He’s not Zucking around.
Meta CEO Mark Zuckerberg held detailed negotiations with the tech giant’s board of directors about moving out of California if the state passes Prop. 40, a 5% wealth tax on billionaires — which could force him to liquidate huge chunks of stock, according to a new financial filing.
The social media firm made the disclosures about Zuckerberg’s threats to offload his $110 million Palo Alto compound and establish residency outside the Golden State in a 109-page Securities and Exchange Commission filing posted Wednesday, which revealed for the first time the billionaire’s concerns about how the wealth tax could rip away his control of the firm he founded.
Meta wrote in the filing that over a series of talks with the board, Zuckerberg said the tax on his net worth of approximately $250 billion — which could amount to a tax bill of $12.5 billion — would force him to dump huge chunks of his stock, diluting his voting shares.
Most of Zuckerberg’s immense wealth comes from his 13% ownership stake in Meta, which includes specialized Class B shares that give him majority shareholder voting rights.
“Mr. Zuckerberg noted that he has taken only a $1 annual salary since 2013 for serving as the Company’s Chief Executive Officer, and he stated that if he needed to pay any such tax by selling down his Class B common stock, the tax liability could be large enough to reduce his voting interest in the Company to approximately 53%,” the filing read.
Talks over Prop. 40 gained steam in July, when Zuckerberg repeatedly raised concerns about Prop. 40 with leaders such as Robert M. Kimmitt, a lead independent director of Meta — saying the wealth tax would “impact his ability to remain resident in California and pay any tax assessed on him if it becomes law.”
His attorneys sent a letter on Aug. 3 to a board special committee demanding a revised comp agreement that would, in part, boost his liquidity in the event of a massive tax bill — triggering weeks of negotiations over how to revise his pay.
Zuckerberg insisted he intended to place his $110 million Palo Alto compound on the market by mid-September in order to establish residency elsewhere before the Nov. 3 election, and told directors he did not want protracted negotiations in the event the wealth tax spreads to other jurisdictions.
“Mr. Zuckerberg stated his intention to remain with the Company for the foreseeable future but noted that, given the impending vote on California Proposition 40 and his personal circumstances, he would need to begin taking steps by mid-September in order to establish residency outside California by mid-October, and that he anticipated informing management of those steps immediately after the upcoming Board meeting that he would be taking steps to leave California,” the filing read.
The company detailed a recapitalization and dividend plan intended to ensure Zuckerberg remains in leadership at the company’s Menlo Park headquarters, which involves spinning out new Class C shares in the firm.
According to the filing, Zuckerberg has agreed to remain a resident of California “or any other jurisdiction in which the Company maintains its corporate headquarters, absent material unforeseen circumstances rendering it prudent or advisable for him to reside elsewhere.”
The disclosures were made alongside Meta’s second-quarter earnings report, which revealed a 26% jump in annual revenue.
Meta didn’t immediately respond to a request for comment.
Zuckerberg is only the latest billionaire to threaten to ditch California over the wealth tax, championed by the SEIU-United Healthcare Workers West as a salve to federal health care funding cuts.
Fellow tech titan Sergey Brin, a co-founder of Google, changed his residency to Nevada and has spent nine figures this election cycle on efforts to kill the billionaire tax.
Former Google CEO Eric Schmidt and cryptocurrency mogul Chris Larsen have joined him with eight-figure contributions.
Recent polls show Prop. 40 slightly short of majority support — with 46% of voters backing the tax in one poll released this week, and 43% of respondents against it.
Two propositions backed by Brin, Prop. 41 and Prop. 42, would also enact barriers to the wealth tax if they obtain more votes.