Google Leaves Shareholders in Dark About 'Green' Investments
In Lewis Carroll’s classic tale Through the Looking Glass, Alice and Humpty Dumpty have a befuddled discussion over the meaning of words:
Humpty Dumpty: “When I use a word it means just what I choose it to mean -- neither more nor less.”
Alice: “The question is whether you can make words mean so many different things.”
Humpty Dumpty: “The question is which is to be master -- that’s all.”
In Mountain View, California, at the Google headquarters, the word in question is “transparency,” and the master is Google’s executive team and board of directors. It is the company’s shareholders who, like Alice, are left confused and in the dark.
Google has come under fire recently for its lack of transparency. Google has a long history of secrecy, but now it appears to be keeping important information from its shareholders. The most recent controversy surrounds Google’s sortie into alternative energy investments.
Since its inception and initial public offering, Google has created immense shareholder value by focusing on its core Internet, technology, and advertising businesses. However, in recent years Google has spent millions in alternative energy markets. Google’s foray into alternative energy is suspicious for multiple reasons and begs for an explanation.
Perhaps the most curious aspect of Google’s green energy investments is that they align more closely with Google board member John Doerr’s personal holdings than with the company’s core business.
Doerr is fanatical about alternative energy, and has spent much of his career advocating for liberal climate change policies. In California, Doerr has been a leader in the cap-and-trade movement. At the federal level, Doerr serves on President Obama’s Economic Recovery and Advisory Board, where he is in a position to influence energy policy. A venture capitalist by trade, Doerr is a partner at Kleiner Perkins Caufield & Byers, a venture capital firm that is heavily invested in alternative energy. According to his corporate bio, Doerr is primarily passionate about “[g]reen tech innovation and policies to fight global warming.”
Doerr’s personal actions alone are insignificant to Google’s shareholders, yet coupled with Google’s green energy investments they raise ethical questions that the company should address.
A 2009 GigaOm news story reported that both Google and Doerr’s firm invested millions in the same small geothermal company: Altarock Energy. Without transparency, shareholders are left to believe either that Doerr is pulling the strings on Google’s alternative energy investments -- potentially for his own benefit -- or the company is bailing out one of its own. Either scenario is likely a losing proposition for Google investors.
As a board member, Doerr has a fiduciary duty to Google shareholders and not to his own wallet or his personal policy preferences. And shareholders have a right to know how this incredible happenstance materialized -- but Google’s leadership isn’t talking.
That is why, representing the National Center for Public Policy Research, I presented a shareholder proposal at Google’s June 2 shareholder meeting asking the company to disclose any board member investments that represent a financial conflict of interest for Google.
The proposal called for a company report to the shareholders that details these conflicts and explains how they are addressed. Shareholders, our proposal said, have a right to know if board members are exerting undue influence or personally benefiting from questionable investments that may damage Google’s bottom line.
Google’s board responded in its proxy statement, saying:
We agree with the [National Center] that transparency and compliance with the Google Code of Conduct are important. However, we disagree that a report to stockholders is a useful mechanism for ensuring that transparency.
So Google likes the idea of transparency, but not the actual practice of it?