Meta creates non-voting Class C shares that could help Zuckerberg meet California wealth-tax proposal

Meta disclosed that its board has approved a new class of non-voting shares, called Class C common stock, which will be issued on a one-for-one basis to holders of existing Class A and B shares. The company said the dividend will not alter any shareholder’s voting power and is intended to support capital raising, employee compensation and acquisitions, including its artificial-intelligence initiatives.

According to a filing with the U.S. Securities and Exchange Commission, the new shares could enable Mark Zuckerberg to sell up to 20% of the Class C stock he receives – equivalent to 10% of his total economic interest in Meta – to satisfy any liability that might arise from California Proposition 40, a proposed one-time 5% wealth tax on the net worth of state-resident billionaires. The filing notes that the dividend would allow such a sale without affecting Zuckerberg’s majority voting control.

The New York Times reported that Zuckerberg had urged the board to devise a plan to protect him from the tax, warning that he might list his Palo Alto property for sale if an agreement could not be reached. The board’s response was the introduction of the Class C shares.

Meta’s earnings release quoted a company statement emphasizing the importance of keeping Zuckerberg based in California to maintain close coordination with management and Meta’s AI labs.

Proposition 40, drafted by tax scholars and backed by the state’s largest healthcare union, would impose a one-time 5% wealth tax on several hundred California billionaires and could raise up to $100 billion over five years for health-care, food-assistance and education programs. Critics, including some Silicon Valley executives, have expressed opposition to the measure.