Google Inc. ranks lower in corporate governance than any company in the Standard & Poor’s 500 stock index, according to influential proxy adviser Institutional Shareholder Services, the Financial Times said on Monday.
ISS, which advises shareholders on how to vote, found 21 weaknesses in the governance practices of Mountain View, California-based Google, which is expected to join the S&P 500, the newspaper said.
These flaws, it said, include a dual-class capital structure that gives effective control to insiders, too few outside directors, a lack of stock ownership guidelines for executives and independent directors, a compensation plan that lets the company reprice stock options if the stock price falls, and loans to company insiders.
The proxy adviser assigned Google, the world’s leading Web search engine, a corporate governance quotient of 0.2 out of a possible 100, the newspaper said.
“I’d say those numbers sound pretty darn evil,” Patrick McGurn, ISS’s senior vice president, told the newspaper.
A Google slogan is “Don’t Be Evil”.
Google and ISS did not immediately return calls seeking comment.
Google made a long-awaited initial public offering last Wednesday. Its shares closed Friday on the Nasdaq at $108.31, or 27 percent above their $85 offering price. The company’s market capitalization now exceeds $29 billion.
The U.S. Securities and Exchange Commission has started an informal inquiry into Google’s offer to buy back 23.2 million shares it may have issued illegally.
Separately, Google has said the SEC may pursue civil remedies against the company’s general counsel for securities law violations related to his prior job.
In addition, the SEC has requested additional information on a Playboy magazine interview with Google founders Sergey Brin and Larry Page. The company has said it does not believe the interview, which took place before it filed to conduct its IPO, violated U.S. securities rules.
ISS is based in Rockville, Maryland.
