Meta Creates Non-Voting Stock So Zuckerberg Can Pay $11 Billion Tax

By Daniel Okafor

Meta says its new non-voting stock lets Mark Zuckerberg sell up to $11 billion worth of shares to cover California's proposed billionaire tax — without surrendering a single vote.

The company disclosed the plan on its Wednesday earnings call. The board approved a new class of shares, called Class C common stock. Holders get an ownership stake but no vote on company decisions. The class takes effect in January.

Why did Meta create Class C stock?

Meta's public rationale covers the basics. The company says it will use the stock for capital raising, employee pay and acquisitions — including its expensive push into AI. The structure preserves the current voting setup, which favors founder and CEO Mark Zuckerberg. He controls around 60% of the vote.

But the New York Times reported a second reason: helping Zuckerberg pay California's proposed "billionaire tax" if voters approve it. Because Class C shares carry no votes, he could sell them to cover the tax bill and keep his grip on the company.

The Times reporting draws partly on a recent SEC filing by Meta. The filing documents the concern around Proposition 40 and how it shaped the talks that produced the new stock class.

How would the share plan work?

The mechanics are simple. 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. It works out to a two-for-one stock split.

The dividend "will not change the voting power of any shareholder," Meta says.

The filing spells out the tax angle. The dividend, it says, "will allow Mr. Zuckerberg to immediately sell or transfer up to 20% of the shares of Class C common stock that he receives in the Dividend, representing 10% of his overall economic stake in the Company, for any reason, including so that he may pay his potential tax liability under California Proposition 40, if enacted into law, without affecting his majority voting control."

The math is one-to-one. Half of his post-dividend shares will be Class C, so the 20% cap on sales equals 10% of his total economic stake.

What is Proposition 40?

Berkeley tax law professors drafted the measure. California's largest healthcare union, SEIU United Healthcare Workers West, sponsors it. The proposition would levy a one-time 5% wealth tax on the net worth of several hundred California billionaires who primarily live in the state.

Backers say the policy could raise as much as $100 billion over five years. Most of that money would fund the state's healthcare needs. The rest would go to food assistance and education.

Estimates put Zuckerberg's own bill at as much as $11 billion.

How hard did Zuckerberg push the board?

The SEC filing shows the tax came up as early as July, when Zuckerberg discussed it with board members. The topic returned in further meetings and communications through that month and August.

The Times adds a harder edge. The paper reports Zuckerberg pressed Meta's board for a plan to shield him from the tax. In September, he told board members that without an agreement he would list his Palo Alto property for sale — a move that could kick off a media firestorm. The stock plan materialized shortly afterward, the newspaper writes.

When TechCrunch asked for comment, Meta pointed to its earnings press release. That statement stressed that part of the motivation was keeping Zuckerberg in place: "The Special Committee affirmed its belief that it was important for Mr. Zuckerberg to continue to lead the Company from California, including because it was crucial that Mr. Zuckerberg remains in close coordination with the Company's management and in close proximity to Meta Superintelligence Labs."

What has the reaction been?

Prop 40 has riled many of Silicon Valley's most prominent businesspeople. Google co-founder Sergey Brin has campaigned aggressively against the measure and spent heavily to defeat it. Other business leaders and critics attacked it online, with many claiming it amounts to economic suicide for California and would drive capital out of the state.

Meta's plan suggests otherwise, at least for the state's largest companies. Their founders have creative ways to absorb the tax if it passes.

"Looks like billionaires will stay and figure out a way to pay the tax," Democratic U.S. Representative Ro Khanna, a vocal proponent of the tax, wrote on X after news of Meta's strategy spread. "If we pass Prop 40, poor California kids can have healthcare," he added.

The strategy now sits in plain sight in an SEC filing. If Prop 40 passes in November, Zuckerberg has a ready-made liquidity valve — and California gets its $11 billion from a founder who never loosens his hold on the company he built.