Meta cuts deal to keep Zuckerberg in California amid tax threat
Meta Platforms Inc. is taking no chances that Mark Zuckerberg ends up living far away from the company he co-founded.
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After Zuckerberg warned that a proposed California wealth tax could push him to leave the state, Meta struck an unusual bargain with its billionaire chief executive officer. The company is giving him non-voting shares that he can sell to cover a multibillion-dollar tax bill without relinquishing control of Meta.
In return, Zuckerberg has committed to stay in California — or wherever Meta keeps its headquarters — for the next eight years while he remains its full-time leader.
The arrangement and the often tense negotiations to reach a deal were outlined in a Wednesday filing that shows how an effort to tax some of Silicon Valley’s largest fortunes has rippled through the corporate world.
Billionaires such as Sergey Brin and David Sacks have taken steps to leave California, fueling criticism that the one-time 5% levy, which will be put to a vote in November, would drive away some of the state’s wealthiest individuals.
Meta’s deal offers a striking counterpoint: Rather than watch Zuckerberg leave, the company created a financial incentive for him to stay.
A special committee charged with negotiating the agreement said having Zuckerberg work from the company’s headquarters was “critically important,” particularly as the intensifying race over artificial intelligence has him collaborating closely with Meta Superintelligence Labs.
The committee pointed to the “difficulties” the company faced during the Covid-19 pandemic, when Zuckerberg was away from the management team, and said it wanted to avoid similar challenges.
Zuckerberg, the world’s fifth-richest person, is worth $247 billion, according to the
That possibility had been worrying Zuckerberg — and Meta’s board — for months.
The subject came up in July, when Zuckerberg briefly discussed the upcoming election with Robert M. Kimmitt, Meta’s lead independent director, according to the filing. Zuckerberg warned that the proposed tax could force him to sell his Class B common stock, leaving him with less than 53% voting interest in the company.
Within weeks, Zuckerberg’s legal counsel sent a letter to the board’s special committee saying he was considering leaving California because of the billionaire tax. He proposed also creating a class of non-voting stock, which would give Meta another way to raise the enormous sums of capital needed for its AI ambitions.
The letter went further, asking the committee to discuss a revised compensation arrangement “comparable to those recently approved for other founders of a similar profile and importance to their companies,” consisting of equity grants tied to performance benchmarks, according to the filing.
The filing detailed the back and forth negotiations to strike a deal and signaled Zuckerberg’s urgency to get a deal in place before the tax vote. In early September, he told the board he would need to take steps regarding his residency and planned to list his Palo Alto home for sale.
The arrangement that emerged allowed Meta to address two problems at once.
Zuckerberg sought flexibility to raise money without weakening his grip on the company. Meanwhile, Meta got another way to finance its expensive AI buildout and give its founder a powerful incentive to stick around.
Meta’s Chief Financial Officer Susan Li said during the company’s quarterly earnings call that the new non-voting stock would primarily serve as a financing tool, giving Meta greater flexibility to fund its AI ambitions without diluting voting power. She didn’t mention the Zuckerberg-specific elements detailed in the filing.
Under the agreement, Zuckerberg can immediately sell 20% of the non-voting Class C shares he receives, the equivalent to 10% of his overall economic stake. That would give him liquidity to help cover a potential tax bill triggered by Proposition 40, the ballot measure that would allow the billionaire tax, if enacted into law.
While the remaining 80% of the Class C stock is initially restricted, those limits gradually lapse over eight years as long as Zuckerberg continues leading the company.
Whether Zuckerberg will ultimately have to face the tax will depend on Californians. Recent polls show voters split over Proposition 40, which was pitched by a healthcare workers union as a way to backfill federal cuts. Governor Gavin Newsom opposes the measure, which would impact people whose net worth exceeded $1 billion on Jan. 1, 2026.
A group of billionaires has
But even if Zuckerberg keeps his main residence in California, the 42-year-old billionaire has a growing portfolio of homes elsewhere.
Earlier this year, he paid
