Meta Created a New Class of Stock So Zuckerberg Can Pay California's Billionaire Tax Without Losing Control

Meta's board created a second kind of share, and the paperwork behind it landed on the same afternoon as the company's quarterly results. One class of Meta stock carries votes. The other, Class C, carries none and can be sold freely. That is the whole trick, and it is aimed at a tax that California has not yet voted on 1.

Meta's release is titled with its quarterly numbers and subtitled "Announces Establishment of New Class C Common Stock." The new class is publicly listed and non-voting, and it takes effect on January 19, 2027, through an amended and restated certificate of incorporation filed in Delaware. Meta is paying it out as a one-time stock dividend: one Class C share for every Class A and Class B share outstanding. After that payment, Meta says it expects the Class A price to reflect a two-for-one stock split, and it says the dividend will not change any shareholder's voting power 1.

The board's stated reasons, in order: capital to fund a scale of investment it calls significant, long-term value for shareholders, and "Ensuring Founder and CEO Mark Zuckerberg Continues to Lead Meta into the Next Era." Moelis advised a special committee of independent directors; Morgan Stanley advised Meta. Shareholders approved the amended certificate by written consent. A Founder Alignment Agreement with Zuckerberg covers his sales of the Class C shares, his service at the company, and the conditions for future dividends of that class 1.

Zuckerberg's control of Meta does not rest on owning most of it. It rests on Class B supervoting stock, which gives him 60.6% of the votes. Paying a large tax bill would normally mean selling shares, and the shares he holds are the ones carrying that voting power: Meta said in the filings that selling them could cut him to about 53%. A share with no vote attached can be sold without touching either number 2.

The New York Times read Wednesday's filings and reported how the class arrived. Zuckerberg had been negotiating with the board since July. At a dinner with directors on September 9, he told them that if no deal was struck he would put his Palo Alto house on the market, publicly, on September 13 — four days, 96 hours, for the board to avoid the headline. Meta declined to comment. At his reported net worth of $247 billion, the tax would come to nearly $12.5 billion 2.

Proposition 40 is on California's ballot on November 3. It would impose a one-time 5% tax on the holdings of billionaires, roughly 200 people, who were California residents on January 1, 2026 — a cut-off that catches anyone who has since moved. California does not currently value and tax personal property beyond real estate and some business equipment, so the state would have to build a system for pricing stocks, investment accounts, art and anything else that stores wealth. Tax lawyers expect lengthy challenges, including over whether the tax can reach back to January 3.

The measure has not been voted on. Opponents, funded in part by $102 million from Google co-founder Sergey Brin, have raised more than $205 million and put two rival measures on the same ballot; if Proposition 40 and Proposition 42 both pass, the one with more yes votes becomes law 3.

The results themselves explain why a new class of sellable stock is useful. Revenue rose 26% to $64.6 billion. Operating income fell 37% to $12.99 billion, because costs and expenses rose 68% and included a $9.89 billion charge from the August agreement with 52 attorneys general over teen mental health and social media, a settlement worth up to about $18.59 billion. Capital spending was $34.91 billion in the quarter; for the full year Meta guided it to $135–145 billion. Free cash flow was negative $2.12 billion. Headcount was 66,775, down 15% from a year earlier 1.

The same Wednesday brought a second bill. A New Mexico judge ordered Meta to pay $25 billion in penalties over how it handled user data around the Cambridge Analytica scandal, after a Santa Fe jury found more than 43 million violations of the state's unfair practices act. Interest accrues at 15% a year until it is paid. Meta's chief legal officer, C.J. Mahoney, called the ruling one that makes it "all but impossible to do business in the state of New Mexico," and said the company expects to prevail on appeal 4.

No Class C share exists yet: the certificate takes effect on January 19, 2027, and Meta has not set the record or payment date for the dividend. Proposition 40 has not been voted on, and it may face a constitutional challenge over its retroactive reach. Meta declined to comment on the arrangement. Nobody has sold a single share of the new class 12.

"SIXTY POINT SIX" is an original Bay Area hyphy song and music video built from those sources — one song, one day's news, with the voting share as the hook.