A Qualcomm shareholder has sued the company’s corporate directors for failing to bring Blacks onto the board or into top executive roles while repeatedly touting diversity efforts in public.
The lawsuit, which comes in the wake of widespread Black Lives Matter protests over racial inequality, is one of three shareholder derivative legal actions recently filed against technology giants by the law firm of Bottini & Bottini in La Jolla.
Other tech firms sued this month include Oracle Corp., on allegations similar to the Qualcomm suit, and Facebook on claims that it has no African Americans among its senior executives.
The Qualcomm case filed July 17 in San Diego federal court contends that the company’s board is “all-white,” and there are no Blacks in the top six C-suite executive jobs.
“Qualcomm’s directors, wishing to avoid a public backlash, have repeatedly made misrepresentations in the company’s public statements by claiming to have a policy of ‘demanding’ diversity and inclusion,” the lawsuit alleges. “In reality, though, Qualcomm’s board and senior executive officers remain devoid of Blacks and other minorities.”
The lawsuit also names two former Qualcomm board members who recently left, Barbara Alexander and Francisco Ros, along with current directors.
Qualcomm declined to comment. But the company does have some gender and ethnic diversity on its 11-member board and in its executive ranks.
Three board members are women — Ann Livermore, a former top executive at Hewlett Packard; Irene Rosenfeld, former head of food brand giant Mondelez International; and Jamie Miller, former chief financial officer of General Electric.
Harish Manwani, a director since 2014 and a former senior executive at Unilever, was born in India.
Among its top executives, Qualcomm’s second-highest ranking decision maker, President Cristiano Amon, is from Brazil. Chief Financial Officer Akash Palkhiwala came to the U.S. from India.
Qualcomm employs roughly 13,800 workers in the U.S., and 37,200 globally. Of its U.S. workforce, 68.5 percent are classified as minorities, according to the company’s annual sustainability report.
The overwhelming percentage of the company’s minority workers are Asian. The group accounts for 60 percent of Qualcomm’s overall U.S. workforce.
Blacks make up just 1.5 percent of Qualcomm employees — three times less than the 4.6 percent of workers with Hispanic heritage.
“That 1.5 percent stands out as an extremely low number,” said Francis Bottini Jr., the attorney who brought the case, in an interview. “The number hasn’t budged. It’s essentially flat-lined at that level” for at least the last three years.
African Americans account for 13 percent of the U.S. population, said Bottini. While the company talks up diversity, its efforts are not getting results, he said.
In derivative lawsuits, a shareholder brings legal actions against the board or management on behalf of the company itself. According to the complaint, Qualcomm’s board has breached its fiduciary duties to ensure diversity, exposing the company to potentials fines, lawsuits and other risks.
The lawsuit calls for at least three current board members to immediately resign, so the company can put forward two Black nominees and additional minority candidate for board seats.
The suit also wants board members to return their 2020 pay and donate it to organizations working to empower Black people, as well as create an $800 million fund to hire Blacks and other minorities, among other things.
While the lawsuit doesn’t mention George Floyd’s death or Black Lives Matter, recent civil unrest is likely linked to the timing of the complaint, said Kevin LaCroix, an attorney and executive at R-T Specialty, a counselor/broker for corporate officer and director insurance.
“I think this plaintiff’s lawyer has read the sense of the time and determined that whatever the procedural or substantive merits of a case like this might be under ordinary circumstances, these are not ordinary circumstances,” he said. “That is going to be the context (under which) the case plays out.”
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