During Meta’s earnings call on Wednesday, the company announced that its board had approved a new class of non-voting stock, referred to as Class C common stock. This new share class will provide holders with an ownership stake but no voting rights on company decisions. The implementation of this class is set to take effect in January.
Meta plans to utilize these shares for various purposes, including capital raising, employee compensation, and acquisitions, particularly in its costly push into AI. This move allows the company to maintain its current voting structure, which heavily favors its founder and CEO, Mark Zuckerberg, who holds approximately 60% of the voting power.
Purpose Behind the New Stock Class
According to a report by the New York Times, there is an additional motive for introducing this new class of shares: assisting Zuckerberg in addressing California’s proposed “billionaire tax,” should voters approve it. Since the new shares carry no voting rights, Zuckerberg could sell some of them to cover the tax without relinquishing his voting control.
Proposition 40, drafted by tax law professors from Berkeley and sponsored by California’s largest healthcare union, SEIU United Healthcare Workers West, proposes a one-time 5% wealth tax on the net worth of several hundred billionaires residing in California. Proponents argue that this policy could generate up to $100 billion over five years, primarily aimed at funding the state’s healthcare needs, with additional allocations for food assistance and education.
