Meta has introduced a new class of non-voting common stock, designated as Class C, which will take effect in January. The company plans to issue these shares as a one-time dividend, granting shareholders one Class C share for every Class A or Class B share held, effectively functioning as a two-for-one stock split.
The board approved this structure to facilitate capital raising, employee compensation, and acquisitions, including investments in artificial intelligence. Crucially, the new class allows Mark Zuckerberg to sell up to 20% of his newly received Class C shares—representing 10% of his total economic stake—without diluting his current 60% voting control.
This strategy is designed to help Zuckerberg manage potential tax liabilities arising from California’s proposed Proposition 40. The measure, if passed, would impose a one-time 5% wealth tax on the net worth of certain billionaires residing in the state, with estimates suggesting Zuckerberg could owe up to $11 billion.
Meta’s SEC filings indicate that discussions regarding the tax and the new stock class began as early as July. Zuckerberg reportedly informed the board that without a plan to address the tax, he would consider selling his property in Palo Alto. The board ultimately supported the measure to ensure he remains in California to lead the company.
