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  • >>Eric Schmidt: It's a great pleasure to invite all of you back.

  • I hope everybody enjoyed their breakfast.

  • I certainly did.

  • And it's my privilege to invite you and welcome you to our shareholder meeting.

  • I'm, of course, Eric Schmidt, the executive chairman.

  • You know me.

  • Everybody should have registered.

  • If you haven't, please go ahead and get your badge so we know who you are.

  • There is an agenda that includes, on the back, a Rules of Procedure for the meeting, which

  • we will, of course, be following.

  • I want to make sure everybody knows we've got a couple of folks here -- I'm just going

  • to describe them.

  • Starting with John Doerr, one of our longest-serving board members, my personal friend for many

  • decades, and a fantastic venture capitalists.

  • John Hennessy, among other things, a brilliant computer scientist, and former president,

  • I guess just recently stepped down at Stanford, and remaining at Stanford as a computer scientist

  • and also on our board.

  • And, of course, Larry Page.

  • It's hard to describe the contribution that Larry Page has made to the world, but just

  • say that he is one of the most extraordinary human beings alive today.

  • And I'll stop there.

  • [ Laughter ] I can go on, but I don't -- he hates this,

  • so I want to be respectful and just say, let's start with that as our threshold.

  • You're going to hear from Ruth Porat, myself, and David Drummond.

  • And -- who are part of the management.

  • We also have Maura Stanley, she's a representative of Computershare.

  • Maura, I didn't see where she was -- Oh, there she is.

  • I'm sorry, would you raise your hand there.

  • She's right over here on the right.

  • And she's our Inspector of Elections.

  • So make sure the numbers add.

  • That was a problem in another award show.

  • And Andrew Cotton and Matthew Taggart, representatives of Ernst & Young.

  • Where are those two?

  • Over here.

  • Okay.

  • Sitting in the opposite corner.

  • And they're our independent accountants.

  • And they've done this forever and, of course, do a great job.

  • What we normally do here is we have sort of the formal procedural part of the meeting

  • and then what will happen is I'll do a short sort of update of where we are and go right

  • to your questions.

  • David Drummond, my colleague for 20 years, I think, close to 20 years, will now run the

  • proper part of the meeting.

  • I think you all know, he's the senior vice president, corporate development, chief legal

  • officer, and secretary of everything.

  • >>David Drummond: All right.

  • >>Eric Schmidt: David.

  • Thank you.

  • >>David Drummond: Thank you, Eric.

  • [ Applause ] Well, thanks, everyone.

  • And welcome to the Annual Meeting of Stockholders, as well as the annual opportunity for Eric

  • and myself to wear a tie on the Google premises.

  • So we're really glad to have you here.

  • So quick note about logistics.

  • As stated in the Rules of Procedure that you probably received -- you should have received,

  • stockholders should not address the meeting until you're recognized.

  • We -- as Eric said, we have a question and answer period, so you can ask your questions

  • after we've finished the formal business.

  • So when we get to the Q&A period, if you'd like to ask a question, we have -- we usually

  • have mics -- I don't see them.

  • Maybe they will be from in the Q&A period -- where you can step up to the mic and ask

  • your question.

  • Once you've been recognized, when you are recognized, please identify yourself and your

  • status as either a stockholder or a representative of a stockholder, and then you can ask your

  • question.

  • I've received the Affidavits of Mailing from Computershare and Broadridge, which state

  • that the notice of the meeting was dual given.

  • All stockholders of Class A and/or Class B common stock as of the close of business on

  • April 19th, 2017, are entitled to vote at this meeting.

  • I've also been advised by the Inspector of Elections that holders of our outstanding

  • Class A and Class B common stock representing at least a majority of the voting power of

  • our outstanding Class A and Class B common stock, which are entitled to vote, is represented

  • in person or by proxy at today's meeting.

  • And I apologize for the longest sentence in the history of mankind that I just read.

  • Therefore, a quorum is present today, and the meeting is duly constituted, and the business

  • of the meeting can proceed.

  • So the first item of business, as always, is election of directors.

  • We have 12 directors to be elected at the meeting today.

  • Those directors will hold office until the 2018 Annual Meeting of Stockholders.

  • The board of directors has nominated the following: Larry Page, Sergey Brin, Eric E. Schmidt,

  • L. John Doerr, Roger W. Ferguson, Jr., Diane B. Greene, John L. Hennessy, Ann Mather, Alan

  • R. Mulally, Paul S. Otellini, K. Ram Shriram, and Shirley M. Tilghman.

  • Now, our bylaws require that stockholders provide advance notice of their intent to

  • nominate persons as directors.

  • We didn't receive any such notice, so accordingly, I declare the nominations for directors closed.

  • Now, the next matter being submitted to our stockholders is the ratification of the appointment

  • by the board of Ernst & Young as our independent registered public accounting firm.

  • And our board has recommended that our stockholders ratify the appointment of Ernst & Young as

  • our public accounting firm for the 2017 fiscal year.

  • The next matter that we've submitted to stockholders is the approval of an amendment to our 2012

  • Stock Plan to increase the maximum number of shares to our Class C capital stock that

  • can be issued under the plan by 15 million shares of Class C capital stock.

  • Our board has also recommended that our stockholders approve this amendment to the 2012 Stock Plan.

  • All of that is described in detail in our proxy statement.

  • Now, the next matter being submitted, on an advisory basis, is the approval of the compensation

  • awarded to Alphabet's named executive officers.

  • Our executive compensation program and the compensation paid to our named executive officers

  • is described in full on pages 38 to 48 of our proxy statement.

  • Now, our compensation programs are overseen by the Leadership Development and Compensation

  • Committee of the board.

  • And they reflect our philosophy to pay all of our employees, including our named executive

  • officers, in ways that support our primary business objectives and mission.

  • Our board of directors has recommended that our stockholders approve the compensation

  • awarded to our named executive officers.

  • The next matter being submitted to the stockholders is an advisory vote, again, to determine the

  • frequency of the future stockholder vote regarding compensation awarded to the named executive

  • officers.

  • So how often we're going to have the advisory vote that we just -- I just discussed.

  • Now, our board of directors has recommended that our stockholders vote for a frequency

  • of every three years for the stockholder advisory vote on compensation awarded to named executive

  • officers.

  • Okay.

  • So now the next seven items are all stockholder proposals.

  • Our board of directors has unanimously recommended that our stockholders vote against all seven

  • stockholder proposals that will be presented.

  • You have the arguments for in our proxy statement, as well as the company's response to each

  • of the proposals.

  • So let's start with the first one.

  • It's being brought by John Chevedden, James McRitchie, Myra K. Young and the NorthStar

  • Asset Management funded pension plan as the colead filers, as well as Boston Common Asset

  • Management, as a co-filer.

  • Ms. Ivy Jack, who is representing NorthStar Asset Management, will be presenting the proposal.

  • There she is.

  • Ms. Jack, you'll have a total of three minutes to make a statement about the proposal.

  • And I'm advise you when your time is up.

  • >>Ivy Jack: Good morning, my name is Ivy Jack, from NorthStar Asset Management in Boston,

  • the beneficial owner of over 7.2 million dollars of Alphabet common stock.

  • Fellow shareholders, I am here to represent resolution number 6, a good governance proposal

  • about equal voting rights.

  • When shareholders of common stock do not have an equal right to weigh in on significant

  • governance matters, we subject ourselves to greater financial risk.

  • When Alphabet went public, shareholders already lacked opportunities to give substantive input

  • into matters of policy.

  • Alphabet's voting structure is heavily weighed to favor insiders, given that Class B shares

  • are granted ten times the voting rights of Class A shares.

  • Matters were made worse when Class B insiders voted in a -- voted in a brand-new class of

  • stock with zero voting rights.

  • The fact that this was approved is particularly remarkable, because our calculations show

  • that only 15% of Class A outside shares that voted approved of establishing Class C capital

  • stock.

  • How was this possible?

  • Well, this measure passed because Mr. Brin and Mr. Page, who currently own only 11% of

  • the outstanding shares of the company, together have 51% of the voting power.

  • While we can ignore this reality when profits are up, this voting structure constitutes

  • a considerable risk to governance and shareholder value.

  • Our company's own 10-K identifies this risk when it states that, "The concentration of

  • our stock ownership limits our stockholders' ability to influence corporate matters and

  • that the Class C structure could prolong the duration of Larry and Sergey's current relative

  • ownership of our voting power and their ability to elect all of our directors to determine

  • the outcome of most matters submitted to a vote of our stockholders."

  • In other words, it continues to be impossible for outsaid shareholders to have any meaningful

  • input on company decisions.

  • Furthermore, the 10-K notes that as a result of this concentrated control, company management

  • may take actions that our stockholders do not view as beneficial.

  • Since Class C shares have no voting rights and given the importance of voting at annual

  • meetings, Class A shares are the only way for outside shareholders to have a say in

  • company matters.

  • We are very concerned about the governance risks that come from relying upon merely two

  • or three people's vision and ability to reduce threats to the company long term without broad

  • input.

  • The founders brought this company into fruition and led it into profitability.

  • But the company's decision to offer common shares of the company on public exchanges

  • makes Alphabet a public company, brings with it a responsibility to shareholders to practice

  • good governance.

  • Shareholders, we urge you to vote for proxy item number 6.

  • >>David Drummond: Thank you very much, Ms. Jack.

  • [ Applause ] The -- thank you.

  • The second stockholder proposal is being brought by Walden Asset Management as the lead filer.

  • They are joined by the Benedictine Sisters of Baltimore, the Benedictine Sisters of Pan

  • de Vida, and other organizations as co-filers.

  • We have today Ms. Meredith Benton, who will be presenting the proposal.

  • Ms. Benton, you have three minutes.

  • >>Meredith Benton: Thank you.

  • My name is Meredith Benton, and I'm here representing Walden Asset Management, the primary sponsor

  • of proposal 7, seeking information on how Alphabet directly and indirectly works to

  • affect legislation and public policy.

  • Walden owns over 160,000 shares of Alphabet.

  • On behalf of Walden and approximately 20 co-filers, I'm pleased to move this resolution.

  • On their behalf, let me start by thanking Alphabet for its steadfast leadership on climate

  • change, both by reducing its greenhouse gas emissions, but also by speaking out to support

  • the Paris Accord and committing to continuing leadership on climate.

  • It is a part of Alphabet's lobbying for positive public policy solutions, and it matters a

  • great deal.

  • Thank you.

  • We understand that corporate lobbying can be a positive force and that transparency

  • is an important part of this.

  • This request for transparency on lobbying has been made to hundreds of companies over

  • the last six years.

  • Lobbying is big for Alphabet.

  • We know that in the last five years, Alphabet spent over $83 million in federal lobbying

  • and has been one of the top five companies lobbying.

  • While Alphabet discloses a summary of their direct federal lobbying on their Web site,

  • with links to a report they provide to the Senate, these Senate quarterly reports are

  • very difficult for investors to navigate.

  • Alphabet also does not disclose meaningful details on dues and grants provided to the

  • over 40 trade groups and advocacy organizations it is a part of, nor how it evaluates whether

  • these lobbying organizations are vetted to be consistent with Alphabet's priorities and

  • values.

  • In order to better understand Alphabet's role in trying to affect legislation and regulation

  • through trade association, additional disclosure is needed for investors.

  • Once again, we want to congratulate Alphabet for the company's public decision several

  • years ago to withdraw from ALEC, a known climate-denying group actively working to combat renewable

  • energy standards.

  • Alphabet acted on its stated values when it withdrew from ALEC, an action we enthusiastically

  • commend.

  • However, there are other trade associations whose actions conflict with Alphabet's values.

  • For example, Alphabet is an active member of the U.S. Chamber of Commerce, a group which

  • has spent over $1.2 billion on lobbying since 1998.

  • This group has been an active force opposing climate change solutions, including suing

  • the EPA to block the EPA's Clean Power Plan to address climate change.

  • Clearly, this creates an outright conflict with our stated environmental position.

  • Apple was so offended by the Chamber's policies and actions that they withdrew membership.

  • We urge Alphabet to seek out challenging the Chamber's actions against climate policies

  • and to lobby inside the Chamber with other companies to change the Chamber's policies.

  • Another item of concern to investors is the Financial Choice Act, which will soon be before

  • the House for a vote.

  • This seeks to eliminate the filing of shareholder resolutions, an important tool for investor

  • communication and trust-building within the financial markets.

  • We urge Alphabet to speak up for the rights of investors to file resolutions.

  • One final point.

  • For several years, investors have written letters to top management and filed resolutions

  • on lobbying disclosure and transparency issues, seeking an opportunity simply to meet and

  • talk.

  • But the letter and calls have gone unanswered.

  • The filers of this resolution are perplexed.

  • Alphabet doesn't have a bad investor relations record in general.

  • So why doesn't the company agree to meet or talk on the phone with investors who want

  • a hearing and to seek a middle ground?

  • Thank you.

  • >>David Drummond: Thank you, Ms. Benton.

  • [ Applause ] The third stockholder proposal is being brought

  • by Clean Yield Asset Management as the lead filer on behalf of John Fedor-Cunningham and

  • David Fedor-Cunningham.

  • And the Benedictine Sisters of Mount St. Scholastica.

  • As the co-filer.

  • Ms. Ivy Jack is back to present this proposal.

  • >>Ivy Jack: Good morning, Mr. Chairman, board of directors, and my fellow shareholders.

  • My name is Ivy Jack, and I have been asked to read the following statement by the filers

  • of this proposal, Clean Yield Asset Management.

  • Our proposal, number 8 on the proxy ballot, calls on Alphabet to fully disclose the extent