During Meta’s earnings call on Wednesday, the company announced that its board had approved a new class of non‑voting stock, called Class C common stock. Holders of these shares receive an ownership interest but no voting rights on corporate matters. The new class will become effective in January. Meta said the shares will be used to raise capital, compensate employees and fund acquisitions, including its costly push into artificial intelligence, while preserving the existing voting structure that gives founder and CEO Mark Zuckerberg roughly 60 percent of the vote.
According to a report by the New York Times, there is an additional motive: the new shares could help Zuckerberg cover a potential California “billionaire tax” if voters approve it. Because the Class C shares carry no votes, he could sell a portion of them to meet the tax liability without diluting his voting control. Proposition 40, drafted by tax scholars at Berkeley and backed by the state’s largest healthcare union, SEIU United Healthcare Workers West, would impose a one‑time 5 percent wealth tax on the net worth of several hundred California billionaires who primarily reside in the state. Supporters estimate the measure could raise up to $100 billion over five years, with most of the revenue earmarked for the state’s healthcare system and the remainder directed to food assistance and education.
The Times also reported that Zuckerberg urged Meta’s board to devise a strategy to shield him from the tax. The newspaper said he told directors in September that, failing an agreement, he would list his Palo Alto property for sale, a move that could spark a media firestorm. Shortly thereafter, the new stock plan was approved, the paper adds. The reporting draws on a recent SEC filing by Meta that documents concerns about Proposition 40 and how they shaped discussions that led to the new share class. The filing notes that as early as July, Zuckerberg was talking about the billionaire tax with board members, and the topic resurfaced in further meetings and communications throughout July and August.
The filing explains the mechanics of the plan. Meta will create a non‑voting Class C share and issue one to each holder of a Class A or Class B share. The company describes this as a one‑time stock dividend that functions like a two‑for‑one split. The dividend “will not change the voting power of any shareholder,” Meta says. Regarding Prop 40, the filing states the dividend “will allow Mr. Zuckerberg to immediately sell or transfer up to 20 percent of the shares of Class C common stock that he receives in the dividend, representing 10 percent of his overall economic stake in the company, for any reason, including to pay his potential tax liability under California Proposition 40, if enacted into law, without affecting his majority voting control.” Because the dividend is one‑for‑one, half of his post‑dividend shares will be Class C, so the 20 percent cap translates to 10 percent of his total economic interest.
When TechCrunch sought comment, Meta pointed to a quote from its earnings release that reiterated the intention to keep Zuckerberg on board: “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.” Analysts estimate that Zuckerberg could owe as much as $11 billion under the tax.
Prop 40 has provoked strong opposition from several high‑profile Silicon Valley figures. Google co‑founder Sergey Brin has mounted an aggressive campaign against the measure, spending a substantial sum to defeat it. Other business leaders and critics argue that the tax would amount to economic suicide for California, prompting capital flight. Yet Meta’s new policy suggests that large tech firms and their leaders have devised ways to comply while preserving their foothold in the state. Democratic Representative Ro Khanna, a vocal supporter of the tax, wrote on X after the news broke, “Looks like billionaires will stay and figure out a way to pay the tax. If we pass Prop 40, poor California kids can have healthcare.”