Meta Platforms Inc. (NASDAQ:META) has struck an agreement designed to keep CEO Mark Zuckerberg in California, addressing the possibility that a proposed billionaire wealth tax could prompt him to relocate.
Zuckerberg agreed to remain a California resident, or live wherever Meta maintains its headquarters, for eight years, the company said on Wednesday. In exchange, he would receive non-voting Class C shares that he could sell if voters approve the proposed billionaire tax, or Proposition 40, next month. The proceeds could help him cover a potentially multibillion-dollar tax obligation.
As per Forbes, Zuckerberg's net worth is $239.3 billion. The CEO may immediately sell 20% of those new Class C shares, representing 10% of his total economic interest, to pay for his potential tax obligation while retaining voting control over Meta.
Meta's special board committee said it was "critically important" for Zuckerberg to remain in leadership and operate from the company's California headquarters amid "unprecedented challenge and competition" driven by AI.
California's Billionaire Tax Sparks Debate
The agreement follows a broader debate over California's proposed billionaire tax.
Earlier this month, Rep. Ro Khanna (D-Calif.) described the measure as an effort to update taxation as wealth becomes increasingly concentrated. Khanna compared the proposal with Wisconsin's adoption of an income tax in 1911, arguing that tax systems must change alongside the ways wealth is created.
Last month, Sen. Bernie Sanders (I-Vt.) argued that the proposed 5% billionaire wealth tax in California could preserve health coverage for 3 million residents, accusing billionaires of spending $229 million to oppose the measure.
On the other hand, economist Peter Schiff had warned that the proposed billionaire tax could drive wealthy entrepreneurs, including Mark Zuckerberg, out of the state, forcing asset sales and potentially eroding its tax base.
Meta's Stock Plan Signals More AI Spending
On Wednesday, Meta announced a non-voting stock recapitalization. Beginning Jan. 19, 2027, shareholders will receive one Class C share for each Class A and Class B share, to raise capital, compensate employees and finance acquisitions without diluting existing shareholders' voting power.
The change was approved by entities linked to Mark Zuckerberg and his wife, Priscilla Chan, which control 56.1% of Meta's voting power, eliminating the need for a shareholder vote. Meta expects to sell the shares periodically.
Nicholas Mugalli, CEO and principal of World Trade Securities, saw the plan as a sign of "more capex coming," with 2026 capex already guided at $135 billion to $145 billion.
Meta reported third-quarter revenue of $64.6 billion, topping analyst estimates of $63.37 billion, according to MarketDash Pro. Adjusted earnings came in at $7.40 per share, above expectations of $5.74.
MarketDash's Edge Rankings place Meta in the 77th percentile for quality and the 75th percentile for growth, reflecting its strong performance in both areas. MarketDash's screener allows you to compare META's performance with its peers.
Price Action: On a year-to-date basis, Meta stock climbed 5.67%, as per MarketDash Pro. The stock traded 0.65% lower at $692.98 premarket on Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by MarketDash editors.
