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Mark Zuckerberg’s control of Facebook is like a dictatorship: CalSTRS



That’s because the tech giant has dual-class shares. Facebook’s Class B shares are controlled by Zuckerberg and a small group of insiders and have 10 votes per share. Class A shares only have one vote per share. The end result is that Zuckerberg and those insiders control almost 70 percent of the voting shares in Facebook.

CalSTRS took on the issue in a recent op-ed in the Financial Times. CalSTRS portfolio manager Aeisha Mastagni wrote, “Why does Mr. Zuckerberg need the entrenchment factor of a dual-class structure? Is it because he does not want governance to evolve with the rest of his company? If so, this American dream is now akin to a dictatorship.”

A Facebook spokesperson told CNBC, “Our board of directors believes that our capital structure contributes to our stability and insulates our board of directors and management from short-term pressures, which allows them to focus on our mission and long-term success.”

CalSTRS, which manages $224.4 billion in assets, owns $650.4 million in Facebook shares as of year-end 2017.

Ailman told CNBC, “If you want to use other people’s money they need to have a chance to have some say in how the business is run by electing a board of directors, holding management accountable.”

“One individual person can’t make all the right decisions. And we’ve seen some cracks in Facebook’s management, especially this year,” he added.

The most notable “crack” was the data scandal involving Cambridge Analytica, which is accused of improperly gaining access to 50 million Facebook profiles before the 2016 election. Cambridge Analytica has called the allegations “false.”

That “lack of poor oversight and management” on the part of Facebook is the reason Ailman deleted his Facebook account in April, he said.

He told CNBC that he has not signed back up. “I do not plan on joining Facebook for a long time.”

That said, CalSTRS has no plan to dump its Facebook shares.

“We’re in this for the long haul,” he said. Instead, they want to start a conversation.

“Something like dual-class shares is something we want to stop dead in its tracks now and try to get Silicon Valley to wake up and see more democracy in their companies and more of an accountability in management,” Ailman said.

— CNBC’s Fred Imbert contributed to this report.


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Biden’s incoming CDC director says Trump administration ‘muzzled’ scientists



Rochelle Walensky, who has been nominated to serve as director of the Centers for Disease Control and Prevention, speaks after US President-elect Joe Biden announced his team tasked with dealing with the Covid-19 pandemic at The Queen in Wilmington, Delaware on December 8, 2020.

Jim Watson | AFP | Getty Images

Scientists at the Centers for Disease Control and Prevention who were sidelined by the Trump administration during the Covid-19 pandemic will “get heard again,” Dr. Rochelle Walensky, President-elect Joe Biden‘s pick to lead the agency, said Tuesday.

Last year, the CDC went months without addressing the U.S. public after Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, warned in February that schools and businesses may have to close to contain the coronavirus.

“We are asking the American public to work with us to prepare for the expectation that this could be bad,” Messonnier said in prescient remarks that sent markets reeling and reportedly irked President Donald Trump.

Throughout the pandemic, Trump has continued to clash with the nation’s top scientists, including current CDC Director Dr. Robert Redfield, publicly contradicting him on issues such as the Covid-19 vaccine timeline.

Walensky vowed to restore the public voice of the CDC and its scientists.

“They have been diminished. I think they’ve been muzzled. That science hasn’t been heard,” she told The Journal of the American Medical Association’s Dr. Howard Bauchner on Tuesday. “This top-tier agency, world renowned, hasn’t really been appreciated over the last four years and really markedly over the last year, so I have to fix that.”

Walensky said she intends to revamp the CDC’s communications efforts under the Biden administration. That could include regular briefings led by Walensky or subject matter experts to explain scientific research published in the CDC’s Morbidity and Mortality Weekly Report, she said. She added that it will likely also mean a more concerted plan to engage the public on social media.

“Science is now conveyed through Twitter. Science is conveyed on social media, on podcasts and in many different ways, and I think that’s critical,” Walensky said. “We have to have a social media plan for the agency.”

She said bolstering the agency’s presence on social media will be particularly important as the country combats vaccine hesitancy. Misinformation about the Covid-19 vaccines is prevalent on social media, she said, adding that the agency needs to get “the right information” out.

Over the past year, communications from the CDC have often been at odds with those from the White House. The agency revised guidance on reopening churches and religious sites after Trump urged state officials to allow houses of worship to reopen. And over the summer, Trump installed longtime ally and former campaign official Michael Caputo as top spokesman at the Department of Health and Human Services, the CDC’s parent department, in an effort to better align messaging with the White House.

Caputo and his team tried to undermine CDC scientists, pressuring them to revise scientific research that ran afoul of guidance pushed by the White House, internal emails obtained by House lawmakers show. Walensky said Tuesday she will make sure the CDC communicates transparently with the American people regardless of the political consequences.

“That I have to fix immediately,” she said.

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U.S. can afford higher corporate tax if it coordinates globally



Treasury secretary nominee Janet Yellen speaks after US President-elect Joe Biden announced his economic team at The Queen Theater in Wilmington, Delaware, on December 1, 2020.

Chandan Khanna | AFP | Getty Images

Janet Yellen, President-elect Joe Biden’s choice for Treasury secretary, testified Tuesday that the U.S. could afford a higher corporate tax rate if it coordinates with other economies around the globe.

“We look forward to actively working with other countries through the [Organization for Economic Cooperation and Development] negotiations on taxes on multinational corporations to try to stop what has been a destructive, global race to the bottom on corporate taxation,” she said in response to a question from Sen. Mike Crapo, R-Idaho.

“In that context, we would assure the competitiveness of American corporations even with a somewhat higher corporate tax,” she added, referring to what could be a coordinated effort to bolster corporate rates.

During his presidential campaign, Biden proposed raising the corporate rate to 28% from the current 21%. Prior to the 2017 tax cuts, the U.S. corporate rate was 35%.

Still, Yellen was quick to caution that any plan to seek a higher corporate rate could start only after the administration felt that the U.S. had overcome the coronavirus.

Yellen’s comments came during her testimony before the Senate Finance Committee, which will debate whether she should be confirmed for the Cabinet role. If confirmed by the Senate, Yellen would be the first woman to lead the Treasury Department.

Biden “has said that eventually, as part of a larger package that would include significant spending and investment proposals — not now while the pandemic is really depressing the economy — that he would want to repeal parts of the 2017 tax cuts that benefited the highest-income Americans and large companies,” Yellen said.

“He wants to reverse the law’s incentives to offshore operations and profits. But he has been very clear that he does not support a complete repeal of the 2017 tax law,” she added.

Yellen, 74, also promised lawmakers that she would prioritize the needs of everyday workers and ensure that the U.S. can offer well-paying jobs to workers in cities and rural areas.

In that light, she defended Biden’s $1.9 trillion stimulus plan, saying the bill would provide relief to struggling households and businesses and offer the U.S. economy the most “bang for the buck.” The measure includes another round of checks, extended and enhanced jobless benefits, funding for universities and the creation of a nationwide vaccine program.

The former Federal Reserve chair said higher corporate rates would come as part of a broader plan to reverse parts of President Donald Trump’s 2017 tax law when the economy is strong enough to stomach higher levies.

A principal goal of Trump’s Tax Cuts and Jobs Act was to spur U.S. companies to bring foreign profits to the U.S. and away from low-tax jurisdictions like Ireland and Bermuda. Before the bill, many multinational companies would establish subsidiaries in such low-tax havens as a backdoor way of protecting profits from U.S. collectors.

An American manufacturer, for example, could buy goods from its Ireland-based subsidiary, book the profits at a lower rate, and sell the goods in the United States. This is what Yellen referred to as a global “race to the bottom” of the corporate tax ladder, a worldwide competition to attract companies with lower and lower rates.

The OECD has for years sought a solution to the downward spiral. In late 2019, the body proposed a global minimum tax that would apply to companies with income from cross-border activities that pay taxes below a certain level.

What Yellen may have suggested on Tuesday is to work together with other nations to raise corporate rates around the globe. That way, if the U.S. wanted to generate more revenue from a corporate rate hike, it could do some more effectively since corporations wouldn’t have a far-more-attractive option.

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SpaceX bought former Valaris oil rigs to build Starship launchpads



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