Meta creates new nonvoting shares that could help Zuckerberg pay a wealth tax

Meta has created a new kind of stock that gives Mark Zuckerberg a way to pay a possible California billionaire tax without giving up control of the company. The shares carry no vote. He could sell some of them to raise cash while keeping his majority voting power. The New York Times reported the tax link, and a Meta filing with the SEC backs it up.

What Meta did

On its earnings call Wednesday, Meta said its board approved a new class of nonvoting stock called Class C. It takes effect in January. Holders own a piece of the company but get no say in its decisions. Meta says it will use the stock to raise money, pay employees and fund acquisitions, including its costly push into AI. Zuckerberg controls about 60% of the vote, and Meta says that will not change.

How it could work

Meta will give shareholders one Class C share for every Class A or Class B share they own. The company calls this a one-time stock dividend and says it works out like a two-for-one stock split. It says the dividend will not change anyone's voting power.

Here is the key detail. The filing says Zuckerberg can immediately sell or transfer up to 20% of the Class C shares he receives. That equals 10% of his total ownership stake. The filing names paying his possible tax bill under California's Proposition 40 as one allowed reason.

What Prop 40 would do

• A one-time 5% tax on the net worth of several hundred California billionaires who mainly live in the state.
• Drafted by Berkeley tax law professors and sponsored by a large California healthcare union, SEIU United Healthcare Workers West.
• Backers say it could raise as much as $100 billion over five years, mostly for healthcare, plus food assistance and education.
• Zuckerberg's bill has been estimated at up to $11 billion.

The backstory

The Times also reported that Zuckerberg pushed Meta's board for a plan to protect him from the tax. It says he told board members in September that if they could not reach an agreement, he would list his Palo Alto property for sale. The filing says he discussed the tax with the board as far back as July. The stock plan came not long after the September warning, the paper writes.

Meta pointed to a statement from its Special Committee. It said it was important for Zuckerberg to keep leading the company from California, close to management and to Meta Superintelligence Labs.

The reaction

Prop 40 has angered many tech leaders. Google co-founder Sergey Brin has campaigned hard against it. Critics say it would push money out of California. Representative Ro Khanna, a supporter, saw it differently. He wrote on X that billionaires will stay and find a way to pay, and that passing the tax could give poor California kids healthcare.

What is not known yet

Prop 40 has not become law. It is not clear whether Zuckerberg would actually sell any Class C shares, or how much. Meta's filing says the shares can be sold for any reason, not only the tax.