Mark Zuckerberg told Meta’s board he was weighing a move out of California over a proposed billionaire wealth tax, then struck a deal with the company that keeps him in the state for at least eight years.
Under the agreement, disclosed by Meta on Wednesday, Zuckerberg will receive new nonvoting Class C shares that he could sell if California voters approve the tax. In return, he agreed to remain a California resident, or live wherever Meta has its headquarters, for eight years, Benzinga reported.
He may immediately sell 20% of the new shares, equal to about 10% of his economic stake in Meta, to cover a possible tax bill while keeping voting control of the company.
Why Meta made the deal
A special committee of Meta’s board said it was “critically important” for Zuckerberg to stay in leadership and work from the company’s California headquarters, citing “unprecedented challenge and competition” in the industry.
The worry was that paying the tax could force Zuckerberg to sell shares that carry votes, weakening his control of the company he founded. The agreement is dated Oct. 19, according to a securities filing cited by Quartz.
What Proposition 40 would do
California voters will decide Proposition 40 on Nov. 3. According to the state’s official voter guide, it would impose a one-time tax equal to 5% of the wealth of residents worth more than $1 billion, with the money going mainly to health care.
State analysts estimate it would bring in tens of billions of dollars over several years, while income tax revenue from billionaires could fall by less than $1 billion a year.
Supporters, including Sen. Bernie Sanders and the SEIU United Healthcare Workers West union, say the money is needed to protect health coverage. Opponents, including the California Taxpayers Association, argue in the voter guide that it is “a flawed, one-time tax scheme that hurts our economy” and damages the state budget.