Meta Platforms has struck a deal with its founder and CEO, Mark Zuckerberg, designed to keep him in California, the company disclosed in a securities filing on Wednesday.
The agreement comes after Zuckerberg warned the company he was considering moving his primary residence out of the state in response to a proposed “wealth tax” on billionaires.
Under the arrangement, Zuckerberg will receive a new class of non-voting Class C shares, which he can sell to cover a potential tax liability without diluting his control over the social media giant. In exchange, he has committed to remain a resident of California – or wherever Meta may relocate its headquarters – for the next eight years.
The deal is a direct response to Proposition 40, a ballot measure Californians will vote on next month. The proposition asks voters to approve a one-time 5% tax on the net worth of the state’s roughly 250 billionaires, a group whose collective wealth exceeds $2 trillion.
If passed, the tax could trigger a “significant, multibillion-dollar tax payment” for Zuckerberg, whose net worth is estimated at approximately $240 billion.
According to the filing, Zuckerberg told Meta’s board he was evaluating a move because the tax could force him to sell a substantial portion of his voting shares, potentially reducing his voting power from over 60% to approximately 53% or lower.
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To prevent this, the company will issue the new non-voting stock in January 2027 as part of a two-for-one split. This structure allows Zuckerberg to sell up to 20% of his new shares – representing 10% of his overall economic stake – to pay taxes while maintaining his iron grip on corporate governance.
Meta’s board justified the extraordinary agreement by citing the critical need for stability amid the artificial intelligence race. A special committee concluded it was “critically important” that Zuckerberg remain in a leadership role and continue to manage the company from its California headquarters, particularly during what it described as “unprecedented challenge and competition in our industry” driven by AI.
The deal highlights a growing trend of tech billionaires reacting to California’s proposed tax. Other prominent figures, including Google co-founders Sergey Brin and Larry Page, as well as investor Peter Thiel, have reportedly already relocated or changed their primary residences.
However, not all executives share Zuckerberg’s concerns. Nvidia CEO Jensen Huang recently stated he does not mind paying taxes, telling CBS News, “The more you make, the more you should pay”.
The announcement coincided with Meta’s quarterly earnings report, which showed a 26% rise in revenue to $64.6 billion, though profits were dragged down by a $9.9 billion charge related to child protection lawsuits.
