New Meta Stock Plan Shields Zuckerberg’s Voting Power From Proposed Tax

Meta has approved a new class of nonvoting shares, a move that would allow Mark Zuckerberg to generate cash to pay a proposed California tax without surrendering his grip on the company's decision-making. The board's decision, announced during the earnings call on Wednesday, establishes Class C common stock, which carries no voting rights. This new share type is scheduled to take effect in January.

The company stated the new stock will be used for capital raising, employee compensation, and acquisitions, including its AI initiatives, while preserving the current voting structure. However, reporting by the New York Times indicates a specific motivation behind the plan: to help Zuckerberg pay for Proposition 40 if voters approve it. The proposition, a one-time 5% wealth tax on several hundred California billionaires, could generate up to $100 billion over five years. Backers intend to use most of the funds for healthcare needs, with the remainder allocated to food assistance and education.

According to the newspaper, Zuckerberg pressed his board in September to devise a strategy to protect him from the tax, stating he would list his Palo Alto property for sale if no agreement was reached. The stock plan followed shortly after. This account is supported by a recent SEC filing that details discussions on the billionaire tax beginning in July. The filing explains that the company is issuing a one-time stock dividend, giving shareholders one Class C share for every Class A or Class B share they own, effectively functioning as a two-for-one split.

Meta confirmed that this dividend will not alter any shareholder's voting power. The filing states the structure allows Zuckerberg to sell or transfer up to 20% of the Class C shares he receives, representing 10% of his total economic stake in the company. This would enable him to pay any potential liability under Proposition 40 without affecting his majority voting control.

The company referred inquiries to a quote in its earnings press release affirming its belief that it is important for Mr. Zuckerberg to continue leading the company from California. The statement cited his role in coordinating with management and his proximity to Meta Superintelligence Labs. It has been estimated that the tax could require Zuckerberg to pay as much as $11 billion.

Proposition 40 has drawn sharp criticism from prominent figures in Silicon Valley. Google co-founder Sergey Brin has campaigned aggressively against the measure, and other business leaders have labeled it economic suicide for the state, warning it could drive capital flight. However, the development suggests major companies have ways to address the tax if it passes.

Democratic U.S. Representative Ro Khanna, who supports the tax, responded to news of the strategy on X. "Looks like billionaires will stay and figure out a way to pay the tax," he wrote. He added, "If we pass Prop 40, poor California kids can have healthcare."