Meta gives Zuckerberg more shares under deal tied to possible California billionaire tax

Meta has agreed to give chief executive Mark Zuckerberg additional shares under a deal linked to a proposed California tax on billionaires. The agreement followed negotiations with a special committee of Meta’s board that the company’s Wednesday financial disclosure described as contentious at points.

The proposal would impose a one-time 5% tax on California residents worth more than $1bn. If voters approve it in November, Zuckerberg could owe about $10bn in additional state taxes.

Under the deal, Zuckerberg will receive shares more frequently and will be able to sell them quarterly. It is set to run for eight years while he remains a California resident, even if the tax proposal fails. The arrangement will not change his level of control over Meta.

Zuckerberg raised the possibility of moving

Last month, Zuckerberg told Meta’s board he was considering moving his primary residence out of California and selling his property in the state. He said such a move would be public, attract attention from employees and raise questions about the company’s management. His main California homes are in Palo Alto and Lake Tahoe.

Meta called the arrangement its “Founder Alignment Agreement” and said keeping Zuckerberg leading the company from California was important amid changes in technology and the global economy related to artificial intelligence. The company also said the new share structure would give it more ways to finance future AI spending.

Meta steps up AI investment

Meta said on Wednesday it planned to spend as much as $145bn on AI projects this year. Chief financial officer Susan Li said the share changes would also expand the company’s options for financing that work.

For the first time since going public 14 years ago, Meta reported negative cash flow, meaning its operating and investment spending exceeded the money coming in. On Thursday, its shares fell more than 7%, wiping more than $100bn from its market capitalisation.