Meta CEO Mark Zuckerberg reached an agreement with the company’s board to help him pay a proposed California billionaire tax without losing his controlling stake in the company, according to regulatory filings published this week.
If approved by voters in the Nov. 3 election, California would impose a one-time 5% tax on residents with a net worth exceeding $1 billion. Zuckerberg, the world’s sixth-richest person, has a net worth of more than $220 billion, according to Forbes. His potential tax liability would therefore exceed $11 billion.
The agreement, announced Wednesday, would allow Zuckerberg to remain Meta’s controlling shareholder while selling some of a new class of nonvoting shares “for any reason,” including to cover potential liabilities under the proposed wealth tax.
According to The Washington Post, negotiations over the agreement became so strained that directors overseeing the talks discussed resigning. Zuckerberg later told a wider group of directors that he planned to put his Palo Alto home up for sale. The possibility of his departure from California added urgency to the negotiations.
READ: Mark Zuckerberg’s $12 billion tax threat: Meta strikes 8-year deal to keep CEO in California (October 22, 2026)
Meta called the arrangement its “Founder Alignment Agreement,” saying it was “critically important” to keep Zuckerberg leading the company from California amid the “dramatic and unprecedented transformation taking place in the tech industry and global economy related to artificial intelligence.”
The company has faced several major challenges in recent years, including operational changes during the COVID-19 pandemic, mass layoffs and restructuring following a hiring surge, and a whistleblower scandal that renewed scrutiny of child safety on its platforms. Meta also redirected significant resources toward building its metaverse business, changing its corporate name from Facebook to Meta in the process.
More recently, the company’s push into artificial intelligence has driven up spending. Meta reported $34.91 billion in capital expenditures, including principal payments on finance leases, for the September quarter.
Meta said Wednesday that it planned to spend as much as $145 billion this year on AI projects. The company has raised its projected AI spending for each financial quarter so far this year.
READ: Zuckerberg touts ‘significant’ AI opportunities as Meta launches enterprise platform (September 28, 2026)
The scale of its AI investments has also put pressure on cash flow. Meta reported negative cash flow for the first time since going public 14 years ago and intends to increase spending further in the coming year. Chief Financial Officer Susan Li said Wednesday that the new stock arrangement would also give the company additional options for financing future AI investments.
California’s proposed wealth tax could affect approximately 250 billionaires in the state, whose combined wealth exceeds $2 trillion. Many wealthy residents have opposed the proposal, with some reportedly considering relocating.
Google co-founder Sergey Brin has taken steps to restructure aspects of his residency and financial arrangements in response to the proposal. These reportedly include shifting his primary residence to Nevada and adjusting the location of certain assets to reduce potential exposure to California tax obligations. Brin has also reportedly opposed the measure and contributed financial resources to efforts to resist or influence it.
Not all Silicon Valley billionaires oppose the proposal, however. Nvidia CEO Jensen Huang said he was “perfectly fine” with the proposed tax and planned to remain in Silicon Valley.