 annual general meeting, the
resolution concludes, 180 million shareowner votes were cast in favor of a similar proposal.
The Firefighters’ Pension System of Kansas City filed a resolution calling for a majority
standard in the election of board directors. Google currently has a plurality standard, by which an
uncontested candidate can win election with a single vote. “A majority vote standard would require
that a nominee receive a majority of the votes cast in order to be elected,” the resolution states.
“This standard is particularly well-suited for the vast majority of director elections in which
only board nominated candidates are on the ballot.”
The Massachusetts Laborers’ Pension
Fund has requested that Google appoint an independent Chair, which is another commonly understood
tenet of effective corporate governance. The company's current Chair is former CEO Eric Schmidt.
“We believe that an independent Chairman who sets agendas, priorities and procedures for the board
can enhance board oversight of management and help ensure the objective functioning of an effective
board,” the resolution states. “We also believe that having an independent Chairman (in practice as
well as appearance) can improve accountability to shareowners.”
Domini Social Investments is the lead filer of a resolution
requesting that Google “adopt a set of principles to address the impact of Google’s tax strategies
on society, with particular focus on Google’s employees, customers and suppliers.”
“Google’s tax practices have come under scrutiny in the United Kingdom and France, leading to
regulatory pressures and reputational damage,” the resolution states. “Although most Google
engineers are U.S.-based, where much of product development takes place, Google’s intellectual
property is held in Bermuda, which does not levy corporate taxes.”
Google's annual general
meeting will be held on May 14th.