Meta creates non-voting Class C stock, keeping Zuckerberg's 60.6% vote intact
In brief
- Class A and B holders get one non-voting Class C share per share owned
- Class C shares come into existence on Jan. 19, 2027
- Zuckerberg held about 60.6% of the vote against a 13.4% economic interest
- Moelis put Meta's equity capacity at about $700 billion before his vote falls below 50%
- CFO Susan Li called the 'hundreds of billions' figure a theoretical maximum
How the Class C dividend works
The one-for-one dividend works as a two-for-one stock split, and Meta said it won't change anyone's voting power.
Zuckerberg held about 60.6% of the voting power on Oct. 1 against a 13.4% economic interest, according to Meta's SEC information statement as reported by Decrypt. The gap comes from the dual-class setup (Class A shares carry one vote each, Class B shares carry 10), and he beneficially owns about 341 million Class B shares. A non-voting share can also serve as pay and acquisition currency.
The $700 billion figure
Advisers at Moelis told the board's special committee that Meta could raise about $700 billion in equity over several years before Zuckerberg's voting power fell below 50%, per the filing. Management also told the advisers its long-term forecasts showed a need to raise "hundreds of billions" of dollars over several years, starting as soon as fall 2026.
CFO Susan Li pushed back on that reading during a follow-up call with analysts. She described the figure as a theoretical maximum, computed to find what level of equity financing would trigger a loss of founder control.
It is "not actually a description of our present equity financing needs or plans," she said, and Meta does not have "anything to announce on that front."
The structure is approved, but the size and timing of any equity sale weren't disclosed.
Founder Alignment Agreement and Prop 40
Under a Founder Alignment Agreement signed Oct. 20, only 20% of the Class C shares Zuckerberg receives can be sold freely. Selling any of the other 80% generally requires him to sell or convert a matching Class A or Class B share within two business days, which reduces his voting power. The agreement also commits him to remain a California resident (or live wherever Meta is headquartered) for eight years.
The filing said California's Proposition 40, a wealth tax on the Nov. 3 ballot, could make Zuckerberg liable for a multi-billion dollar payment. Selling Class B shares to cover it could cut his voting interest to about 53%, according to the filing.
The board also agreed to pay another one-for-one Class C dividend each time the 30-day volume-weighted average price of Class C hits a successive doubling of the $580.60 Class A price from Sept. 10 (adjusted for splits), as long as shareholder returns compound at 10% or more a year.
There's a catch for investors. The filing warned that Class C will likely trade at some discount to Class A, and Meta may need to issue more shares for any equity sale. Record and payment dates haven't been set yet. Payment must come within five business days after the charter takes effect on Jan. 19, 2027.
Frequently asked questions
Why did Meta create non-voting Class C shares?
Class C shares generally carry no vote, so Meta can sell them for cash or use them as pay and acquisition currency without reducing Zuckerberg's control. Meta said the one-for-one dividend won't change anyone's voting power.
Is Meta planning to raise $700 billion in equity?
No sale has been announced. Moelis advisers told the board's special committee Meta could raise about $700 billion over several years before Zuckerberg's vote fell below 50%. CFO Susan Li called the 'hundreds of billions' figure a theoretical maximum, and the size and timing of any sale weren't disclosed.
What does the Founder Alignment Agreement require of Zuckerberg?
Only 20% of the Class C shares he receives can be sold freely. Selling the other 80% generally requires him to sell or convert a matching Class A or B share within two business days. He also has to remain a California resident, or live wherever Meta is headquartered, for eight years.
