Zuckerberg Told Meta's Board He Was Leaving California Over Its Billionaire Tax. Meta Rewrote Its Stock to Keep Him.

Mark Zuckerberg, the founder and CEO of Meta, the company behind Facebook, Instagram and WhatsApp, told his own board this fall that he was getting ready to leave California. The reason was Proposition 40, a one-time 5% tax on billionaires' net worth that California voters decide on Nov. 3. Rather than lose him, Meta is creating a whole new class of stock so he can pay the bill and stay put, according to a filing with the Securities and Exchange Commission released Wednesday night.

The filing is unusually blunt. If Prop 40 becomes law, Meta's lawyers wrote, Zuckerberg "could become liable for a significant, multi-billion dollar tax payment based on his ownership of stock in the Company." He told a special committee of the board that he "was evaluating relocating his primary residence outside California," and warned that any move, "including any listing of his residential real estate in California on the market, would be public and inevitably noted and commented upon by Company employees."

How close he came to leaving

This was not a bluff floated in passing. At a September meeting with the committee, Zuckerberg said he planned to stay with Meta "for the foreseeable future," but that because of the coming Prop 40 vote "he would need to begin taking steps by mid-September in order to establish residency outside California by mid-October," and that he expected to tell management right after the next board meeting, the filing says.

The committee, three independent directors chaired by former ambassador Robert Kimmitt, held 33 formal meetings over eight months. It called the talks "protracted and, at several points, contentious." Zuckerberg first asked for 20 new shares for every share already outstanding. The committee called that excessive. His next offer was four. They settled on one.

The deal

Every Meta shareholder will get one new Class C share for each share they already own, which works out to a two-for-one split once the new charter takes effect Jan. 19, 2027. The Class C shares carry no votes. That is the whole point: Zuckerberg can sell them for cash without giving up the voting control he holds through his super-voting Class B stock.

He can sell 20% of his new Class C shares right away, about 10% of his total economic stake in Meta, "for any reason, including so that he may pay his potential tax liability under California Proposition 40, if enacted into law," the filing says. The rest unlocks 2.5% per quarter over eight years, and only while he stays on full time. In return, he commits to remain a resident of California, or wherever Meta keeps its headquarters, for those eight years.

Think of a team reworking its whole salary cap so its franchise quarterback doesn't walk in free agency. The front office didn't change the tax. It changed everything around the player so he could afford to stay. Meta's committee said keeping him in Menlo Park was "critically important" during "this era of unprecedented challenge and competition in our industry," and tied it directly to his work with Meta Superintelligence Labs, the company's SI push.

What Prop 40 actually does

Prop 40 would charge California billionaires 5% of their entire net worth once, not just the amount above $1 billion, with the bill due in 2027, according to the state's official voter guide. It reaches back in time: it applies to anyone who lived in California on Jan. 1, 2026, a date already in the past before anyone casts a ballot, the Hoover Institution notes. Ninety percent of the money must go to health care. The measure is sponsored by the SEIU-United Healthcare Workers West union and backed by Sen. Bernie Sanders.

Forbes puts Zuckerberg's fortune at $239 billion, The Guardian reported. Five percent of that is roughly $12 billion, for one man, in one year.

The ones who already left

Zuckerberg is the biggest name to say it out loud, but he would not be the first to go. Google co-founders Larry Page and Sergey Brin and investor Peter Thiel left before the Jan. 1 cutoff, as did Uber co-founder Travis Kalanick and Las Vegas-bound car-loan billionaire Don Hankey, Fortune reported in March. Page alone could avoid nearly $15 billion if the tax passes, Fortune estimated this week. Brin has become the biggest individual donor to a ballot measure campaign in California history, and the main group fighting Prop 40 has spent about $118 million, CNBC reported.

Stanford finance professor Joshua Rauh and his Hoover co-authors estimate that lost income taxes from billionaires who leave would more than wipe out the one-time haul, for a net present value of negative $38.9 billion, per CNBC.

Even Democrats are voting no

Opposition is not just coming from the right. Gov. Gavin Newsom is a no. "You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do. Wealth is movable, and it shops for the state with the lowest taxes," he wrote in June, CNBC reported. Democratic governor nominee Xavier Becerra says he will vote no too. Republican nominee Steve Hilton put it simply: "I agree that we can't drive more tax revenue out of our state, because we need that money here, and this initiative would do that."

Support has been sliding. A UC Berkeley poll in March had Yes up 19 points. By September the lead was 3, and a Citrin-Politico poll taken Oct. 9-14 found 46% Yes and 43% No, per Ballotpedia). Kalshi and Polymarket both give it under a 30% chance of passing, CNBC noted.

What's next

Two rival measures on the same ballot could stop Prop 40 even if it wins. Prop 42 would bar new retroactive taxes on personal assets after Jan. 1, 2026, and Prop 41 would cancel new taxes that bust the state's spending limits. If either gets more Yes votes than Prop 40, courts could find they conflict and block it, the state's Legislative Analyst's Office says, per CNBC. Newsom backs Prop 42.

Meta's new share structure takes effect in January no matter how the vote goes, and the board's committee said it also gives the company a non-voting stock to raise money and pay employees with. But the reason it was built now is written into the filing. California's most famous tech founder was weeks from packing up, and the company had to rewrite its stock to keep him home. That is the real-world price of Prop 40, and voters haven't even passed it yet.