Zuckerberg agrees to stay in California for eight years amid proposed billionaire tax
In short
Meta CEO Mark Zuckerberg considered leaving California because of a proposed one-time tax on billionaires, but agreed with Meta to keep living in the state for eight years, according to a Meta SEC filing on 21 October. Meta's board will create non-voting Class C shares so he can raise tax money without losing voting control.
Read the full story 2 min read
Meta CEO Mark Zuckerberg considered moving his residence to avoid California's so-called billionaire tax, but agreed to keep living in the state for eight years. Yonhap, Dong-A Ilbo and Asia Economy reported the arrangement, citing a separate filing Meta made with the US Securities and Exchange Commission on 21 October, US local time, the day it announced third-quarter results. [ 1 , 2 , 3 ]
According to the filing, Zuckerberg told a special committee of Meta's board that he was considering relocating after California's Proposition 40 was put to a vote. The measure would impose a one-time tax of 5% of wealth on people with net worth above $1 billion. He also raised the possibility of selling his home in Palo Alto. The committee concluded he should not leave California, where the company is headquartered. It said it was very important that he continue to control the company and be based at the California headquarters at a turning point for the company and the technology industry. [ 1 , 2 , 3 ]
The committee was concerned that if the measure passed, Zuckerberg could owe a tax of billions of dollars and might have to sell shares, which could affect his control, Yonhap and Asia Economy reported. To keep his 60.6% voting power, the board and committee decided to create non-voting Class C common stock and distribute it to existing shareholders at a 1-for-1 ratio as a stock dividend. If Zuckerberg has to pay a wealth tax, he can sell Class C shares to raise the money without losing votes. [ 1 , 2 , 3 ]
Yonhap and Asia Economy said Zuckerberg signed a separate agreement with Meta under which he will keep living in California for eight years as long as he holds a top executive position. In return, Meta will lift sale restrictions immediately on 20% of the Class C shares he receives, and on the remaining 80% at 2.5% per quarter over eight years. Yonhap added that he will keep the $1 annual salary he has taken since 2013 and accepted stock grant options linked to share-price performance. [ 1 , 3 ]
Asia Economy described Proposition 40 as a one-time levy of 5% of net worth on California billionaires with at least $1 billion. It said the revenue is intended to strengthen health care and social safety nets, including health coverage for low-income people. The outlet said adoption will be decided in a November vote and that about 200 billionaires in California would be affected. [ 3 ]
All three outlets said that tech founders and executives have been leaving California as the tax has advanced. Google co-founders Larry Page and Sergey Brin, previously the state's richest people, moved to Florida and Nevada respectively, making Zuckerberg the richest person in California. Yonhap and Asia Economy added that Nvidia CEO Jensen Huang has said he will keep living in California whether or not the tax is introduced. [ 1 , 2 , 3 ]
Why it matters
The filing shows how a proposed state tax on very wealthy residents is shaping where tech executives live and how Meta structures its shares. The outlets note that other tech figures have already moved out of California, while Zuckerberg has become the state's richest resident.
Key facts
- Meta disclosed the arrangement in a separate SEC filing on 21 October (US local time), the day it announced third-quarter results. [ 1 , 2 , 3 ]
- Zuckerberg told a special committee of Meta's board he was considering moving because California's Proposition 40 was going to a vote; the measure would impose a one-time tax of 5% of wealth on people with net worth above $1 billion. [ 1 , 2 , 3 ]
- Zuckerberg also raised the possibility of selling his home in Palo Alto. [ 1 , 2 , 3 ]
- The board and special committee decided to create non-voting Class C common stock and distribute it to existing shareholders as a 1-for-1 stock dividend, to protect Zuckerberg's 60.6% voting power. [ 1 , 2 , 3 ]
- Zuckerberg agreed to keep living in California for eight years as long as he holds a top executive position at Meta. [ 1 , 3 ]
- In return, Meta will lift sale restrictions at once on 20% of the Class C shares he receives and on the other 80% at 2.5% per quarter over eight years. [ 1 , 3 ]
Confirmed by several sources
- Zuckerberg considered leaving California because of the proposed billionaire tax, and the special committee concluded he should not leave the state where Meta's headquarters is located. [ 1 , 2 , 3 ]
- Meta will create non-voting Class C shares and pay them to existing shareholders at a 1-for-1 ratio so Zuckerberg can sell them to pay any wealth tax without losing voting control. [ 1 , 2 , 3 ]
- Larry Page and Sergey Brin have moved to Florida and Nevada respectively, leaving Zuckerberg as California's richest person. [ 1 , 2 , 3 ]
- Nvidia CEO Jensen Huang has said he will keep living in California whether or not the tax is introduced. [ 1 , 3 ]
Still unclear
- Whether Proposition 40 will be adopted. Only one outlet says the matter will be decided in a vote in November; no document gives a result or a forecast.
- How many billionaires would be affected and what the tax revenue would fund. Only Asia Economy reports that about 200 billionaires are expected to be affected and that the revenue is meant for health care and social safety nets for low-income people.