Meta creates new stock class to keep CEO Mark Zuckerberg in California amid wealth-tax proposal
Meta filed a plan to grant non-voting Class C shares to Mark Zuckerberg, allowing him to cover a potential California billionaire tax while remaining in the state for at least eight years.
Meta disclosed a new stock plan in a filing that coincided with its third-quarter earnings report, aimed at helping CEO Mark Zuckerberg offset a possible California billionaire tax under Proposition 40. The measure, which would levy a 5% tax on residents with net worth over $1 billion, could affect Zuckerberg, whose net worth is about $225 billion.
The filing states that Zuckerberg has committed to staying in California for eight years, "unless there are material unforeseen circumstances that would render it prudent or advisable for Mr. Zuckerberg to reside elsewhere." The company will issue a new class of non-voting Class C common stock in January, granting Zuckerberg a dividend that he may sell or transfer up to 20% of the shares to cover any tax liability without altering his voting control.
"If the California wealth tax is enacted and Mr. Zuckerberg becomes liable for a tax payment, Mr. Zuckerberg would effectively be paying to serve as the Company's chief executive officer while residing in California," the filing read, noting his $1 annual salary.
Meta said the board and a special committee approved the Class C shares for multiple reasons and cautioned against attributing the decision to a single factor. The company emphasized Zuckerberg’s role in its AI initiatives, particularly the Meta Superintelligence Labs led by AI chief Alexandr Wang.
"The Special Committee believes that Mr. Zuckerberg's talent and leadership have been crucial to our growth, strategy, and stability since our inception, and the Special Committee wants that to continue," the filing said.
The tech industry has largely opposed Proposition 40, with several high-profile executives and investors contributing to opposition campaigns. Recent polling shows the measure trailing with 46% support versus 43% opposition, suggesting it may not achieve the required majority.
Meta also noted that Zuckerberg declined a larger equity financing that could dilute his voting power, preferring the new stock incentive to provide capital without affecting his control of the company.