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Melinda and Bill Gates pose for their annual letter. (Gates Foundation Photo)

A King County judge has found that a former top technology executive at the Bill & Melinda Gates Foundation is entitled to $4.9 million in damages from lost compensation after he was terminated in what court documents describe as a “broken promise.”

King County Superior Court Judge Catherine Shaffer sided with Todd Pierce, former chief digital officer for the Gates Foundation, who sued the foundation last year, a few months after he was terminated. Shaffer agreed that Pierce was undermined soon after starting his new role and was terminated for clashing with executives who didn’t believe in his vision.

The court’s Findings of Fact in the case are dated Oct. 2 but weren’t made public in the court file until Monday, and they haven’t been previously reported.

Todd Pierce
Todd Pierce.

“Pierce was pulled away from lucrative employment to take on a visionary, change-oriented, big ‘D’ digital role; he worked his heart out to make it happen,” according to the Findings of Fact. “But as soon as he tried to roll out his vision, he was frustrated and denied the opportunity.”

Pierce, a senior vice president with Salesforce at the time, was recruited in 2014 by then Gates Foundation COO Leigh Morgan, a former colleague of his at biotech company Genentech. The chief digital officer role was promoted as a key position in the company, and Pierce’s employment needed buy-in from Bill Gates himself.

Pierce started in March 2015 and was terminated about 17 months later in October 2016. Court documents lay out the difficulties the foundation was facing in late 2014 when Pierce was being recruited. A major cross-program initiative had just failed.

As Pierce’s recruitment progressed, involving top executives like Bill Gates and the foundation’s CEO, Sue Desmond-Hellmann, it became clear that not everyone was on the same page about what the position should entail, according to the findings. Some wanted to see a new big-picture strategy that would succeed where the previous initiative failed, while others just wanted someone to “fix IT.”

Around the same time, in November 2014, Morgan and the Foundation reached a decision to end a multi-year, multi-million project called “Clarity.” Clarity was supposed to overhaul cross-program systems like investment management (e.g., grant management and tracking), for which IT resources played a significant part. The project was an utter failure, with the Foundation writing off a $70 million loss.

In December 2014, Morgan invited Pierce to interview with Bill Gates and Desmond-Hellmann for the job described above and he accepted. Morgan and her staff prepared talking points for Gates that stressed the visionary and transformative nature of the role.

At trial, Dr. Desmond-Hellmann described the job description as “shared agreements” meant to ensure that Gates and Pierce were on the “same page” about the role.

Pierce met with Bill Gates on December 18. The meeting went well: the two spoke longer than the allotted meeting time and Gates and Pierce held a lively discussion about how digital technologies could help transform the Foundation and, with it, the business of philanthropy.

Pierce articulated a vision during the interview process and throughout his employment of getting more of the Foundation’s money more quickly to the people who need it through the use of digital technologies.

While there is no question Bill Gates understood the CDO role, others at the Foundation did not. And, unfortunately, Morgan did not lay the groundwork for a CDO to succeed. For example, there is no evidence she analyzed or even considered how a CDO would fit into the organization or its work flow at any point during her recruitment of Pierce; she did not discuss with program staff who were already engaged in digital technologies about the need or desire for such a role; and perhaps worse, she sent inconsistent messages about the job.

In fact, while Morgan emphasized the expanded nature of the role to certain people (e.g., Pierce, Gates, Desmond-Hellmann) she repeatedly told internal constituents that Pierce’s number one job was to ‘fix IT.” At trial, when asked whether she said anything similar to Pierce before he accepted the job, Morgan’s testimony in the affirmative was, at best, unconvincing. She could point to no documentary support for it and, as with many other aspects of her testimony, she was not credible. Time and again, she said different things to different people depending on what was most politically expedient.

For her part, Desmond-Hellmann admits that convincing program-side leaders and staff to engage in broad, cross-program ideas was a ‘tall order’ then and now. She did not survey employees about the need for a CDO prior to offering the job to Pierce, explaining she did not need to because she ‘would have predicted the outcome of the survey,’ which was that program staff would have asked ‘what is a CDO and why do I have one?’

Judge Shaffer found that Pierce is entitled to $4.89 million in wages, stock options and stock awards that he left on the table by taking the job at the Gates Foundation. Pierce also alleged that he was deliberately misled during his recruitment, but the judge sided with the Gates Foundation on that issue.

In a statement, the Gates Foundation reiterated a pledge to appeal the decision, saying it does not match up with Washington state law. Here is the full statement:

“The foundation agrees with the judge’s ruling that Todd Pierce did not meet his burden on the negligent misrepresentation claim. We continue to dispute the findings, characterizations of fact, and legal conclusions on the other claims, which are not supported by the record and contradict well established case law in Washington State. A judgment has not yet been entered and the amount of any judgment is still uncertain. The foundation intends to appeal the decision.”

Morgan did not respond to a request for comment.

According to Pierce’s LinkedIn profile, his current work includes sitting on a pair of boards for health-oriented companies in San Francisco. Morgan’s LinkedIn profile says she served as Gates Foundation COO from 2014 to 2017 and is now an executive in residence at Nia Tero, a nonprofit that helps indigenous people with conservation efforts.

According to the findings, Pierce faced nearly immediate resistance to his mandate for a company-wide digital re-imagination. The breaking point though, according to court documents, came after Pierce gave a presentation for a “Digital Foundation” to Desmond-Hellmann without first running the content by Morgan. Morgan formulated a “Plan B” to terminate Pierce, which she eventually followed through on in October 2016, according to the judge’s findings.

Pierce’s termination came down to the fact that some executives “wanted a CIO to ‘fix IT’ not a visionary CDO,” according to the document. “Morgan concluded that it had been premature to hire Pierce and that the CDO concept was ‘ahead of its time.’ ”

Shaffer concluded the reasons for his termination were “as close to a smoking gun as one finds to demonstrate a deliberately broken promise.”

“Pierce left Salesforce because he trusted that the Foundation would come through on its promise to allow him to do the job of CDO,” according to the findings. “That promise never materialized in any meaningful way and Morgan knew or should have known that the Foundation was not prepared to support a bona fide CDO like the one she promised, which she effectively admitted at the time she terminated Pierce.”

Here are the full Findings of Fact from Judge Shaffer:

Findings of Fact by Nat Levy on Scribd

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