Alphabet Urged by Conservatives to Mind ‘Diversity of Thought’

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By Andrea Vittorio

Efforts to diversify Google parent Alphabet Inc.'s board of directors should include ideology, according to a conservative group confronting companies on the same issues as other shareholder advocates.

The National Center for Public Policy Research got a proposal onto Alphabet’s ballot that looks a lot like one from New York City Comptroller Scott Stringer, who has been pushing companies for more reporting on their directors’ race, gender, and skills. The center’s copycat proposal adds ideological diversity to the list of desired disclosures.

“They see diversity as what someone looks like,” Justin Danhof, the National Center for Public Policy Research’s general counsel, told Bloomberg Law, referring to activist shareholders like Stringer who usually advocate from the left. “True diversity comes from diversity of thought.”

Danhof pressed Alphabet at its annual meeting last year over the firing of engineer James Damore, who wrote a controversial memo criticizing the company’s diversity policies.

Alphabet, which said it’s committed to diversity “in and outside of the boardroom,” is telling investors to vote against the ideological diversity proposal at this year’s meeting in June. The company’s existing disclosures provide much of what the proposal is seeking, Alphabet’s board wrote in an April 27 regulatory filing.

First to File

The conservative center succeeded in getting its copycat proposals on the ballots of three other companies this year, including General Electric Co. The proposals are made to look like other investors’ submissions, with the same types of disclosure requests but with different reasoning.

That way, the group can take advantage of the Securities and Exchange Commission’s rules for dealing with duplicates. Companies that receive two similar shareholder proposals only have to include the one that came in first.

The center used this tactic for the first time this year to edge out another shareholder proposal from New York State Comptroller Thomas DiNapoli seeking more information on GE’s lobbying expenditures. A spokesman for DiNapoli, who oversees the state’s pension fund, called the center’s approach “partisan gamesmanship.”

“Genuine shareholder engagement is a venue for protecting corporations’ long-term value, not a cheap outlet for partisan gamesmanship,” the spokesman told Bloomberg Law. DiNapoli has convinced 37 companies to voluntarily disclose their political spending since the Supreme Court lifted restrictions on such spending in 2010.

The comptroller’s proposal at GE asked for a report on lobbying spending, including payments toward trade groups such as the U.S. Chamber of Commerce that lobby on companies’ behalf. “Investors are put at risk when corporations spend on political causes that are not in their own best interest,” the comptroller’s spokesman said.

Flipped Script

Lobbying disclosure proposals like the one DiNapoli filed are meant to defund the Chamber and other groups that “leftist investors” disagree with, Danhof said. So the center filed a proposal at GE just days before DiNapoli’s came in that said the company “should be proud” of its membership in the chamber.

“We flipped the script,” Danhof said.

DiNapoli withdrew his lobbying disclosure proposal after GE challenged it at the SEC, citing the first-to-file principle.

GE told investors to oppose the center’s lobbying disclosure proposal when they voted on it at the company’s annual shareholder meeting April 25. It ended up getting about 20 percent support.

Another lobbying proposal that the center submitted at Duke Energy Corp. is headed to a vote May 3.

Salesforce.com Inc. shareholders are also voting in June on a proposal that Danhof said is part of the center’s work to “defend religious freedom.”

The center filed 11 more shareholder proposals that didn’t make it onto company ballots, including a board diversity disclosure proposal at Facebook Inc. similar to the one at Alphabet. It was thrown out on technical grounds.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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