Meta Engineers Nonvoting Shares to Let Zuckerberg Pay $11B California Tax Without Ceding Control

California’s proposed one-time wealth tax has forced Silicon Valley’s largest employers to rethink their capital structures.

Meta Platforms has approved a new category of equity, designated as Class C common stock, designed to give holders an ownership stake without granting voting rights on corporate matters.

The primary strategic objective of this move is to allow CEO Mark Zuckerberg to satisfy his potential tax obligations under Proposition 40 without diluting the voting control he currently exercises over the company.

According to a recent report from The New York Times, the board’s decision was driven by Zuckerberg’s desire to remain based in California while protecting his influence over Meta’s direction.

If voters approve Proposition 40, the measure would impose a one-time 5% levy on the net worth of hundreds of California-based billionaires.

Supporters of the initiative, including the state’s largest healthcare union, SEIU United Healthcare Workers West, estimate the tax could raise up to $100 billion over five years.

The revenue would primarily fund the state’s healthcare infrastructure, with remaining proceeds allocated to food assistance and education programs.

Zuckerberg is estimated to owe approximately $11 billion under this proposal, a sum that has prompted him to push the board for a structural solution.

The mechanism involves a one-time stock dividend where shareholders receive one Class C share for every Class A or Class B share they currently hold.

This effectively functions as a two-for-one stock split, but with the new shares carrying no voting rights.

The SEC filing notes that this structure allows Zuckerberg to sell or transfer up to 20% of his newly acquired Class C shares.

This portion represents 10% of his total economic stake in the company, enabling him to raise cash for the tax without altering the existing voting balance.

Meta has stated that the new stock class will also be used for capital raising, employee compensation, and funding acquisitions, particularly in the artificial intelligence sector.

The company’s Special Committee emphasized that keeping Zuckerberg in California is crucial for his close coordination with Meta Superintelligence Labs.

The filing indicates that discussions regarding the tax began in July, with additional meetings held throughout August to finalize the plan.

Before the stock plan was implemented, Zuckerberg had reportedly suggested listing his Palo Alto property for sale if the board could not reach an agreement on a protective strategy.

The proposal has sparked significant debate among Silicon Valley leaders, with some criticizing it as a driver of capital flight from the state.

Google co-founder Sergey Brin has actively campaigned against the measure, spending significant funds in an effort to defeat it.

Democratic U.S. Representative Ro Khanna, a vocal proponent of the tax, responded to the news by noting that the strategy suggests billionaires intend to stay and find ways to pay.

Khanna argued that if Proposition 40 passes, the funds will ensure better healthcare access for low-income children in California.