- Share Deal: Meta approved nonvoting shares that could help CEO Mark Zuckerberg fund a possible California wealth-tax bill while retaining control.
- Residence Commitment: Zuckerberg committed to live in California or wherever Meta keeps its headquarters for eight years, Reuters reports.
- Company Financing: Meta also plans to use the shares for fundraising, employee pay and acquisitions as artificial-intelligence investment consumes cash.
- Tax Vote: California voters will decide on a proposed one-time 5% tax on billionaires’ net worth in November.
Meta has approved a share restructuring that would let CEO Mark Zuckerberg sell part of his holdings for cash without surrendering votes, offering a way to fund a possible California wealth-tax bill. In return, the Facebook and Instagram parent secured a reported eight-year commitment to live in California or wherever it maintains its headquarters.
The arrangement disclosed on October 21 also gives Meta a new stock class for raising funds, compensating employees and financing acquisitions. Its charter change is scheduled to take effect on January 19, 2027, with the stock distribution to follow.
How Stock Sales Can Leave Votes Intact
Meta’s existing shares give investors different amounts of influence. Publicly traded Class A stock carries one vote per share. Zuckerberg mainly holds Class B stock, with ten votes per share; when he sells those shares, they convert to Class A, reducing his voting power.
The planned Class C stock carries no votes. Each existing Class A or Class B share would receive one Class C share through a one-time stock dividend. Every holder receives the same allocation, so Zuckerberg’s percentage ownership would initially stay the same. He could obtain cash by selling some of the new shares to buyers who would receive an economic interest without votes, leaving his existing voting shares in place.
Reuters reports that he could initially sell 20% of the Class C shares he receives, equivalent to one-tenth of his own economic stake after the distribution. Fortune describes the remaining 80% as tied to sales or conversions of an equal number of voting shares.
Meta has yet to set the dividend’s record and payment dates. It intends to list the new stock on Nasdaq after issuance, alongside the Class A shares already traded there.
What Meta Sought From Zuckerberg
The residence commitment emerged after Zuckerberg raised the possibility of leaving California over the proposed tax, Reuters reported.
Meta’s board committee argued that keeping Zuckerberg in a leadership role and managing the company from its California headquarters was especially important during intense AI competition. Directors reportedly want him close to Meta’s artificial-intelligence laboratory.
His lawyers also sought a pay package partly to cover a potential tax bill. Zuckerberg initially proposed distributing 20 Class C shares for each Class A or B share, and resisted conditions that would end his supervoting stock or dilute his voting control. The final distribution is one-for-one. He dropped a pay request and retained his $1 salary, according to the report.
Financing AI Without Adding Votes
New Class A stock used to pay employees, acquire businesses or raise capital adds votes held by other investors. Nonvoting stock would let Meta make those transactions while preserving the existing balance of voting power. New issuance can still reduce existing investors’ percentage ownership.
Buybacks have previously helped offset voting dilution, but they require cash. Meta reported no Class A repurchases in the first nine months of 2026, compared with $26.25 billion in the same period a year earlier. The new share class appears like a preparation for greater reliance on equity financing for AI investment.
In the third quarter, capital expenditure on property and equipment, including principal payments on finance leases, reached $34.91 billion, against $32.79 billion in cash from operations. That left negative free cash flow of $2.12 billion, compared with positive $10.63 billion a year earlier. This non-GAAP measure subtracts those capital outlays from operating cash flow.
Meta’s October 21 outlook put 2026 capital expenditure at $135 billion to $145 billion, including finance-lease principal payments. That raised the lower end from $130 billion while leaving the upper end unchanged. Chief financial officer Susan Li said Meta had no specific financing plans yet.
Tax Remains a Voter Decision
California’s Proposition 40 would impose a one-time tax equal to 5% of covered billionaires’ net worth. It would apply to billionaires who were California residents on January 1, 2026, with payment due in 2027. Taxpayers could spread payments over five years at additional cost. Real estate, pensions and retirement accounts would generally be excluded.
The proposal targets accumulated wealth, including stock holdings. A shareholder could therefore need to sell assets to pay it.
The proposal would direct 90% of its revenue to healthcare services, with the remainder going to education, food assistance and administration. The Legislative Analyst projects temporary receipts of tens of billions of dollars spread over several years.
If billionaires respond by reducing taxable income or leaving California, the state could lose some of their annual income-tax payments. The Legislative Analyst estimates that possible ongoing reduction at less than $1 billion a year.
