In case you were wondering, Mark Zuckerberg is in California.
Meta seems concerned enough about its founder and CEO leaving his home state that it introduced a new equity plan that could offset the burden of tax increases if Prop. 40, known as the billionaire tax, passes on Election Day, Nov. 3.
The disclosure was made in a Wednesday filing coinciding with Meta’s third-quarter earnings report and is the first among the California giant tech companies. Mr. Zuckerberg is the world’s sixth richest person and one of the few of his colleagues who still resides in the state. Nvidia CEO Jensen Huang.
Elon Musk and Michael Dell live in Texas. Amazon Founder Jeff Bezos’ primary residence has always been elsewhere. Google co-founders Larry Page and Sergey Brin left California before the election and bought luxury homes in Florida. oracle Founder Larry Ellison officially calls it home.
Proposition 40 would impose a 5% tax on Californians making more than $1 billion. Mr. Zuckerberg’s net worth is currently approximately $225 billion.
“If the California Wealth Tax were enacted and Mr. Zuckerberg was required to pay taxes, he would effectively be paid as CEO of the company while residing in California,” the filing said, noting that the CEO’s “salary is only $1 per year.”
Mehta said in the filing that Zuckerberg has committed to remain in California for eight years “unless there are significant unforeseen circumstances that would make it advisable or prudent for Mr. Zuckerberg to reside elsewhere.”
The company has created a new class of non-voting Class C common stock effective in January. Zuckerberg will essentially receive a portion of the new shares through dividends. He may “immediately sell or transfer up to 20%” of the stock granted to him for any reason, including to pay potential tax liability under California Proposition 40, without affecting his majority voting control, the filing states.
The tech industry is generally unanimous in its opposition to this ballot measure.
In addition to Google’s co-founder, many prominent technologists have committed funds to opposing Proposition 40. They include former Google CEO Eric Schmidt, Stripe CEO Patrick Collison, venture capitalist Peter Thiel, and door dash CEO Tony Xu made the announcement in various media reports based on campaign reports.
Mr. Collison and Mr. Hsu are members of Meta’s board of directors, while Mr. Thiel has served on the board since 2005 and will retire from the board in 2022.
Brin, who fled the Soviet Union with her family in 1979, told the New York Times in April that she “doesn’t want California to end up the same way.”
But Hwang recently told CBS Sunday Morning that paying taxes will be a “privilege.” Huang is just behind Zuckerberg on Forbes’ list of billionaires, with a net worth of $185 billion.
Supporters of Prop. 40, including Sen. Bernie Sanders of Vermont, have been urging voters to pass the ballot measure, but recent polls suggest they may not have the majority support needed to pass the measure. A recent Citrine Politico poll found 46% of people approve of the bill, while 43% oppose it.
Meta, with the help of a special committee, views Mr. Zuckerberg as key to the company’s future and its efforts to become a leading artificial intelligence company, according to the filing. In particular, the company said it had no intention of jeopardizing Zuckerberg’s close collaboration with the Meta Superintelligence Institute, led by AI chief Alexander Wang.
“The Special Committee believes that Mr. Zuckerberg’s talent and leadership have been critical to the growth, strategy, and stability of the Company since its inception, and the Special Committee hopes that will continue,” the filing said.
Meta had been considering the possibility of issuing Class A common stock to help raise capital, but the filing states that Zuckerberg has made it clear that he “does not support a significant equity raise that would have the effect of reducing our voting rights in the company.”
Doing so would allow Meta to receive “significant equity capital without affecting Mr. Zuckerberg’s voting rights, unique creative vision, and exceptional management capabilities that have helped realize the long-term value described above,” the filing states.
WATCH: ‘Fast Money’ traders react to Meta’s third quarter results as stock rises in after-hours trading.
