Meta Board Approves Class C Non-Voting Stock to Let Zuckerberg Sell Shares for Proposed California Wealth Tax Without Losing Control

Meta’s board of directors has approved a new class of non-voting common stock, known as Class C shares, which will take effect in January. According to SEC filings and media reports, a key motivation for this structural change is to help founder and CEO Mark Zuckerberg address California’s proposed “billionaire tax” (Proposition 40). If passed by voters, the measure would impose a one-time 5% wealth tax on the net worth of several hundred California billionaires primarily residing in the state.

Holders of the new Class C shares possess an ownership stake but no vote on company decisions. Meta states it will use these shares for capital raising, employee compensation, and acquisitions—including its expensive push into artificial intelligence—while maintaining the current voting structure that favors Zuckerberg, who controls approximately 60% of the vote.

The New York Times reported that Zuckerberg pressed Meta’s board to devise a plan to protect him from the tax. SEC documents reveal that discussions began as early as July. The filing describes a mechanism where Meta issues one Class C share for every Class A or B share held, effectively acting as a one-time stock dividend equivalent to a two-for-one split. Crucially, Meta notes that the dividend “will not change the voting power of any shareholder.”

Specifically, the SEC filing states that the dividend “will allow Mr. Zuckerberg to immediately sell or transfer up to 20% of the shares of Class C common stock that he receives... representing 10% of his overall economic stake in the Company... without affecting his majority voting control.” This enables him to pay potential tax liabilities under Proposition 40 if enacted. Estimates suggest Zuckerberg could face a tax bill of up to $11 billion.