Meta CEO Mark Zuckerberg has agreed to stay in California for eight years under a new stock agreement designed to keep him close to the company's leadership and artificial intelligence operations.
The arrangement, detailed in a regulatory filing released Wednesday, could leave Zuckerberg facing billions of dollars in one-time taxes if California voters approve Proposition 40 next month.
The proposed measure would impose a one-time 5 percent tax on stocks and other assets held by billionaires in California as of January 2026.
According to Meta's filing, Zuckerberg considered leaving the state because of the proposal and discussed the possibility with board members on September 9.
During that dinner, Zuckerberg told directors he was considering listing his Palo Alto home for sale four days later.
The Wall Street Journal reported in February that he had purchased a home in Florida, adding to speculation about a potential relocation.
Meta's board was concerned that losing Zuckerberg's physical presence in California could disrupt the company's operations and artificial intelligence ambitions.
A special committee that included attorney Robert Kimmitt, venture capitalist Charlie Songhurst, and DoorDash CEO Tony Xu negotiated an agreement linking Zuckerberg's ability to sell a new class of company shares to his continued residence in the state.
The filing explained that the committee considered the operational difficulties Meta experienced during the COVID-19 pandemic, when Zuckerberg could not be physically present with the management team.
"The special committee was mindful about the difficulties the company faced during the COVID-19 pandemic when Zuckerberg could not be physically present with the company's management team and did not want the company to face similar challenges going forward," the filing stated.
The agreement was finalized a week before Meta disclosed its details on Wednesday.
Under the plan, Meta will create a new class of shares without voting rights, allowing shareholders to sell stock to raise funds without reducing Zuckerberg's existing voting control.
All existing shareholders will automatically receive the new nonvoting shares in proportion to their current holdings.
Under the Founder Alignment Agreement, Zuckerberg can sell 20 percent of his new shares to help cover any taxes he owes, while the remaining 80 percent can be sold in portions over the next eight years if he remains in California.
If Zuckerberg attempts to sell the remaining shares before the scheduled period ends, he would have to sell some of his voting shares unless material unforeseen circumstances make it prudent or advisable for him to live elsewhere.
The filing also specifies that Zuckerberg must remain wherever Meta maintains its headquarters, leaving open the possibility that he and the company could relocate together to another state.
Meta's stated objective is to maintain Zuckerberg's leadership in California and his proximity to the company's advanced AI development team.
The filing connected the residency agreement to the work of Meta Superintelligence Labs, the unit behind the company's recent Muse AI models.
"The goal is to keep Zuckerberg continuing to lead the company from California and in close proximity to Meta Superintelligence Labs," the filing stated.
California's proposed billionaire tax has prompted concerns among wealthy residents and businesses about the potential financial consequences of remaining in the state.
Several California companies have relocated to Texas, Nevada, and other states in recent years, while Google cofounders Sergey Brin and Larry Page are among the billionaires widely believed to have left California over the potential tax.
The measure could still face lawsuits if voters approve it.
Recent polling cited in the source article suggests Proposition 40 may fail, following approximately $129 million in spending against the proposal's passage.
