Meta says Mark Zuckerberg would effectively be paying to remain its chief executive if California introduces taxes on billionaires.
The company is therefore creating new shares that he can sell to cover the potential tax bill.
In return, Zuckerberg has pledged to remain in the state, according to an SEC filing published on Wednesday.
The agreement followed months of discussions between Zuckerberg and a special committee of Meta’s board. During a board dinner on 9 September, he disclosed plans to list his Palo Alto home for sale on 13 September. Both parties reached an agreement on the terms the following day.
Zuckerberg warned the committee that the move would not remain secret.
Zuckerberg told the committee that any listing of his California home would be publicly disclosed and likely to attract attention and comment from Meta employees, according to the filing.
Under the arrangement, each Meta shareholder will receive one additional non-voting Class C share for every share held. The change will take effect on 19 January 2027. Meta described the move as equivalent to a two-for-one stock split in its third-quarter results.
Zuckerberg owns approximately 13.4 per cent of Meta’s shares but controls 60.6 per cent of its voting rights. His Class B shares carry 10 votes each but convert into ordinary shares with one vote each when sold.
According to the filing, selling enough shares to cover the potential tax liability could reduce his voting power to about 53 per cent.
