TLDR
Meta has agreed to give Mark Zuckerberg a way to pay a possible California billionaire tax without losing control of the company. In return he must stay a California resident for eight years. Voters decide the one-off 5 per cent tax early next month.
A deal to keep Zuckerberg in California
Meta has struck a deal with chief executive Mark Zuckerberg to help him pay a possible California tax on billionaires.[1] The company disclosed the arrangement on Wednesday, US time.[1]
Meta calls it a "Founder Alignment Agreement". It said keeping Zuckerberg leading the company from California was "critically important".[2]
How it works
Meta is creating a new class of non-voting shares through a two-for-one stock split for all existing shareholders.[1] Zuckerberg can sell some of the new class C shares to pay a potential tax bill without diluting his control of the company.[1]
He will receive more stock and can sell it each quarter. The deal applies even if the tax does not pass, the BBC reported.[2]
In return, he commits to remain a resident of California, or wherever Meta is based, for eight years.[1]
The tax
Californians vote early next month on Proposition 40, a one-off 5 per cent tax on billionaires who live in the state.[1] It would likely cost Zuckerberg about US$10 billion, the BBC reported.[2]
Zuckerberg is worth US$239 billion, according to Forbes.[1] He told Meta's board last month he was thinking of moving his main residence out of California.[2]
Such a move "would be public and inevitably noted and commented upon by company employees", he told the board.[2]
The deal followed "robust" and "at several points, contentious" negotiations with a special committee of Meta's board, a financial disclosure said.[2]
The Guardian puts the number of billionaires living in California at about 250. The Americans for Tax Fairness campaign group says about 225.[1][2] Recent polling shows Proposition 40 short of majority support, the Guardian reported.[1]
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