Meta's board has agreed to give chief executive Mark Zuckerberg additional shares in the company to offset the potential cost of a proposed California wealth tax, following what the company described as "robust" and "at several points, contentious" negotiations with a special board committee.
The proposed state measure would impose a one-time 5% tax on California residents with a net worth above $1 billion, a levy that would likely cost Zuckerberg, whose fortune is estimated at more than $200 billion, around $10 billion if it passes in next month's vote. Under the new arrangement, disclosed in a securities filing, Zuckerberg will receive more Meta stock, distributed more frequently and sellable on a quarterly basis, without any change to his level of control over the company.
A threat to leave sparked the deal
The agreement follows Zuckerberg telling Meta's board last month that he was considering moving his primary residence out of California, and potentially selling his properties in Palo Alto and Lake Tahoe, to avoid the tax exposure. He warned directors that such a move "would be public and inevitably noted and commented upon by company employees" and could "raise questions for management of the company going forward." Rather than risk Zuckerberg relocating, the board opted to structure a stock arrangement that would let him remain a California resident while offsetting any added tax burden.
Meta called the arrangement its "Founder Alignment Agreement," saying in the filing that keeping Zuckerberg leading the company from California was "critically important" given the "dramatic and unprecedented transformation taking place in the tech industry and global economy related to artificial intelligence." The deal is structured to run for eight years, or for as long as Zuckerberg remains a California resident, and takes effect regardless of whether the ballot measure ultimately passes.
California's billionaire problem
California is home to the bulk of the country's technology giants and roughly 225 billionaires, according to the advocacy group Americans for Tax Fairness, whose members have seen their collective wealth balloon in recent years even as critics note how little tax many of them pay relative to their net worth. The Zuckerberg arrangement illustrates one of the central tensions in taxing concentrated wealth: when a single individual's decision to stay or leave carries real consequences for a company's workforce and headquarters, boards have shown they are willing to engineer around the tax rather than risk losing their leader to a lower-tax state.
