Google Shareholder Proposal to Resist Censorship

buxton2k writes "Slashdot has had plenty of stories about technology companies like Google kowtowing to repressive political regimes such as China's. I'm an (extremely) small shareholder in Google, and I looked at their proxy statement today. Most of the time, shareholders' meetings don't deal with anything other than rubber-stamping the board of directors, but Google's upcoming meeting has a interesting shareholder proposal dealing with free speech and censorship to be voted on at the May 10 meeting."

Comments

Re:Maybe I can start to trust Google again?

[bernywork]

This was raised by a shareholder, in particular:

The Funds' request was submitted by Patrick Doherty, The City of New York Office of the Comptroller, 1 Centre Street, New York, New York, 1007-2341

Didn't the directors suggest a no vote?

Required Vote

Approval of the stockholder proposal requires the affirmative "FOR" vote of a majority of the votes cast on the proposal. Unless marked to the contrary, proxies received will be voted "AGAINST" the stockholder proposal.

Recommendation

Our board of directors recommends a vote AGAINST the stockholder proposal.

Founders control all the votes anyway

[crt]

Remember that the Google founders have a different class of shares that count 10X as many votes per share as common shares. They can easily block any shareholder proposal they disagree with, although it certainly may look bad if there is heavy support for this.

Re:Note the Recommendation of the Board: Against

[Otter]

I think it's a ballsy move to put it to shareholder vote.

They're required to put any qualified proposal to a vote. Despite what the submitter thinks, largely symbolic politicized proposals are routine at any large public corporation.

Re:Evil will always win...

[FusionDragon2099]

You're thinking "chaotic good", Google's thinking "lawful good". There's different ways to go about the same goal, you know.

Re:Well...

[HellYeahAutomaton]

> Wrong. Bad press in the YRO section of slashdot? Sure. You fail to see the scope of the problem. How about the bad press in CNN? http://money.cnn.com/2006/01/30/technology/browser 0130/index.htm The NY Times? http://www.nytimes.com/2006/04/23/magazine/23googl e.html?ex=1303444800&en=972002761056363f&ei=5090 or the BBC? http://news.bbc.co.uk/1/hi/technology/4645596.stm No, the scope of this isn't just here on Slashdot. China is running a two-faced capitalist regime' (worldly capitalistic, internally Communist). If Google decides its presence in China isn't profitable they will pull out. (The juice has to be worth the squeeze, and if the Chinese gov't has its way, it won't)

Re:Expansion *in* China?

[argent]

Data point: India also has a huge population, but another mass market company (Ikea) has estimated that the total potential customer base for their products in India is no more than five digits.

Re:Without the board, not much chance.

[Shakrai]

And, like it or not, most of the big shareholders of any publicly-held corporations are going to be pension and mutual funds, investment banks, and other companies -- not the sort of entities that are generally swayed by feel-good rhetoric

In this case it seems that this motion was brought by a pension trust:

"The Office of the Comptroller of New York City has advised us that it intends to submit the proposal set forth below for consideration at our annual meeting. It is the custodian and trustee of the New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Police Pension Fund, and the New York City Fire Department Pension Fund, and custodian of the New York City Board of Education Retirement System (the "Funds"), which beneficially own 486,617 shares of Google's Class A common stock."

There are some funds that engage in "socially responsible investing". This would seem to be one of them. My 403(b) is managed by another one.

Larry&Sergey can outvote all other shareholder

[Anonymous Coward]

Google has two classes of shares: Class A common shares (which are what trade under the symbol GOOG) and Class B common shares. Class B common shares are almost identical to Class A common shares, except that Class B common shares have ten votes per share, whereas Class A shares have only one vote per share. Class B shares can be converted at will to Class A shares, but the reverse is not true.

Larry Page and Sergey Brin, between them, hold enough Class B common shares to control more than 51% of the votes that exist, even though most of the economic value of the company is in Class A shares held by investors. So as long as Larry and Sergey agree with each other, they can overrule all other shareholders. They have made public statements indicating that they intend to cooperate with each other to maintain this situation, by converting any of their shares they may sell to Class A before selling them. They can each afford to sell many millions' of dollars worth of stock that way without upsetting their shared controlling interest in the company.

So if Larry and Sergey support a proposal, it passes, and if they don't, it doesn't. When you buy a Class A common share of GOOG, you're getting a share of the profits, not a usable share in making the decisions.

Google doesn't care what its shareholders think

[jalefkowit]

... because they don't have to.

When the company IPOed, they issued two classes of stock: one that you could buy (Class A), and special shares for Sergey Brin, Larry Page and Eric Schmidt that carry 10 times the voting weight of the shares available on the public market (Class B). The result is that anything that Brin (founder), Page (founder) and Schmidt (CEO) don't want passed can't be passed by a shareholder vote; ordinary shareholders simply don't have the voting muscle, even if they all voted together.

Google's rationale at the time was that this arrangement would free them from pressure to constantly be posting higher earnings each quarter. In their SEC filing, they included an unusual "Letter from the Founders" that defended the approach:

The main effect of this structure is likely to leave our team, especially Sergey and me, with significant control over the company's decisions and fate, as Google shares change hands. New investors will fully share in Google's long term growth but will have less influence over its strategic decisions than they would at most public companies...

Academic studies have shown that from a purely economic point of view, dual class structures have not harmed the share price of companies. The shares of each of our classes have identical economic rights and differ only as to voting rights.

Google has prospered as a private company. As a public company, we believe a dual class voting structure will enable us to retain many of the positive aspects of being private. We understand some investors do not favor dual class structures. We have considered this point of view carefully, and we have not made our decision lightly. We are convinced that everyone associated with Google--including new investors--will benefit from this structure.

(Emphasis mine)

It's hard to read the part about "retain[ing] many of the positive aspects of being private" as anything other than "we don't want shareholders telling us how to run our company". And given how the stock is structured, shareholders can't, unless they can win over one or more of the three top execs at Google to their point of view.