Meta Creates Non-Voting Stock to Fund AI Buildout, Keeping Zuckerberg in Control

Meta's board has approved a new class of non-voting stock, and every holder of Class A and Class B shares will receive one new share for each share they own. The company disclosed the plan on Wednesday with its third-quarter results, and the Class C shares come into existence on Jan. 19, 2027.

The one-for-one dividend works as a two-for-one stock split, and Meta says it will not change anyone's voting power. Because Class C shares generally carry no vote, Meta can sell them for cash, or use them as pay and acquisition currency, without shrinking Mark Zuckerberg's control.

Zuckerberg held about 60.6% of the voting power on Oct. 1 against a 13.4% economic interest, according to the information statement Meta filed with the SEC. The gap comes from the dual-class setup, where Class A shares carry one vote each and Class B shares carry 10, and he beneficially owns about 341 million Class B shares.

According to the SEC filing, advisers at Moelis told the board's special committee that Meta could raise about $700 billion in equity over several years before Zuckerberg's voting power fell below 50%, according to the filing. Management also told those advisers that its long-term forecasts showed a need to raise "hundreds of billions of dollars" over several years, starting as early as fall 2026.

CFO Susan Li framed the filing's "hundreds of billions" language differently on a follow-up call with analysts, calling it "a theoretical maximum" computed to determine what level of equity financing would trigger a loss of founder control. It is "not actually a description of our present equity financing needs or plans," she said, and Meta does not have "anything to announce on that front." The structure is approved, while the size and timing of any equity sale are not disclosed.

Under a Founder Alignment Agreement signed Oct. 20, only 20% of the Class C shares Zuckerberg receives can be sold freely. Selling any of the other 80% generally requires him to sell or convert a matching Class A or Class B share within two business days, which trims his voting power.

The agreement also commits Zuckerberg to remain a California resident, or live wherever Meta is headquartered, for eight years. The filing says California's Proposition 40, a wealth tax on the Nov. 3 ballot, could make him liable for a multi-billion dollar payment, and that Zuckerberg stated selling Class B shares to cover it could cut his voting interest to about 53%.

The board has also agreed to pay another one-for-one Class C dividend each time the 30-day volume-weighted average price of Class C reaches a successive doubling of the $580.60 Class A price from Sept. 10, adjusted for splits, as long as shareholder returns compound at 10% or more a year.

Class C shares are identical to Class A and Class B except for voting rights, but the filing warns they will likely trade at some discount to Class A, and Meta may need to issue more of them for any equity sale. Class C also will not count as "voting stock" under Section 368(a) of the tax code, so sellers who want to defer taxes on a deal may push for a different structure.

Meta's board had not set the record or payment dates for the dividend as of its filing, and the payment must come within five business days after the charter takes effect on Jan. 19, 2027.