Meta CEO Mark Zuckerberg has agreed to remain in California for eight years, a decision that could leave him liable for billions in one-time taxes if voters approve Proposition 40 next month.
A regulatory filing released Wednesday details the shift in plans. During a dinner with board members on September 9, Zuckerberg told them he was considering leaving the state due to the measure. He intended to list his Palo Alto home for sale four days later, according to the 109-page document. The ballot proposal, which may face lawsuits even after approval, imposes a single 5 percent tax on stock and other assets held by billionaires in the state as of January 2026.
Many wealthy figures, including Zuckerberg, currently minimise tax bills by borrowing against shares and taking low salaries. The Meta CEO draws an annual salary of $1. He bought a home in Florida this past February, the Wall Street Journal reported at the time.
The board’s concern
His potential move across the country worried a special committee of the board. Members included attorney Robert Kimmitt, venture capitalist Charlie Songhurst, and DoorDash CEO Tony Xu. The group noted the difficulties the company faced during the COVID-19 pandemic when Zuckerberg could not be physically present with management. They did not want the company to face similar challenges going forward.
Within days of the dinner, the special committee and Zuckerberg reached an agreement. This links his ability to sell special company shares to his continued residence in California. Finalised a week ago, Meta announced the details on Wednesday. The company plans to create a new class of shares that hold no voting power. Selling these shares could potentially raise funds for Meta’s expensive investments into AI data centres, without diluting Zuckerberg’s existing voting control.
All existing shareholders will receive the new nonvoting shares automatically in proportion to their existing holdings. Under what Meta calls a “Founder Alignment Agreement” with Zuckerberg, he can sell 20 percent of those new shares to help pay any taxes he may owe. The remaining 80 percent would be available for sale in chunks over the next eight years as long as he remains in California. Any attempt to sell them early would require offloading some of his voting shares unless there are material unforeseen circumstances that would render it prudent or advisable for Zuckerberg to reside elsewhere.
The agreement specifies that Zuckerberg merely has to remain wherever Meta maintains its headquarters. This means it is possible that both he and the company could move together to another state. A number of California companies left for Texas, Nevada, and other states in recent years. Google cofounders Sergey Brin and Larry Page are among the handful of billionaires widely believed to have exited California over the potential tax.
With much of the most pioneering AI development happening in Silicon Valley, leaving the city of Menlo Park could be a difficult proposition for the Meta board to stomach. “The goal is to keep Zuckerberg continuing to lead the company from California and in close proximity to Meta Superintelligence Labs,” the filing stated, referring to the company unit behind its recent Muse AI models.
What it means
For the people making things, the arrangement creates a financial penalty for leaving. Zuckerberg can only access his own capital by staying put. He cannot simply liquidate his position to fund his own relocation without triggering a tax event or losing voting control. This ties the company’s leadership to the state’s geography, effectively locking the CEO into the local ecosystem regardless of where the most efficient data centres might be built.
In the end, the exercise may have been for naught. Recent polling in California suggests that with about $129 million spent campaigning against Prop 40, it will fail to muster enough votes.
