Alphabet settles shareholder suit over sexual misconduct cases


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© Reuters. FILE PHOTO: Children play around a sign of Alphabet Inc’s Google outside its office in Beijing

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By Munsif Vengattil and Paresh Dave

(Reuters) – Alphabet (NASDAQ:) Inc on Friday settled a shareholder lawsuit that accused the Google parent of covering up lavish exit packages to executives found responsible for sexual misconduct, saying it would overhaul workplace policies and increase oversight of its diversity efforts.

The company will prohibit severance packages to employees who are subject to any pending investigation for sexual misconduct or retaliation. 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.

The company will spend $310 million over a decade on diversity initiatives, such as computer science training for minorities, and Google will expand globally its U.S. policy of not considering prior salaries in setting wages for new hires.

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.

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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.

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