Meta strikes deal to keep Zuckerberg in California over billionaire tax that could cost him $10 billion
The eight-year pact stays in force even if the tax never passes — but investors wiped $100 billion off Meta anyway.
Meta has struck a new agreement with its chief executive, Mark Zuckerberg, designed to keep him in California as the state moves toward a possible one-time 5% tax on residents worth more than $1 billion — a levy that would have cost the Meta founder roughly $10 billion. The arrangement, which the company calls its "Founder Alignment Agreement", compensates Zuckerberg for the potential tax through additional shares and was secured after what Meta described as "robust" and "at several points, contentious" negotiations with its board.
Under the deal, announced alongside a stock split on Wednesday, Meta will create an entirely new class of shares and grant one new share to each existing shareholder. Zuckerberg will receive additional stock more frequently and become able to sell shares quarterly; the grants do not change his voting control over the company but make it easier for him to cash in. The agreement runs for eight years as long as he remains a California resident — and stays in force even if the billionaire tax never passes. The standoff had escalated earlier this year when Zuckerberg told the board he was considering moving his primary residence out of the state, where his main homes are in Palo Alto and Lake Tahoe.
Context
The fight reflects Meta's strained finances during its artificial intelligence buildout: the company plans to spend as much as $145 billion on AI projects this year, has increased that spend every quarter, and in the most recent quarter posted negative cash flow for the first time since going public 14 years ago. Investors reacted badly to the package — Meta's shares fell more than 7% after the announcement, erasing more than $100 billion from its market value. California is home to roughly 225 billionaires, who would be the tax's main targets.
Source and attribution
This report is based on BBC News' reporting. Figures on the proposed tax, the share grants and the market reaction come from the BBC's coverage and Meta's announcements; the tax itself has not yet been enacted and could still change.
