Meta has set a bar for Mark Zuckerberg that the company itself calls “extraordinary.” Each time Meta’s stock doubles, and compounds at least 10% a year along the way, every shareholder gets one free Class C share for each share they own. The condition is written into a Founder Alignment Agreement between Meta and its CEO, which also sets terms for how he sells his new shares and his service at the company. Meta’s stock has already risen more than 1,700% since its IPO, against about 495% for the S&P 500, and the board wants that kind of run to continue.The yardstick is $580.60, Meta’s share price on September 10. In pre-split terms, the first payout kicks in once the stock’s 30-day average price crosses just over $1,161, which would put Meta’s market value close to $3 trillion. The next comes at around $2,322, and the pattern repeats with every doubling after that. This sits on top of the one-for-one Class C dividend Meta has already declared. That takes effect on January 19, 2027, and works much like a two-for-one stock split.The new Class C shares carry no voting rights, and that is by design. Zuckerberg controls about 61% of Meta’s votes through super-voting stock. The new class lets him sell without loosening that grip. He can sell up to 20% of the Class C shares he receives right away, about 10% of his overall economic stake. He also gets the same dividends, on the same terms, as every other shareholder.
California’s billionaire tax pushed Meta to rework its shares
The rejig traces back to Proposition 40, a California ballot measure proposing a one-time 5% tax on residents worth more than $1 billion. Zuckerberg, the world’s fifth-richest person at roughly $247 billion, had considered leaving the state over it. According to the filing, Meta worried that steps like listing his home for sale could prompt employees to question the company’s leadership.A special committee of the board then negotiated with him, in talks the filing calls “protracted and, at several points, contentious.” Zuckerberg first pitched a 20-for-1 dividend, which the committee rejected as excessive. The final deal ties him to California for eight years while he leads Meta, barring material unforeseen circumstances, and gives him enough sellable stock to cover the tax.Californians voted on Prop 40 on November 3. Counting is still underway and early returns show the measure trailing. The eight-year commitment stands either way.
Meta needs non-voting shares to fund its AI spending
The tax is only part of the story. Meta’s internal forecasts show it will need to raise “hundreds of billions of dollars” over several years for its AI push. Class C shares let it do that without diluting Zuckerberg’s control. The company expects to spend $135 billion to $145 billion on capital expenditure in 2026. It spent $34.91 billion in the third quarter alone and posted negative free cash flow of $2.12 billion, its first quarter of cash burn in at least a decade.The core business is still growing fast. Third-quarter revenue rose 26% year on year to $64.6 billion. Its Muse AI assistant has also spent most of its time since September at the top of US app store charts.Investors weren’t thrilled, though. Meta’s shares fell 6% the morning after the announcement. The plan could also face legal pushback: Cloudflare shareholders have sued in Delaware to block a similar non-voting share class. Meta itself dropped a comparable proposal in 2017, days before Zuckerberg was due to testify in a shareholder trial.Meta’s stock has already climbed more than sevenfold from its November 2022 low, to a market value of nearly $1.8 trillion. The doubling clause bets it can pull off a run like that again, this time while spending more on AI than ever.