Google employees are bucking their own company to advocate for more diversity at shareholder meeting

Key Points
  • A handful of employees will attend Alphabet's annual shareholder meeting on Wednesday to present a proposal aimed at increasing diversity.
  • Employees say that the company hasn't taken enough concrete actions to actively recruit women and minorities.
Google's headquarters at Mountain View, California
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Tariq Yusuf, a privacy engineer in Google's Seattle office, is heading to Alphabet's Silicon Valley headquarters on Wednesday to take part in the company's annual shareholder meeting. But Yusuf is hardly attending as a cheerleader.

Rather, he's part of a small group of Google employees attending the meeting to seek shareholder support for a diversity and inclusion proposal that the company recommends rejecting.

The proposal, filed by Zevin Asset Management, which describes itself as a socially responsible investment firm, calls for Alphabet's executive compensation to be tied to gender, racial and ethnic diversity metrics in employee recruiting and retention.

Zevin cites Google's own data showing that over the past four years, the percentage of women employees has only gone from 30 percent to 31 percent, while the number of underrepresented minorities has increased from 9 percent to 10 percent.

"One of the reasons we partnered with Zevin is that it advocates building in the values that Alphabet purports to support," Yusuf told CNBC. Alphabet "can do a better job of putting its money where its mouth is to some degree," he added.

Fired Google engineer James Damore: I was pointing out problems at Google
Fired Google engineer James Damore: I was pointing out problems at Google

It's been a turbulent year for Google. The company has been hit with multiple lawsuits from ex-employees who say that it either isn't doing enough or is going too far in its push for diversity.

In January, fired engineer James Damore accused Google of discriminating against white, male and conservative employees. Another former engineer then sued the company for wrongful termination due to his response to Damore's controversial memo, which criticized Google's diversity efforts.

There are several other lawsuits pertaining to harassment and hiring bias, and the Department of Labor is investigating the company for underpaying women.

'Employees and investors locking hands'

Zevin's proposal challenges Google, which was one of the first major companies to publicly publish its diversity statistics, to step up its efforts and better protect employees working internally on diversity projects so that it has the talent to drive long-term shareholder value. Zevin has made similar proposals to Amazon and Apple.

"It's not often you see employees and investors locking hands like this," said Pat Tomaino, Zevin's director of socially responsible investing. The Boston-based firm owns about $23 million worth of Alphabet shares, according to FactSet.

Alphabet recommends shareholders vote against the proposal because the company says it already incorporates diversity values into its business. Because of Alphabet's dual-voting structure that gives the co-founders outsized control, the proposal likely won't pass.

Google founders Sergey Brin and Larry Page
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Liz Fong-Jones, an engineer who won't be attending the meeting but is a diversity advocate within the company, acknowledged the risk of retaliation associated with supporting the proposal but said that it's important to put pressure on management.

"If shareholders and employees work together, we can achieve better results than any one of us pushing alone on the issue," Fong-Jones said. Lack of accountability in leadership has allowed Google to "make symbolic steps and not actually take concrete action to move the needle," she said.

Another proposal for shareholders comes from Arjuna Capital and relates to the gender pay gap. In March, Google released a study showing that it found no significant difference in pay between male and female employees. However, the study didn't include the salaries of top managers.

"That wasn't something that we thought was helpful, considering that the pay gap tends to get wider as you move up the corporate ladder," said Natasha Lamb, a managing partner at Arjuna. The proposal suggests that Google report on the median pay of men versus women.

Google employees have a long history of internal grassroots organizing and were recently successful at putting pressure on the company to not renew a controversial Pentagon contract next year, following intense internal backlash first highlighted by Gizmodo.

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