Meta’s Zuckerberg Deal: New Shares Could Help CEO Pay California’s Proposed Wealth Tax
Meta will issue non-voting shares as part of a deal tied to Mark Zuckerberg’s eight-year California residency commitment. Here’s how the agreement connects to Proposition 40.
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Meta has reached an agreement with CEO Mark Zuckerberg that could give him a way to pay a potential California wealth-tax bill without surrendering voting control of the company. The deal combines a new class of non-voting shares with an eight-year commitment from Zuckerberg to live in California, or wherever Meta is headquartered, while continuing in a full-time leadership role.
The agreement is tied to Proposition 40, a proposed one-time tax on certain billionaires that California voters will decide on November 3. The measure would impose a 5% tax on certain taxpayers with assets over $1 billion, with revenue primarily directed to health care. It has not been approved, so the tax and any liability for Zuckerberg remain conditional.
How Meta’s new Class C shares would work
Meta’s board approved the creation of non-voting Class C common stock. Under the plan, existing holders of Meta’s Class A and Class B shares would receive one Class C share for each existing share, subject to the required corporate steps. The stock dividend is expected to take effect in January 2027.
The new shares are designed to provide economic value without adding voting power. That distinction matters for Zuckerberg: he told Meta he was considering moving his primary residence out of California because the proposed tax could create a multibillion-dollar liability and potentially force him to sell voting shares. The Class C shares could give him another source of funds while helping him retain control.
The arrangement does not let Zuckerberg sell every new share freely while keeping all his voting power. Meta’s filing says 20% of the Class C shares issued to his holder group would be freely saleable. Most of the remaining shares would be subject to restrictions: selling them generally requires a corresponding sale or conversion of voting shares. Some restricted shares would become eligible for sale over time, provided Zuckerberg continues in a full-time leadership role.
What does Zuckerberg have to commit to?
Under the Founder Alignment Agreement, Zuckerberg has committed to remain a resident of California, or another jurisdiction where Meta maintains its corporate headquarters, for eight years. The agreement links that commitment to his continued full-time service on Meta’s executive team or as executive chair. It also allows for material unforeseen circumstances that could make living elsewhere prudent or advisable.
Meta’s board said retaining Zuckerberg in a leadership role was important as the company faces intense competition, particularly in artificial intelligence. The company’s filing also describes the new share class as part of a wider capital structure intended to support acquisitions, employee compensation and other corporate needs.
What is Proposition 40?
Proposition 40 is a California ballot measure proposing a one-time 5% tax on certain taxpayers with assets above $1 billion. The state’s official voter guide says the revenue would primarily go to health care and estimates a temporary increase in state revenue of tens of billions of dollars over several years. Voters are scheduled to decide the measure on November 3.
The proposal is contested. Supporters argue that taxing billionaire wealth could help fund health care. Opponents say the measure could harm the state’s economy and budget. Whatever the arguments, it remains a proposal until voters decide. The official summary describes the tax as applying to certain taxpayers and assets, so the headline figure of 5% should not be treated as a confirmed calculation of Zuckerberg’s personal bill.
Meta has struck a deal with Mark Zuckerberg to keep him living in California after the CEO warned he was considering leaving the state that houses the company's headquarters if voters pass a wealth tax proposal next month https://t.co/g2qz2QDali
— Reuters (@Reuters) October 22, 2026
Why the deal is drawing attention
The agreement links a corporate stock structure to a major tax debate. Meta is changing its share structure, while its founder has made an eight-year residency commitment. The new shares may give Zuckerberg more flexibility to raise money if the tax passes, but the agreement does not cancel the proposed tax or establish his final tax liability.
It also highlights how a possible change in state tax policy can influence decisions at a company whose leadership is closely tied to its headquarters. For Meta, the board says keeping Zuckerberg in California matters to the company’s leadership and strategy. For California voters, Proposition 40 presents a separate question: whether to approve a one-time tax on certain billionaires’ assets.
Questions readers ask
What deal did Meta make with Mark Zuckerberg?
Meta entered a Founder Alignment Agreement with Zuckerberg. It includes an eight-year commitment to live in California, or wherever Meta is headquartered, while serving in a full-time leadership role, alongside a new class of non-voting shares.
How could the new Meta shares help Zuckerberg?
The non-voting Class C shares could give him a way to raise money for a potential tax bill without selling the same amount of voting stock. The agreement restricts the sale of most of his shares, however.
What is California Proposition 40?
Proposition 40 is a ballot measure proposing a one-time 5% tax on certain taxpayers with assets over $1 billion. The official voter guide says revenue would primarily fund health care.
Has California approved the billionaire wealth tax?
No. Proposition 40 is scheduled for a statewide vote on November 3, 2026. The tax would apply only if voters approve the measure and it takes effect.
Does the Meta deal exempt Zuckerberg from the proposed tax?
No exemption is described in Meta’s agreement. The share arrangement could help him raise funds if a tax bill arises, but it does not remove the proposal or determine his eventual tax liability.
Will Zuckerberg lose voting control by selling Class C shares?
Class C shares are non-voting. Meta’s agreement allows some of the shares to be sold freely and places restrictions on most of the remainder, with conditions intended to protect Zuckerberg’s voting control.
