Meta Platforms has reached an agreement with CEO Mark Zuckerberg to keep him in California after he warned the company he was considering leaving the state over a proposed one-time tax on billionaires.
The arrangement, outlined in a regulatory filing, gives Zuckerberg access to newly created non-voting shares he can sell to cover a potential multi-billion-dollar tax bill without reducing his voting control of the company.
Zuckerberg told a special committee of Meta’s board that he was evaluating moving his primary residence outside California if voters approve Proposition 40 in the November 3 election.
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California’s Proposed Billionaire Tax: What to Know
California is moving towards a proposed one-time 5% tax on billionaires’ wealth as the state seeks additional funding for healthcare, food assistance and education, sparking a debate over wealth inequality, investment and the potential departure of some of its richest residents.
The proposal, known as Proposition 40, is scheduled to go before California voters on November 3, 2026. As of October 23, the measure has qualified for the ballot but has not been approved by voters.
If enacted, the tax would target qualifying individuals with net worths exceeding $1 billion who were California residents on January 1, 2026. The measure is expected to affect approximately 200 billionaires, many of whom have accumulated substantial wealth through ownership of technology companies and other investments.
The proposal comes amid mounting pressure on California’s healthcare funding, particularly following federal funding cuts and changes to public assistance programmes.
Supporters argue that the state needs additional revenue to protect essential services and prevent vulnerable residents from bearing the consequences of reduced government funding.
Under the proposal, 90% of the revenue generated would be allocated to healthcare, while the remaining 10% would support food assistance and education-related programmes.
The initiative also reflects a broader debate about wealth inequality and the taxation of accumulated fortunes. Unlike conventional income taxes, which are generally calculated on earnings, the proposed levy would apply to qualifying assets held by billionaires, including certain shares, business interests and other investments.
Supporters contend that individuals who have accumulated enormous fortunes should contribute more towards public services, particularly when government funding is under pressure.
At an estimated net worth of roughly $240 billion, Zuckerberg faced a potential liability of about $12 billion. Meeting that obligation by selling his existing Class B supervoting shares risked dropping his voting power from around 60 percent to approximately 53 percent.
He noted that any steps to list his Palo Alto home for sale would become public knowledge and could create uncertainty among company employees about Meta’s leadership.
Following negotiations described by the company as robust and at times contentious, the special committee concluded it was critically important for Zuckerberg to remain in a leadership position and continue managing the firm from its California headquarters amid intense industry competition driven by artificial intelligence.
Under the resulting Founder Alignment Agreement, Meta will issue a new class of non-voting Class C common stock in January 2027. Zuckerberg can immediately sell 20 percent of the shares he receives, equivalent to about 10 percent of his overall economic interest, to help pay any tax that may be due.
The balance of those shares would become available for sale in stages over the following eight years, provided he remains a California resident or lives in whatever location Meta maintains as its headquarters.
In return, Zuckerberg has committed to staying in California or wherever the company is headquartered for eight years while serving as a full-time leader.
Meta stated that his talent and leadership have been crucial to the company’s growth, strategy, and stability since its inception and that the board wants that continuity to continue.
California is home to an estimated 200 to 250 billionaires whose combined wealth exceeds $2 trillion. Several prominent figures have already relocated ahead of the January 1 residency date used by the measure.
However, analysts say Proposition 40’s chances of passage remain uncertain, and even if approved it could face legal challenges. Estimates of the revenue it might generate vary significantly depending on assumptions about taxpayer migration and enforcement.
The deal highlights the pressure that California’s proposed wealth tax has placed on the state’s largest technology companies and their founders as voters prepare to decide the measure’s fate.