Meta’s agreement with Mark Zuckerberg links sales of certain new shares to his remaining in California for eight years.
The company also plans a non-voting share class, saying it could help fund AI data-center investment without reducing his voting power—a useful case study in how share design can separate capital from control.
The proposal, called Proposition 40, would impose a one-time 5% tax on stocks and other assets of billionaires located in California in January 2026. The measure is expected to be put to a vote next month, according to the report. Even if it passes, it could face challenges in the courts.
On September 9, at a dinner with Meta board members, Zuckerberg said he was considering leaving California because of the proposal. Four days later, he planned to put his Palo Alto home up for sale. According to a Wall Street Journal report, he had bought a home in Florida in February.
A special committee of the board of directors was concerned that Zuckerberg’s absence would make it more difficult for him to work with Meta’s management team. The committee linked this concern to difficulties that had arisen during the COVID-19 pandemic.
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The deal will see Meta create a new class of shares with no voting rights in the company. All existing shareholders will automatically receive them, based on the stake they already own. Meta says the new shares could help fund investments in artificial intelligence data centers without reducing Zuckerberg’s voting power.
Zuckerberg can sell 20% of the new shares to pay any taxes he owes. He can also sell the remaining 80% in installments over the next eight years, as long as he stays in California. If he wants to sell that portion sooner, he will also have to sell some of his voting shares. An exception is made if serious and unforeseen circumstances arise that would make it prudent or advisable for him to reside elsewhere.
However, the deal requires him to live in the state where Meta is headquartered. So the company and Zuckerberg could move together to another state. Meta says the goal is for Zuckerberg to continue leading the company from California, close to the Meta Superintelligence Labs team. The team is behind the company’s recent Muse AI models.
Recent polls in California suggest that Proposition 40 may not secure enough votes. According to the report, about $129 million was spent on the campaign against the proposal.
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