Meta claims Mark Zuckerberg would “effectively pay to serve” as CEO if California taxed its billionaires. So he creates new shares that he can sell to cover the bill. In exchange, he promised to stay in the state, an SEC filing released Wednesday shows.
The agreement follows months of discussions between Zuckerberg and a special committee of Meta’s board of directors. At a board dinner on September 9, he announced that he would list his Palo Alto home on September 13. The two sides agreed to the terms on September 14.
He warned the committee that this decision would not remain silent.
Any listing of his California home “would be public and inevitably noted and commented on by company employees,” Zuckerberg told the committee, according to the filing.
What Meta agreed to
Each Meta shareholder will receive one new, non-voting Class C share for each share they own. The change takes effect on January 19, 2027. It works like a two-for-one stock split, Meta said in its third-quarter results.
Zuckerberg owns about 13.4% of Meta but controls 60.6% of the votes. Its class B shares each have ten votes. These shares become one-vote common shares when he sells them. Selling enough to pay the tax could reduce his voting power to about 53%, the filing says.
Under the deal, he can immediately sell 20% of his new Class C shares. This is equivalent to 10% of his economic stake in Meta. The rest is released at a rate of 2.5% per quarter while he remains in charge.
In exchange, he will live in California, or wherever Meta is based, for eight years while he runs it. “Significant unforeseen circumstances” are the only exception. Shareholders also receive another Class C dividend each time the stock price doubles from $580.60. Returns must average at least 10% per year.
“Prolonged and, on several points, controversial”
The file describes the progress of the negotiations. On July 8, Zuckerberg told Robert Kimmitt, Meta’s lead independent director, that the tax could force him to sell shares. He said he has been paid a $1 salary since 2013. On August 3, his lawyers requested compensation similar to those recently approved for other founders.
The next day he went further.
He “intended to relocate outside of California, which he was advised to do prior to the November 3, 2026 election,” the filing states.
He proposed 20 new Class C shares for every existing share, which the committee considered “excessive.” In late August, its members were considering disbanding the committee or resigning from the board.
The committee consisted of Kimmitt, DoorDash CEO Tony Xu, and Charles Songhurst. Xu revealed a personal friendship with Zuckerberg, the filing said. Xu and fellow director Patrick Collison donated to the campaign against the tax, the New York Times reported. Zuckerberg did not make a donation, the newspaper said.
The committee said they wanted it close to Meta Superintelligence Labs and pointed to the pandemic.
“The Special Committee was aware of the difficulties faced by the Company during the COVID-19 pandemic, when Mr. Zuckerberg could not be physically present with the Company’s management team,” the filing said.
Other reasons for Meta
Meta disputes that the deal involves one man, in a statement to CNBC.
“Many factors led the board and special committee to approve the Class C shares, and it would be misleading to attribute it to any one reason,” Meta said.
The new shares also allow Meta to raise money, pay staff and buy companies without diluting Zuckerberg’s control. Management’s forecasts showed the need to raise “hundreds of billions of dollars” over several years, the filing said. Meta has already announced $825 billion in future commitments, much of it for AI.
The filing also warns that the new title “could significantly extend” his control. Class A shareholders do not have a vote on the change, as Zuckerberg can approve it himself. Facebook abandoned a similar stock plan in 2017 after investors opposed it, Bloomberg reported at the time. Shares of Meta fell about 7% on Thursday.
The vote of November 3
Proposition 40, the California wealth tax, would impose a one-time 5% tax on billionaires who lived in California as of January 1, 2026. Most of the money would be spent on health care. Governor Gavin Newsom opposes it. The main campaign against the project raised more than $333 million, about 30 percent of it from Sergey Brin, the Associated Press reported. The campaign for this project raised $32.7 million. Tech billionaires had invested $120 million in the fight by July.
“This is the nail in the coffin of months of scare tactics claiming that billionaires are fleeing California,” said Suzanne Jimenez, chief of staff for SEIU United Healthcare Workers West, which is sponsoring the measure.
A Citrin-Politico poll put support at 46% and opposition at 43%, CNBC reported.
Gn bussni
