Meta says Mark Zuckerberg “would effectively be paying to serve” as its chief executive if California taxes its billionaires. So it is creating new shares he can sell to cover the bill. In return, he has promised to stay in the state, an SEC filing published on Wednesday shows.
The deal followed months of talks between Zuckerberg and a special committee of Meta’s board. At a board dinner on 9 September, he said he would list his Palo Alto home on 13 September. Both sides agreed terms on 14 September.
He warned the committee that the move would not stay quiet.
Any listing of his California home “would be public and inevitably noted and commented upon by Company employees,” Zuckerberg told the committee, according to the filing.
What Meta agreed
Every Meta shareholder will get one new Class C share, which carries no vote, for each share they own. The change takes effect on 19 January 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. His Class B shares carry ten votes each. Those shares become ordinary one-vote shares when he sells them. Selling enough to pay the tax could cut his voting power to about 53%, the filing says.
Under the deal, he can sell 20% of his new Class C shares straight away. That equals 10% of his economic stake in Meta. The rest is released at 2.5% a quarter while he stays in charge.
In return, he will live in California, or wherever Meta is based, for eight years while he leads it. “Material unforeseen circumstances” are the only exception. Shareholders also get another Class C dividend each time the share price doubles from $580.60. Returns must average at least 10% a year.
“Protracted and, at several points, contentious”
The filing sets out how the talks went. On 8 July, Zuckerberg told Robert Kimmitt, Meta’s lead independent director, that the tax could force him to sell shares. He noted that he has taken a $1 salary since 2013. On 3 August, his lawyers asked for a pay package like those recently approved for other founders.
The next day, he went further.
He “intended to establish residence outside California, which he had been advised he would need to do before the November 3, 2026 election,” the filing says.
He proposed 20 new Class C shares for every existing share, which the committee viewed as “excessive”. By late August, its members were discussing dissolving the committee or resigning from the board.
The committee was Kimmitt, DoorDash chief executive Tony Xu and Charles Songhurst. Xu disclosed a personal friendship with Zuckerberg, the filing says. Xu and fellow director Patrick Collison have donated to the campaign against the tax, The New York Times reported. Zuckerberg has not donated to it, the paper said.
The committee said it wanted him close to Meta Superintelligence Labs, and pointed to the pandemic.
“The Special Committee was mindful about the difficulties the Company faced during the COVID-19 pandemic when Mr. Zuckerberg could not be physically present with the Company’s management team,” the filing says.
Meta’s other reasons
Meta disputes that the deal is about one man, in a statement to CNBC.
“There were many driving factors that led the board and special committee to approve the Class C shares, and it would be misleading to attribute it to any single reason,” Meta said.
The new stock also lets Meta raise money, pay staff and buy companies without diluting Zuckerberg’s control. Management forecasts showed a need to raise “hundreds of billions of dollars” over several years, the filing says. Meta has already reported $825bn in future commitments, much of it for AI.
The filing also warns that the new stock “could substantially prolong” his control. Class A shareholders get no vote on the change, because Zuckerberg can approve it himself. Facebook dropped a similar share plan in 2017 after investors objected, Bloomberg reported at the time. Meta’s shares fell about 7% on Thursday.
The vote on 3 November
Proposition 40, California’s wealth tax, would impose a one-time 5% tax on billionaires who lived in California on 1 January 2026. Most of the money would go to healthcare. Governor Gavin Newsom opposes it. The main campaign against it has raised more than $333m, about 30% of it from Sergey Brin, the Associated Press reported. The campaign for it has raised $32.7m. Tech billionaires had put $120m into the fight by July.
“This is the nail in the coffin to months of scare tactics claiming that billionaires are fleeing California,” said Suzanne Jimenez, chief of staff at SEIU United Healthcare Workers West, which sponsors the measure.
A Citrin-Politico poll put support at 46% and opposition at 43%, CNBC reported.