Good morning. David Meyer here, filling in for Alan from Berlin.
Google—whose workers recently got it to drop a Pentagon deal due to the possibility that Google AI could help mark people for death—is facing more pressure from below. But this time there’s a new twist.
Employees and investors yesterday teamed up to urge Google parent Alphabet to tie executive pay to the meeting of corporate diversity goals. The shareholder proposal, from Zevin Asset Management, was voted down at Alphabet’s shareholder meeting along with all the other proposals. However, even though it failed, it was notable for the way in which it showed investors stepping in to back up employee concerns.
The problem at hand is real, too. As the proposal stated:
“Our Company remains predominantly white and male, especially in technical and leadership roles. Over the past four years, the Google division has only improved representation of women in its workforce by one percentage point (from 30% to 31%). In the same period, positions for all underrepresented people of color in the Google workforce have only increased from 9% to 10%. Among Google’s top 31 executives in 2016, there was only one underrepresented person of color and only four women.”
“Clearly, Alphabet’s management approach to inclusion in its key Google subsidiary lacks serious momentum and directionality. As with any other major strategic challenge, investors should not be satisfied with one-percent progress in four years.”
Software engineer Irene Knapp backed up the Zevin proposal by telling shareholders that the lack of executive leadership on this front “fundamentally hurts the quality of products Alphabet can deliver to users” and “has left many of us feeling unsafe and unable to do our work.”
Regarding that last point, the Zevin proposal cited multiple recent reports about employees quitting over racial discrimination, employees being harrassed after their personal information was posted on far-right websites (they blame coworkers), and a soon-to-depart coder allegedly being told by a senior executive that “if the majority of your coworkers are Nazis, it is better if you don’t know about it.”
Zevin’s proposal didn’t just address the diversity issue, instead rolling it into a wider argument about corporate sustainability. It also referenced Google’s multiple antitrust investigations in Europe, and with good timing as it turned out—the Financial Times reported yesterday that the European Commission will find against Google in its Android antitrust probe “within weeks.”
Google founders Larry Page and Sergey Brin may hold supervoting rights, making these proposals untenable in practice, but they can’t stop this dirty laundry being aired in public—particularly when employees and shareholders join forces. At some point, something has to give. And not just a “more inclusive vegan salad” emoji.
Warren Buffett and Jamie Dimon have again called for an end to quarterly earnings guidance, warning that such forecasts result in short-termism that harms the economy. “When companies get where they’re sort of living by so-called making the numbers, they do a lot of things that really are counter to the long-term interests of the business,” said Buffett. CNBC
The European Union intends to have its new tariffs against U.S. goods in place by July—this is of course retaliation against President Donald Trump’s steel and aluminum tariffs, but Trump has previously warned that retaliation will be met with more tariffs on imports from the EU. The EU’s tariffs on American imports will whack 25% on whisky, pleasure boats and more. Even U.S. playing cards will get a 10% tariff. Financial Times
Twitter will sell at least $1 billion in convertible debt, it said yesterday. There’s a big trend right now of tech companies in particular taking advantage of high share prices to issue convertible bonds. Twitter said it would use the cash for general corporate purposes. They will bear interest at 0.25% a year and mature in mid-2024, unless they’re converted or repurchased by then. Wall Street Journal
The Goldman Sachs-backed, blockchain-based payment service Circle is reportedly seeking a federal banking license so it can provide more services to customers. It also wants to become a registered brokerage—as does the major cryptocurrency exchange Coinbase. If these brokerage licenses are granted, the companies could become big-time conduits for the tokens that firms issue in initial coin offerings. Bloomberg
Around the Water Cooler
Back to the possibility of Starbucks’s exiting chair, Howard Schultz, gunning for the presidency… The Democrat blasted the left wing members of his party for over-promising things they wouldn’t be able to pay for: “It concerns me that so many voices within the Democratic Party are going so far to the left. I say to myself, ‘How are we going to pay for these things,’ in terms of things like single payer [and] people espousing the fact that the government is going to give everyone a job. I don’t think that’s realistic.” Sure sounds like he will be running, although he hedged: “There’s a lot of things I can do as a private citizen other than run for the presidency of the United States.” CNBC
Volkswagen is planning “closure days” at its main German factory in order to stop a build-up of vehicles, thanks to the rigorousness of new emissions tests. The EU is introducing stricter new standards in September, and VW says it doesn’t have enough testing equipment to cope. On a related note, a new kind of emissions test, on which it is hard to cheat, shows that pretty much all diesel cars produced since the Dieselgate scandal exceed the EU’s current limits. BBC
The sound-related illnesses that hit U.S. consulate workers in Cuba in 2016 are back, this time hitting their colleagues in China. The U.S. has evacuated workers from a Guangzhou consulate over neurological symptoms that seem to have been caused by a sound like “marbles bouncing and hitting a floor then rolling on an incline with a static sound.” South China Morning Post
Trump lawyer Rudy Giuliani says North Korean dictator Kim Jong-un “got back on his hands and knees and begged” for the revival of the Singapore summit with Trump. The comment may play well to some at home, but it is very likely to offend Kim and his team, given that Kim is treated as a near-deity in North Korea. The summit was previously called off after the North Koreans reacted angrily to comments by Trump’s national security advisor, John Bolton. New York Times