10%: How Meta’s New Stock Lets Zuckerberg Pay a Potential $11 Billion Tax

For the average investor in Meta, nothing changes in terms of voting rights, but the structure of the company’s ownership is shifting to handle a massive financial question. The company’s board has approved a new type of stock that allows the founder to sell a piece of his wealth without giving up his control over the company’s direction.

The new shares, known as Class C common stock, are set to take effect in January. Unlike the existing Class A and Class B shares, these new units grant an ownership stake but carry no vote on company decisions. Meta states the class will be used for raising capital, paying employees, and funding acquisitions, particularly in the expensive field of artificial intelligence.

However, reporting from The New York Times suggests a more specific purpose for the new shares: helping Mark Zuckerberg pay for California’s proposed billionaire tax. Proposition 40, a measure currently before voters, would impose a one-time 5% wealth tax on hundreds of California billionaires. If passed, the tax is estimated to generate up to $100 billion over five years, primarily for healthcare, with some funds directed to food assistance and education.

Zuckerberg, who controls approximately 60% of the vote at Meta, has been pressing the board to find a way to protect his position. According to the Times, he warned board members in September that if a plan was not reached, he might list his Palo Alto property for sale. This move would have triggered significant media attention. The stock plan was developed shortly after these discussions.

A recent SEC filing reveals that these conversations began as early as July. The filing details that the new Class C shares will be distributed as a one-time dividend. Shareholders will receive one Class C share for every Class A or Class B share they already hold. This effectively acts as a two-for-one stock split, but it does not alter the voting power of any existing shareholder.

The filing explicitly states that this dividend will allow Zuckerberg to sell or transfer up to 20% of the Class C shares he receives. Because the dividend is one-for-one, this 20% cap represents 10% of his total economic stake in the company. The document notes that he can use these funds for any reason, including paying his potential tax liability under Proposition 40, while maintaining his majority voting control. Estimates suggest the tax could cost him as much as $11 billion.

Meta responded to inquiries by pointing to a quote from its earnings press release. The company said a Special Committee believed it was crucial for Zuckerberg to continue leading the company from California. The release emphasized that his proximity to Meta Superintelligence Labs and management is vital for the company’s operations.

The proposed tax has stirred strong reactions across Silicon Valley. Google co-founder Sergey Brin has campaigned aggressively against the measure, spending significant funds to defeat it. Other business leaders have criticized it online, arguing it could drive capital away from the state. Yet, Meta’s strategy suggests that major tech companies have devised ways to comply while preserving their leadership structures.

Democratic Representative Ro Khanna, a vocal supporter of the tax, reacted to the news on social media. He noted that it appears billionaires plan to stay and find ways to pay. He added that if Proposition 40 passes, it will ensure that children in California have access to healthcare.