Meta Creates New Stock For Tax

California is weighing a new tax on its wealthiest residents. In response, Meta has created a specific stock structure to help its CEO navigate the measure without losing power.

On Wednesday, Meta announced that its board approved Class C common stock. These shares provide an ownership stake but carry no voting rights. The new class becomes effective in January. The company plans to use these shares for capital raising, employee compensation, and acquisitions. This includes funding for its expensive artificial intelligence projects. The structure maintains the current voting balance. This favors Mark Zuckerberg, who currently controls about 60% of the vote.

The New York Times reports that this move serves a second purpose. It helps Zuckerberg pay for California’s proposed billionaire tax if voters approve it. Because the new shares have no votes, he can sell them to cover the tax. He does not have to give up his voting control. Proposition 40, drafted by Berkeley tax law professors, would impose a one-time 5% wealth tax. It targets several hundred California billionaires who primarily live in the state. The measure is sponsored by the state’s largest healthcare union. Backers say it could raise up to $100 billion over five years. Most of the funds would go to healthcare. The rest would support food assistance and education.

The Times reports that Zuckerberg pushed the board to find a solution. He told members in September that if they could not agree, he might list his Palo Alto property for sale. That move could have caused a media firestorm. The stock plan appeared shortly after those conversations. The reporting is based partly on a recent SEC filing. That document details the concern surrounding Proposition 40. It shows how the issue influenced discussions about the new stock class.

The filing indicates that Zuckerberg discussed the tax with the board as early as July. The topic resurfaced in meetings and communications through August. The document explains the mechanics of the plan. Meta will issue one Class C share for every Class A or Class B share held. This is a one-time stock dividend. It effectively acts as a two-for-one stock split. Meta states that this will not change the voting power of any shareholder.

The filing explicitly links the dividend to the tax. It notes that the dividend allows Zuckerberg to sell or transfer up to 20% of his Class C shares. This represents 10% of his overall economic stake. He can do this for any reason, including paying a potential tax liability under Proposition 40. Because the dividend is one-for-one, half of his post-dividend shares will be Class C. The 20% cap equals 10% of his total economic stake. This allows him to raise cash without affecting his majority voting control.

Meta referred TechCrunch to a quote from its earnings press release. The statement says a Special Committee affirmed it is important for Zuckerberg to continue leading the company from California. It notes that his proximity to management and Meta Superintelligence Labs is crucial. Estimates suggest Zuckerberg could owe as much as $11 billion under the tax.

The proposal has agitated many Silicon Valley business leaders. Google co-founder Sergey Brin has campaigned aggressively against the measure. He has spent significant money to defeat it. Other critics claim the tax is economic suicide for California. They argue it will drive capital flight. Meta’s new policy suggests that the state’s mega-companies have creative ways to handle the tax if it passes.

Democratic Representative Ro Khanna reacted to the news on X. He is a vocal proponent of the tax. He wrote that billionaires will stay and find a way to pay. He added that if Proposition 40 passes, poor California kids can have healthcare.