Alphabet Inc GOOGL GOOG said Monday in a filing with the United States Securities and Exchange Commission that in the future its directors will be elected by a majority vote.
What Happened: The Google parent said that its board of directors had adopted amendments to the company’s bylaws on Oct. 21.
In the past, the board functioned on a plurality-based system, which meant a person could get elected as a director if they got more votes than an opposing candidate, Bloomberg reported.
Since most of Alphabet board candidates run unopposed, the previous system meant that the company’s candidate of choice would secure a place on the board in most cases.
Jill E. Fisch, a professor at the University of Pennsylvania Law School, called the change a “symbolic gesture,” as per Bloomberg. “It’s some indication that they’re hearing that shareholders want more accountability,” Fisch said.
Why It Matters: The company has an 11-member board, which includes founders Larry Page and Sergey Brin. The founders own super-voting shares — allowing them to have greater control over the tech giant.
Last year, the company’s board investigated allegations of sexual harassment against senior executives and also looked into its handling of the allegations.
The company’s shareholders filed a lawsuit against the board accusing it of covering up sexual misconduct, according to the New York Times.
Price Action: Alphabet Class A shares traded nearly 3% lower at $1,584.29 on Monday. On the same day, the company’s Class C shares traded almost 3.1% lower at $1,590.45 and gained 0.13% in the after-hours session.
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