At Alphabet, There Are Only Two Shareholders Who Count

Google parent Alphabet’s annual shareholder meetings are a very civilized affair, with chairman Eric Schmidt playing host, sharing a vision of the better world the company is creating, followed by polite questions and proposals from shareholders.

Those shareholder proposals, however, are largely a false front—window dressing, if you will. Because as everyone at the meeting probably knows, there are only two shareholders who really matter at an Alphabet annual meeting, and their names are Larry Page and Sergey Brin.

That’s because Google founders Page and Brin control 51% of the votes, despite owning just 11% of the overall equity. Their voting control comes through their large ownership stake in Class B shares, which carry 10 votes each (Schmidt’s stake gives him 5% of the overall votes).

One by one, shareholder representatives stood up at the meeting in Mountain View, Calif. on Wednesday morning, including several from large investors such as Northstar Asset Management, which owns 7.2 million shares. They presented a range of proposals designed to try and force Alphabet to take action on a variety of issues.

A proposal from Arjuna Capital, for example, would have required that the company produce numbers related to the pay gap between male and female staff, an issue that is currently the subject of an investigation by the U.S. Department of Labor.

The department has alleged that there are “systemic compensation disparities against women” at Alphabet, but the company maintains that this is not the case. In the shareholder proxy document filed with regulators, it argued that shareholders should vote against the Arjuna proposal because it is “not in the best interests of the company and its stockholders.”

Another motion, also backed by Arjuna and several other institutional shareholders, proposed that the company be required to produce a report describing what kind of action it is taking to prevent the spread of “fake news” and misinformation through its networks.

Arjuna director Natasha Lamb told the meeting that such misinformation “has affected elections in the U.K, France and the U.S., and the confusion cuts across political lines—a study from Pew shows that 64% of Americans trust news on the Internet less than a year ago.” Steps the company has announced to take action, she said “are too little and too late.”

The investment fund presented an identical motion at Facebook’s recent annual meeting, and just like the proposal at Alphabet’s meeting, it was voted down—and for the same reason, since Facebook co-founder Mark Zuckerberg controls a majority of the votes in the company.

The motion from NorthStar was perhaps the most quixotic of them all: It proposed that Alphabet restructure its shares in order to give every shareholder a single vote.

A representative for the fund said that it’s easy to ignore voting-rights inequities when profits are up, but it “poses significant risk” to the company’s future performance. “It’s impossible for shareholders to have any meaningful input,” the NorthStar spokesman said. “We are very concerned about the governance risks of relying on two or three people.”

Just like all the other shareholder proposals, the Northstar motion was voted down.

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