The arrangement, disclosed in a regulatory filing, follows Zuckerberg’s warning that he was considering moving his primary residence outside the state to avoid a potentially multibillion-dollar liability under Proposition 40, which goes before voters on 3 November.
Meta will introduce non-voting Class C shares through a two-for-one stock split scheduled for January 2027. Zuckerberg can sell an initial portion of those shares to raise money without reducing the voting power that gives him control over the Facebook and Instagram parent.
In exchange, he has agreed to remain resident in California, or wherever Meta maintains its headquarters, for eight years while continuing in a full-time leadership role, subject to provisions covering unforeseen circumstances.
The proposed tax would impose a one-off levy of 5% on the wealth of California residents whose net worth exceeded $1 billion on 1 January 2026. Zuckerberg’s fortune, estimated at roughly $240 billion, could expose him to a bill exceeding $10 billion, although the precise liability would depend on the measure’s rules and asset valuations.
Meta’s special board committee said keeping Zuckerberg close to its Menlo Park headquarters was essential as the company pursues expensive artificial intelligence projects and confronts intensifying competition. Directors were concerned that a relocation could complicate management and unsettle employees.
The company said Zuckerberg had raised the prospect of selling voting shares to meet the tax. His holdings of Class B stock carry ten votes per share, compared with one vote for ordinary Class A stock, allowing him to exercise majority control despite owning a much smaller economic stake.
Under the agreement, Zuckerberg may immediately sell up to 20% of the Class C shares allocated to him, equivalent to about 10% of his economic interest. Restrictions on the remaining shares ease in stages over eight years, linked to his continued full-time service.
The new share class will be distributed to holders of existing Class A and Class B shares, rather than exclusively to Zuckerberg. Its non-voting structure also provides Meta with an additional means of raising capital without issuing stock that dilutes existing voting rights.
Meta has forecast substantial financing requirements as it expands artificial intelligence infrastructure. Its long-range projections contemplate capital needs reaching hundreds of billions of dollars over several years, although the company has not announced a specific financing transaction tied to the new shares.
The agreement emerged after months of negotiations between Zuckerberg and independent directors over voting control, shareholder protections and the company’s financing needs. Committee members considered proposals that would eventually limit the founder’s control, but Zuckerberg opposed arrangements that could weaken his voting position.
Discussions became strained before the parties reached terms in September. The full board subsequently approved the arrangement, and entities associated with Zuckerberg and his wife, Priscilla Chan, supplied the shareholder voting support required for the changes.
The filing also disclosed that Zuckerberg had considered publicly listing his California residence for sale. Directors believed such a step would attract attention inside the company and raise questions about whether its chief executive would continue directing operations from headquarters.
The ballot initiative has divided California’s political and business communities. Supporters, including healthcare workers’ representatives, say the levy would provide funding for public services, particularly healthcare, while opponents argue it could encourage wealthy residents to relocate and undermine future state tax receipts.
Governor Gavin Newsom has opposed the proposal, warning about its potential economic consequences. Backers dispute predictions of a mass departure by billionaires and argue that substantial wealth accumulated in California should contribute more to essential services.
The outcome remains uncertain, with the measure facing opposition ahead of election day. California is home to hundreds of billionaires whose combined fortunes exceed $2 trillion, making the proposed levy unusually consequential for both state finances and owners of major technology companies.
Meta chief financial officer Susan Li said the company had no financing plans attached to the restructuring. The new Class C shares are expected to begin trading in late January, following the planned January stock distribution. Zuckerberg has received an annual salary of $1 since 2013, with most of his wealth tied to his ownership interest in the company.
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