Meta strikes deal with Zuckerberg to keep him in Calif. over billionaire tax

Meta CEO Mark Zuckerberg threatened to leave California over the state’s proposed wealth tax on billionaires, according to a Wednesday Securities and Exchange Commission filing. 

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The filing noted that Zuckerberg told Meta he was considering relocating because of Proposition 40, more commonly known as the California billionaire tax. Meta said Zuckerberg raised concerns to a special committee within the company that his potential relocation could be a risk to the company because it would “raise questions” about management among employees. In response, Meta negotiated a new stock deal with Zuckerberg to keep him in California in case the tax passes. The company added that it was important to keep Zuckerberg close to its Menlo Park headquarters, noting challenges faced during the COVID-19 pandemic.

“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,” the filing notes.

California voters will decide next month on the billionaire tax, with polling showing voters divided over the proposition. 

Zuckerberg famously only takes a salary of $1 a year from Meta, but that won’t save him from the tax. Proposition 40 is based on a person’s global net worth, not their annual income. Meta said Wednesday that if Proposition 40 passes, Zuckerberg would likely have to sell or borrow against his own shares in the company to pay the new tax, according to the filing. Selling shares would dilute Zuckerberg’s voting control on the board, where as chairman, he maintains 61%. 

According to the filing, Zuckerberg “made clear that he does not support any financing, or other actions, that would result in his loss of voting control.” Meta said the company agreed to issue Zuckerberg additional shares to give him some breathing room, noting that it “provides him a source of liquidity, without reducing his voting interest.”

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Billionaires fleeing the state has become the biggest concern over Proposition 40, as California depends on progressive taxes on the wealthy to fund its government. Billionaires already pay the state billions of dollars through the state’s income tax, and if the ultra wealthy leave for good, they will take their tax dollars with them. Supporters of Proposition 40 say the concern is overblown and passing the tax will not result in an exodus.

Even if Zuckerberg left the state, there’s no evidence it would shield him from paying the tax. Proposition 40 is a one-time tax based on January 2026 residency. That means even if he moved, he’d still be responsible for paying the tax. And moving would not shield him from future taxes under Proposition 40 as it will only be assessed once. 

Zuckerberg owns several multimillion-dollar properties in Palo Alto and Lake Tahoe.

Meta was not immediately available for comment.

Contact tech reporter Matthew Brown at [email protected] or matthewbrownsfgate.11 on Signal.