MEXICO CITY: Meta Platforms has struck a deal with Mark Zuckerberg to keep him living in California after the chief executive warned he was considering leaving the state, which houses the company's headquarters, if voters approve a wealth tax proposal next month.
Under the deal, Zuckerberg will receive non-voting shares that he can sell to potentially cover a multi-billion-dollar tax bill if the proposal is approved, in exchange for a commitment to remain a resident of California, or wherever Meta maintains its headquarters, for eight years, Meta said on Wednesday.
Zuckerberg, the world's sixth-richest person, according to Forbes, told Meta he was considering moving his primary residence outside California because Proposition 40, a ballot measure dubbed the "California wealth tax", could expose him to a massive tax liability, potentially forcing him to sell voting shares to pay it.
Proposition 40 asks Californians whether to impose a one-time 5 per cent tax on the state's billionaires. It is far from certain to pass, political analysts say. The state is home to as many as 250 billionaires, collectively worth upwards of US$2 trillion.
Zuckerberg, whose net worth is about US$240 billion, can immediately sell 20 per cent of the Class C shares he receives, representing 10 per cent of his overall economic stake in the company, allowing him to pay a potential tax bill without losing voting control.
The company said on Wednesday it would issue a new class of non-voting Class C common stock in January 2027, effectively resulting in a two-for-one split, to fund acquisitions and retain top talent while maintaining Zuckerberg's control.
Meta's long-term forecasts, as described in the filing, showed it would need to raise "hundreds of billions of dollars" over several years, beginning as early as autumn 2026, as it expects to need capital to finance its AI-related growth plan.
The parent company of Facebook and Instagram said a special committee of its board had concluded it was "critically important" that Zuckerberg remain in a leadership role and continue to manage the company from its California headquarters, particularly amid what it described as "unprecedented challenge and competition in our industry" driven by AI.
© New Straits Times Press (M) Bhd