Meta offers Zuckerberg new shares to keep him in California
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Meta chief Mark Zuckerberg previously said he was considering leaving California because the state’s proposed wealth tax could leave him with a multibillion-dollar bill, potentially forcing him to sell voting shares to pay it.
PHOTO: AFP
- Meta agreed a share deal with Mark Zuckerberg to keep him in California for eight years, or wherever Meta’s headquarters moves, while he stays in full-time leadership.
- The plan gives him non-voting Class C shares and immediate sale rights for 20% of them, helping him cover a possible tax bill from California’s proposed wealth tax, Proposition 40.
- Meta said keeping Zuckerberg at headquarters is “critically important” for its AI race, and the move also counters claims that a wealth tax would drive billionaires out of California.
AI generated
Meta Platforms signed an agreement with Mark Zuckerberg to keep him living in the same jurisdiction as the company’s headquarters after the chief executive said he was weighing leaving California if the state passes a wealth tax.
Zuckerberg would “remain a resident of California, or any other jurisdiction in which the company maintains its corporate headquarters, for eight years”, Meta said in a filing on Oct 21.
Meta said that Zuckerberg was considering leaving California because the state’s proposed wealth tax could leave him with a multibillion-dollar bill, potentially forcing him to sell voting shares to pay it.
The company said in the filing it was issuing Class C shares in a deal partly designed to prevent that outcome.
Zuckerberg, the world’s fifth-richest person, gets non-voting shares he can sell for liquidity without reducing his voting control. In return, he has committed to remain in California – or wherever Meta is headquartered – while he remains in a full-time leadership role.
Under the agreement, he can immediately sell 20% of the Class C shares he receives, the equivalent to 10% of his overall economic stake. That would give him liquidity to help cover a potential tax bill triggered by Proposition 40, the name of the ballot measure that California voters will decide in November.
While the remaining 80% of the Class C stock is initially restricted, those limits gradually lapse over eight years as long as Zuckerberg continues leading the company. Zuckerberg has a net worth of US$247 billion (S$315 billion), according to the Bloomberg Billionaires Index.
Proposition 40 has been pushed by a healthcare workers union and progressive politicians in the state, including Congressman Ro Khanna.
The levy would impact people whose net worth exceeded US$1 billion on Jan 1, 2026. Some of the world’s wealthiest people, including Google co-founder Sergey Brin, have opposed the tax and left the state. Recent polls show a tight race.
The arrangement offers a counterpoint to one of the main arguments against Proposition 40: that a wealth tax would push billionaires out of California.
Meta’s special committee said keeping Zuckerberg working from the company’s headquarters was “critically important”, particularly as he works closely with Meta Superintelligence Labs during the intensifying race over artificial intelligence.
The special committee also noted the “difficulties” the company faced during the Covid-19 pandemic, when Zuckerberg was away from the management team, and said it did not want to face similar challenges.
Zuckerberg had been discussing the California tax and how it would impact his ownership in the company for months, the Oct 21 filing shows.
The subject came up in July, when the CEO briefly discussed the upcoming election with Robert M. Kimmitt, Meta’s lead independent director. At the time, Zuckerberg warned that the proposal could force him to sell down his Class B common stock, leaving him with less than 53% voting interest in the company.
Within weeks, Zuckerberg’s legal counsel sent a letter to a special committee of the board warning the committee that he was considering leaving California in the light of the proposed tax on billionaires. He also suggested that Meta should create a class of non-voting stock that would allow it to raise the equity capital it needed to fund its AI ambitions.
The letter also asked that the special committee discuss with Zuckerberg a revised compensation arrangement “comparable to those recently approved for other founders of a similar profile and importance to their companies”, Meta said on the filing, “consisting of equity grants tied to rigorous performance benchmarks”.
Meta’s chief financial officer Susan Li said during the company’s quarterly earnings call that the Class C shares will primarily serve as a financing tool, giving the company more flexibility to fund its AI ambitions without diluting existing voting power. She did not mention the Zuckerberg-specific elements detailed in the filing. Bloomberg