Meta launches non-voting Class C shares to preserve Zuckerberg's voting control and fund future needs
Meta announced a one-for-one distribution of new non-voting Class C shares, a move aimed at raising capital without diluting Mark Zuckerberg’s voting power and to help cover a possible California wealth-tax liability.
Meta disclosed on Wednesday that it will issue a new class of non-voting Class C shares to all existing shareholders. The one-for-one dividend, which will begin trading in late January, is intended to provide a source of capital for employee compensation, acquisitions and other financing needs while allowing Mark Zuckerberg to retain his majority voting control.
The change follows months of negotiations between Zuckerberg and a board committee that included DoorDash CEO Tony Xu, former ambassador Robert Kimmitt and former Microsoft executive Charles Songhurst. According to a filing with the U.S. Securities and Exchange Commission, Zuckerberg sought a structure that would let him meet his commitments to the Chan Zuckerberg Initiative, maintain voting control and be prepared to pay a potential wealth-tax bill in California if Proposition 40 is approved in November.
Meta’s dual-class share system currently gives Class A shares one vote per share, while Zuckerberg’s Class B shares carry ten votes each, giving him about 60.6% of voting power. Issuing additional Class A shares for equity grants or capital raises would dilute his stake, a concern that has been offset in the past by large stock buybacks. However, buybacks have strained cash that the company wants to allocate to its artificial-intelligence expansion.
In the third quarter, Meta reported revenue of $64.6 billion, a 26% increase year over year, but free cash flow turned negative at $2.1 billion. Capital expenditures rose to $34.9 billion, and the company projected 2026 spending of $135 billion to $140 billion.
Under the new arrangement, each existing Class A and Class B share will receive one Class C share. The Class C shares carry no voting rights, and Zuckerberg can sell up to 20% of them immediately, with the remainder “stapled” to his voting shares. This structure enables him to raise cash without reducing his voting influence.
“We thought it was prudent to establish the appropriate capital structure framework to ensure that we have access to a diverse pool of funding sources,” CFO Susan Li said during the earnings call.
The board approved the plan in September, and Chan Zuckerberg Initiative entities, which hold a majority of voting shares, signed off on the implementation scheduled for January 19, 2027.