The big news in the tech world earlier this week was the $57 million fine handed down by France’s National Data Protection Commission, or CNIL for short. The French regulatory body fine Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) for failing to protect its European users adequately. Naturally, as is often the case in these matters, investors reacted negatively toward the news sending GOOGL stock lower.

My InvestorPlace colleague Will Healy managed to come up with a reasonably original argument why these fines are a good thing for those wishing to acquire Alphabet stock on the cheap.

“These fines offer unexpected benefits to holders of GOOGL stock. The more obvious advantage comes from the chance to buy GOOGL at a lower price for a time,” Healy wrote January 23. “More importantly, the tighter rules make it more difficult for an upstart to challenge Google. This should lead to both less competition and more profit which will increase Google stock in the long run.”

Now, I’m sure Healy doesn’t want to see any more multi-billion-dollar fines like the $7.61 billion Alphabet was forced to pay over the past two years, but it is an intriguing thought. Rather than waste money on share buybacks, Larry Page should put some of its $24 billion in free cash flow aside for future payments that ultimately weaken the competition.

That’s one way of looking at it. Here’s another.

Better Corporate Governance

You would have to be an avoider of news not to know that Alphabet’s facing some serious workplace conduct issues at the moment. So severe, two shareholder lawsuits were filed this week seeking to change the way it runs its business.

Normally, when shareholders file lawsuits against a company, they’re accompanied by an ambulance chaser or two, which can all into question the seriousness of the accusations made by the lawyers bringing these suits.

However, in this instance, it looks as though they have a great deal of merit.

“If you were a high‐level male executive at Google responsible for generating millions of dollars in revenue, Google would let you engage in sexual harassment,” stated one of the lawsuits filed in California. “And if you get caught, Google would keep it quiet, let you resign, and pay you millions of dollars in severance.”

I have no time for companies who operate this way.

Google CEO Sundar Pichai publicly apologized in October for the egregious conduct, reminding employees that 48 people were fired over two years as a result of their actions.

I’m not privy to inside information, so I’ll assume his regret is genuine, but it begs the question of why the board so blatantly ignored the situation. More importantly, it lends credence to the lawsuit’s claim that the board breached its fiduciary duty.  

Hopefully, these lawsuits make their way through the legal system with Alphabet paying a real price for turning a blind eye to this kind of conduct.

There’s An Upside Similar to the EU Fines

The lawsuit filed in San Mateo County by shareholder James Martin — he’s held Google stock since October 2009 — asks Alphabet to add three independent directors and eliminate the company’s multi-class share structure that allows Larry Page and Sergey Brin to retain control.

While I’ve found multi-class share structures often lead to better stock performance, many institutional investors don’t share my views, pushing for their complete elimination. That’s a subject for another time.

The addition of three or more independent directors can only help Alphabet become a more respectful organization.

However, it is the proposal by employee organizers that a regular employee ought to serve on the board, that holds the most promise for better corporate governance at Alphabet.

Frankly, I don’t know why it’s not a requirement for all publicly traded companies.

The Bottom Line on GOOGL Stock

As my colleague so aptly said, Alphabet has $106 billion in cash. Eight billion in fines is not going to move the needle. The company is not going to the poorhouse.

Over the past five years, GOOGL stock has generated a sub-standard annualized total return of 7.1% — 250 basis points less than the S&P 500. Shareholders like Martin must be very disappointed with their investment.

If Alphabet wants GOOGL stock to get unstuck, appointing a company employee to the board would go a long way to eliminating some of the distrust female employees have working in such a toxic environment.  

Investors?

I think they’d buy in, hook, line, and sinker.

As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.