Zuckerberg’s tax threat led to a new stock class
A new stock class lets Zuckerberg avoid selling his voting shares while still paying a potential wealth tax.
The story
Meta CEO Mark Zuckerberg threatened to leave California to avoid a potential wealth tax, prompting the company to create a new class of stock to protect his voting control and allow him to pay the tax without selling his Class B shares.
Source: fortune.com
Our reading
Zuckerberg’s threat to leave California over a potential wealth tax led to the creation of a new class of stock. The Class C shares, which carry no voting power, let him sell them to pay the tax without diluting his control. The new stock is a way to keep him in the state, but also to keep him in charge.
The stock split is structured so that Zuckerberg can sell 20% of his new shares immediately, and the rest are tied to his Class B shares. It’s a way to keep the tax from forcing him to sell his voting stock, but also to keep the board from forcing him to change his voting structure.
Meta’s solution is a technical workaround, but it also reveals how the company sees its most powerful shareholder as both a liability and an asset. The board didn’t want to lose him, but they also didn’t want to give him more control. The new stock class is a compromise, but it also makes clear that the real power still lies with Zuckerberg.