Meta creates non-voting stock to fund AI and tax liabilities

Meta has announced plans to issue a new class of non-voting stock to help fund its artificial intelligence buildout. The company’s CFO, Susan Li, confirmed that the new capital stock will be distributed to existing shareholders via a stock dividend. This move is intended to raise capital for employee compensation, acquisitions, and other corporate purposes while preserving the voting power of existing Class A and B shareholders.

The board approved the non-voting Class C stock on October 19. Existing Class A and B holders will receive one Class C share for every share they hold, with distribution starting on January 19, 2027. Meta’s filing indicates that management forecasts showed a need to raise hundreds of billions of dollars over several years. Advisers at Moelis told the board that the company could raise about $700 billion in equity over several years before Mark Zuckerberg’s voting power fell below 50%. Li stated that the hundreds of billions figure is a theoretical maximum and not an announcement of present equity financing needs.

The New York Times reported that another reason for the new stock class is helping Zuckerberg pay for California’s proposed billionaire tax, Proposition 40. This proposal would level a one-time 5% wealth tax on the net worth of several hundred California billionaires. Meta’s SEC filing documents that Zuckerberg discussed this tax with board members as far back as July. The filing states the dividend will allow Zuckerberg to sell or transfer up to 20% of the Class C shares he receives to pay potential tax liability without affecting his majority voting control. It has been estimated that Zuckerberg would have to pay as much as $11 billion as part of the tax.

Under a Founder Alignment Agreement signed on October 20, only 20% of the Class C shares Zuckerberg receives can be sold freely. The agreement commits Zuckerberg to remain a California resident or live where Meta is headquartered for eight years. The board agreed to pay another one-for-one Class C dividend each time the 30-day volume-weighted average price of Class C reaches a successive doubling of the $580.60 Class A price from September 10. The payment for the initial Class C dividend must come within five business days after the charter takes effect on January 19, 2027.