Meta Stock Split Deal Will Keep Billionaire Mark Zuckerberg In California

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0:39Only at McDonald's for a limited time. Price and participation may vary. Promotion pricing may be lower than meal pricing. Meta struck an agreement with its billionaire CEO Mark Zuckerberg to keep him in California for the next eight years after he considered leaving the state over its proposed billionaire wealth tax that could have forced him to sell his shares in the company and weakened his voting control. In an SEC filing, Meta said Zuckerberg told a special committee of the company's board that he was considering relocating his primary residence outside California because he would be liable for a significant multi-billion dollar tax if voters in the state approved the wealth tax ballot measure in November.

1:19The billionaire was concerned that paying the proposed tax could force him to sell some of his super voting class B shares, potentially reducing his voting control in the company from about 60.6 % to 53%, according to the filing. In a separate filing, Meta disclosed that Zuckerberg had signed a founder alignment agreement to remain a resident of California or any jurisdiction where Meta maintains its corporate headquarters while continuing to serve in a full-time leadership role. Under the agreement, Meta will create a new class of Class C non-voting shares, distributing one new share for every existing Class A or Class B share in January next year, allowing the company to raise money without diluting the voting power of existing shareholders.

2:05Meta's board committee argued that it was critically important to keep Zuckerberg in a leadership position near its California headquarters amid intensifying competition in AI. The filing read, the special committee was mindful about the difficulties the company faced during the COVID-19 pandemic, when Mr. Zuckerberg could not be physically present with the company's management team and did not want the company to face similar challenges going forward. California voters will decide on Proposition 40, a ballot measure that would impose a one-time tax of up to 5 % on certain taxpayers with covered assets valued over$1 billion.

2:41Such assets include businesses, securities, art, collectibles, and intellectual property. The state believes the measure could help raise up to tens of billions of dollars over several years. About 90 % of the tax's proceeds would fund public health services. According to our estimates, Zuckerberg's current net worth is$239.3 billion, making him the world's sixth richest person. 5 % of Zuckerberg's fortune would be about$12 billion, but the Meta CEO's actual liability under the tax, if it passes, would depend on assessment rules. For more on this story, click the link in the description.