When in doubt, Mark Zuckerberg stays in California.
Meta was apparently concerned enough that its founder and CEO might leave his home state that the company implemented a new stock plan that could help offset the burden of higher taxes if a tax on billionaires, known as Proposition 40, passed on Election Day on November 3.
The disclosure was released Wednesday, coinciding with Meta’s third-quarter earnings report and represents a first among California’s mega-cap technology companies. Zuckerberg, the world’s sixth-richest person, is one of the few among his peers to still reside in the state, with Nvidia CEO Jensen Huang.
Elon Musk and Michael Dell live in Texas, while Amazon Founder Jeff Bezos’ primary residence has always been elsewhere. Google co-founders Larry Page and Sergey Brin left California before the election and bought luxury homes in Florida, the same state where Oracle founder Larry Ellison is officially calling home.
Proposition 40 would impose a 5% tax on Californians worth more than $1 billion. Zuckerberg’s net worth currently stands at around $225 billion.
“If the California wealth tax is passed and Mr. Zuckerberg becomes liable for a tax, Mr. Zuckerberg would effectively pay to serve as CEO of the Company while residing in California,” the filing states, noting the CEO’s “salary of only $1 per year.”
Meta said in the filing that Zuckerberg was committed to remaining in California for eight years, “unless there are significant unforeseen circumstances that would make it prudent or advisable for Mr. Zuckerberg to reside elsewhere.”
The company has created a new class of non-voting Class C common stock that will take effect in January. Zuckerberg will essentially receive a portion of the new shares via a dividend. He will be able to “immediately sell or transfer up to 20%” of the shares allocated to him “for any reason, including so that he can pay his potential tax liability under California Proposition 40, if enacted, without affecting his majority control,” the filing says.
The tech industry, overall, has been unified in its objection to the ballot measure.
In addition to Google’s co-founders, a number of big tech names have invested money to oppose Proposition 40. These include former Google CEO Eric Schmidt, Stripe CEO Patrick Collison, venture capitalist Peter Thiel and PorteDash CEO Tony Xu, according to various media reports based on campaign records.
Collison and Xu are members of Meta’s board of directors while Thiel left the company’s board in 2022, after serving on it in 2005.
Brin told The New York Times in April that he fled the Soviet Union with his family in 1979 and said, “I don’t want California to end up in the same place.”
However, Huang recently told CBS Sunday Morning that it would be a “privilege” to pay the tax. Huang is just behind Zuckerberg in Forbes’ billionaire rankings, with a net worth of $185 billion.
Although proponents of Proposition 40, including Sen. Bernie Sanders, I-Vt., have urged voters to pass the ballot measure, a recent poll suggested it may fall short of garnering the majority support needed to make it law. A recent Citrin-Politico poll showed 46% favor the measure, compared to 43% who oppose it.
Meta, with the help of a special committee, sees Zuckerberg as key to the company’s future and its efforts to become a major player in artificial intelligence, according to the filing. In particular, the company said it did not want to jeopardize the close working agreement between Zuckerberg and 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 expects this to continue,” the filing said.
Although Meta considered the possibility of issuing Class A common stock to help raise funds, the filing says Zuckerberg made clear “that he would not support significant equity financing that would have the effect of reducing his voting power in the company.”
This will help Meta receive “critical equity without impacting Mr. Zuckerberg’s voting power, nor the unique, creative vision and exceptional management abilities that helped drive the long-term value as noted above,” the filing said.
WATCH: ‘Fast Money’ traders react to Meta’s third quarter results as stocks climb in extended trading.
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