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Google slammed for corporate sleaze

SEC to investigate as space cadets return to earth

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Google's eleventh hour price adjustment might have saved it some red-faces when it finally floated last week, but it's back to earth with a bump this week. The Securities and Exchange commission has confirmed that it will investigate Google's chaotic allocation of buddy shares in the year preceding the flotation. Google had issued 23.2 million shares and options without declaring them. It had announced its intention to buy them back, but in some cases was offering only cents for stock now worth $108 a piece.

More worryingly for the famously secretive company is the fresh glare of public scrutiny. An independent shareholder advisor, ISS, has ranked the newly-public Google Inc in last place for corporate governance out of 500 companies on the Standard and Poors Index.

The Corporate Governance Quotient lists factors such as accountability and executive compensation levels. ISS found 21 bad practices at Google, earning it a CGQ of only 0.2, and so placing it last in the S&P 500. The watchdog criticized the two-tier share structure, not enough external directors, insider loans, and stock repricing options.

"I'd say those numbers sound pretty darn evil," ISS senior veep Patrick McGurn told the FT.

All a little unfair, we think, as it places too little emphasis on what shareholders really want, which is apparently an abundance of pictures of pretty colored balls on the corporate web site, and a rating that evaluates the general cuteness of the founders. We will be writing to the ISS researchers demanding why these important criteria have been excluded. ®

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