Meta creates new nonvoting shares to keep CEO Zuckerberg in California amid billionaire tax proposal
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Meta announced a board-approved plan to issue nonvoting Class C shares that Mark Zuckerberg can sell to fund a potential California billionaire wealth tax, while committing to remain a state resident for eight years.
Meta disclosed that its board has authorized a new class of nonvoting common stock that CEO Mark Zuckerberg can sell to raise cash if California voters approve Proposition 40, a one-time 5% wealth tax on billionaires. The filing said Zuckerberg had been "evaluating relocating his primary residence outside California" and that any move would attract employee scrutiny and raise management questions.
To avoid forcing Zuckerberg to sell voting shares, which could diminish his control, the company created the nonvoting Class C shares effective January. In return, Zuckerberg agreed to stay a California resident for eight years, and to relocate only if Meta moves its headquarters to another state.
Meta stated that keeping Zuckerberg near its Menlo Park headquarters is "critically important" for the company's performance during a period of intense industry competition. The new shares are also intended to help fund Meta's artificial-intelligence infrastructure, employee compensation, acquisitions and other corporate needs.
Analysts noted that the issuance of nonvoting shares allows the company to raise capital for AI investments without diluting Zuckerberg's voting power.