Meta Chief Executive Mark Zuckerberg warned company directors that he was prepared to leave California and sell his Silicon Valley home to avoid a proposed state wealth tax, prompting the board to approve a new non-voting stock class to keep him in place, according to regulatory filings made public Wednesday.
The disclosures, detailed in a 109-page filing with the Securities and Exchange Commission, describe months of contentious summer negotiations between Zuckerberg and a special board committee. California voters are scheduled to decide Nov. 3 on Proposition 40, a proposed 5 percent tax on the assets of billionaires that supporters backed to help counter federal health care funding cuts.
Threatened move to protect voting power
With a fortune estimated between $240 billion and $250 billion, Zuckerberg faced a potential tax bill reaching $12.5 billion if the measure passes, according to company records reviewed by the New York Post and Fortune. Most of his wealth consists of super-voting Class B shares, which carry 10 votes each and give him roughly 60.6 percent voting control over Meta.
Zuckerberg told directors that because he takes only a $1 annual salary, paying such an assessment would require offloading voting stock. That could have reduced his voting power to roughly 53 percent. In late July and early August, his legal team pressed for compensation adjustments to provide liquidity and pushed back against proposed sunset provisions that would expire his super-voting rights after his death or departure.
During a Sept. 9 board dinner, Zuckerberg told directors he planned to list his $110 million Palo Alto residential compound within days to establish residency outside California ahead of the election, the filing stated. The special committee concluded it was vital for Zuckerberg to remain near company headquarters in Menlo Park, particularly to guide Meta Superintelligence Labs as the company scales up artificial intelligence investments.
The Class C stock compromise
To resolve the standoff, the board approved an equity overhaul that distributes one share of a newly created Class C non-voting stock for every Class A and Class B share held. The transaction gives all shareholders a one-for-one dividend while leaving Zuckerberg’s voting majority untouched.
Under terms finalized in mid-September and formally approved this week, Zuckerberg can immediately sell up to 20 percent of his new Class C holdings. That tranche provides roughly $20 billion in cash liquidity that could cover tax liabilities without surrendering voting power, Business Insider reported. The remaining 80 percent remains stapled to his voting stock, meaning those shares cannot be sold unless equivalent voting shares are converted or sold as well.
In exchange, Zuckerberg dropped demands for a new executive compensation package, agreed to maintain his $1 annual base salary, and pledged to remain a resident of California or wherever Meta maintains its headquarters for eight years, absent unforeseen circumstances.
Funding artificial intelligence expansion
The recapitalization also addresses corporate funding challenges as Meta rapidly increases its spending on data centers and artificial intelligence infrastructure. Alongside the share disclosures, Meta reported third-quarter revenue grew 26 percent to $64.6 billion, while capital expenditures reached $34.9 billion. Free cash flow dropped to negative $2.1 billion, and the company raised the lower end of its full-year capital expenditure forecast.
Issuing non-voting Class C shares will allow the technology giant to raise capital, compensate staff, and pursue acquisitions without diluting founder control or relying on cash-draining share repurchases, according to Chief Financial Officer Susan Li. Meta entities controlling a voting majority ratified the plan, and the new shares are scheduled to begin trading on Jan. 19, 2027.
Other California tech figures have opposed Proposition 40 through political spending. Google co-founder Sergey Brin changed his residency to Nevada and financed competing ballot initiatives, while former Google chief Eric Schmidt contributed heavily to opposition campaigns. Recent polling cited in public reports showed the initiative closely divided ahead of the November vote.
