A tech entrepreneur recently took a novel approach to ensure that members of her company’s board of directors cannot engage in sexual harassment and keep their positions. The entrepreneur, Kristina Bergman, is the CEO of Integris Software. Bergman added a clause to stockholders’ voting agreements that requires them to vote out a director if there is a “reasonable probability” that they sexually harassed someone.
Typically, directors are only removable for cause, such as if they embezzle money from the company or engage in fraud. Bergman’s approach is novel but it is smart given how rampant sexual harassment is in the tech industry. Hot startup companies, like Uber, and some of the venture capital firms that fund them, like Binary Capital, have come under fire for sexual harassment. Bergman wanted to try to prevent the problem that has dogged these companies from infecting hers.
Notably, the standard of “reasonable probability” is intended to be lower than the standard of proof required to hold someone responsible for sexual harassment in court. Bergman and the lawyer who helped her draft the stockholder voting agreement wanted to avoid protracted legal fights.
According to the voting agreement, if there is a concern about sexual harassment occurring, a special counsel must be appointed by the board of directors to conduct an investigation. If a director from the board must be removed due to sexual harassment, the same venture capital firm that employed the offending director may appoint a new one. Giving the venture capital firm the right to replace the offending director mitigates the risk that the firm will sweep sexual harassment allegations under the rug in order to protect their investment.
Bergman should be applauded for thinking outside of the box to address a serious problem. Sexual harassment is rampant in workplaces throughout the country. More companies need to think creatively not only about how to correct sexual harassment when it occurs but, as Bergman has done, to prevent sexual harassment from occurring in the first place.