Meta creates new stock shares to help founder pay California tax

Meta has introduced a new type of share that allows its founder to raise money without losing his grip on company decisions. The board approved this Class C common stock on Wednesday, and it takes effect in January. These shares give holders a piece of the company’s value but no say in how it is run. This move helps address a looming financial threat from California’s proposed billionaire tax.

The New York Times reports that this strategy is specifically designed to help Mark Zuckerberg pay for Proposition 40 if voters approve it. Because the new shares carry no voting rights, he can sell them to cover the tax bill while keeping the current voting structure intact. Zuckerberg currently controls about 60 percent of the vote at Meta. This arrangement ensures he remains the dominant voice in company governance even after selling a portion of his stake.

Proposition 40 is a one-time five percent wealth tax aimed at several hundred California billionaires who primarily live in the state. It was drafted by tax law professors at Berkeley and sponsored by the state’s largest healthcare union. Backers argue the measure could raise up to $100 billion over five years. Most of that money would go toward healthcare, with the remainder supporting food assistance and education programs.

Meta’s recent filing with the Securities and Exchange Commission reveals that Zuckerberg began discussing this tax with board members as early as July. He pressed them to find a solution to protect him from the liability. According to the Times, he told the board in September that if they could not agree on a plan, he would list his property in Palo Alto for sale. That threat of a media firestorm seemingly accelerated the creation of the new stock class.

The company will issue one Class C share for every Class A or Class B share currently held by investors. Meta describes this as a one-time stock dividend that acts like a two-for-one split. The filing states this will not change the voting power of any shareholder. However, it will allow Zuckerberg to immediately sell or transfer up to 20 percent of the Class C shares he receives. This represents 10 percent of his overall economic stake in the company.

Meta says the goal is to keep Zuckerberg leading the company from California. A recent press release notes that it is crucial he remains close to the management team and Meta Superintelligence Labs. Estimates suggest the tax could cost Zuckerberg as much as $11 billion. Other tech leaders have criticized the proposal, but Meta’s new policy shows a creative way to handle the financial burden if it becomes law.

Democratic Representative Ro Khanna, a supporter of the tax, reacted to the news on social media. He wrote that billionaires will stay and figure out a way to pay the tax. He added that if Proposition 40 passes, children in California can access better healthcare. The measure has already drawn strong opposition from prominent Silicon Valley figures who fear it will drive capital out of the state.