Meta Platforms has agreed to restructure its shares to keep Mark Zuckerberg in California after the billionaire founder considered leaving the state over a proposed wealth tax that could leave him facing a multibillion-dollar liability.

The arrangement, disclosed in regulatory filings on October 21, will give Zuckerberg greater freedom to sell shares without surrendering control of the company he founded. In return, he has committed to remain a resident of California, or whichever jurisdiction houses Meta's headquarters, for eight years, barring material unforeseen circumstances.

Behind the agreement is Proposition 40, a measure California voters will consider on November 3. The proposal would impose a one-time 5% tax on the wealth of qualifying billionaires, with the proceeds directed primarily towards healthcare.

According to the California Legislative Analyst's assessment, the tax would apply to billionaires who were California residents on January 1, 2026, with payments due beginning in 2027. The state estimates that it could generate tens of billions of dollars, although the eventual revenue would depend partly on how affected taxpayers respond.

Zuckerberg's wealth is concentrated in Meta stock, creating a potential problem if he needs substantial cash to meet a tax obligation. Selling his existing voting shares could reduce his control over the business, while borrowing against those holdings would create additional financial obligations.

Meta's solution is a new class of non-voting stock.

Under the share restructuring disclosed to US securities regulators, shareholders will receive one new Class C share for every existing Class A or Class B share they own. The distribution, scheduled for January 19, 2027, will effectively create a two-for-one stock split without changing shareholders' initial relative ownership or voting power.

Zuckerberg will be permitted to sell 20% of the Class C shares he receives without surrendering any voting rights. Restrictions on the remaining shares will be relaxed gradually over eight years, provided he continues serving in an eligible full-time leadership position.

The arrangement preserves the distinction between economic ownership and corporate control. Zuckerberg already controlled approximately 60.6% of Meta's voting power as of October 1, according to the company's filing, despite owning a substantially smaller proportion of its total equity.

Meta's board-appointed special committee concluded that retaining Zuckerberg at its headquarters was particularly important as the company expanded its artificial intelligence operations. The committee also considered the possibility that a departure from California could complicate management during a period of significant investment and technological change.

The new shares serve another commercial purpose. Meta will be able to use non-voting equity to raise capital, compensate employees and pursue acquisitions without diluting existing shareholders' voting power. That flexibility could become increasingly valuable as the company commits more money to AI infrastructure.

The negotiations were extensive. Meta's filing describes months of discussions over Zuckerberg's liquidity, compensation and voting control before a final agreement was reached in September. The independent committee initially resisted arrangements that could allow him to sell substantial economic interests while retaining unrestricted control.

For other shareholders, the new structure raises a familiar corporate-governance issue: investors may be able to purchase a larger economic interest in Meta without receiving a corresponding voice in its decisions.

California voters have yet to decide whether to impose the tax that prompted the negotiations. Meta, however, has already secured an eight-year residency commitment from its founder while creating a new financial instrument to support its expansion.