Mark Zuckerberg Considered California Exit Over Wealth Tax, SEC Filing Reveals
Meta disclosed that CEO Mark Zuckerberg considered leaving California over a proposed 5% wealth tax, prompting an agreement requiring him to stay for eight years in exchange for a stock restructuring.
Meta CEO Mark Zuckerberg considered leaving California following a proposed one-time 5% wealth tax on billionaires residing in the state, according to a filing submitted by Meta to the US Securities and Exchange Commission (SEC).
The Billionaire Tax Proposal and SEC Filing
The proposed measure, known as Proposition 40, is set to face a public vote in California in November. If approved, it could compel Zuckerberg, whose fortune is estimated at approximately $240 billion, to pay billions of dollars in taxes. Although the tax is not guaranteed and its prospects remain uncertain, Meta acknowledged that Zuckerberg's potential departure became a strategic issue for the company, which sought to ensure he continues leading operations from Silicon Valley.
According to the SEC filing, Zuckerberg made it clear during negotiations with a special committee of Meta's board of directors that he was considering relocating his primary residence outside the state. Ultimately, an agreement was signed on September 14 obligating him to remain a resident of California—or wherever the company's headquarters are located—for eight years, barring exceptional circumstances.
Financial Restructuring and AI Funding
As part of the arrangement, Meta will issue a new class of non-voting Class C shares in January 2027. The move will be executed via a 1:2 stock split, granting shareholders an additional share for every one they currently hold. Zuckerberg will be permitted to immediately sell 20% of his newly allocated shares, representing about 10% of his total economic stake in the company, generating roughly $20 billion in liquidity.
This mechanism will allow Zuckerberg to finance potential tax liabilities without selling voting shares and undermining his control over Meta.
Beyond personal financial planning, Meta estimates it will require hundreds of billions of dollars over the coming years to fund its ambitious artificial intelligence growth plans. The new shares are also designed to facilitate acquisitions and employee compensation while safeguarding Zuckerberg's voting power. A special board committee concluded that Zuckerberg's ongoing leadership is critical amid unprecedented industry competition and the challenges of the AI revolution.
