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Mark Zuckerberg Pushed Meta to Shield Him from California's Proposed Wealth Tax

39 points JKCalhoun 1 hour ago 43 comments

JKCalhoun 1 hour ago | parent

https://archive.ph/2Dyp0

gnabgib 1 hour ago | parent

Comments:

Guardian: Meta strikes deal with Zuckerberg to protect him from California wealth tax (39 points, 2 days ago, 33 comments) https://news.ycombinator.com/item?id=50193581

Wired: Mark Zuckerberg Agrees to Stay in California Despite Billionaires' Tax Measure (5 points, 2 days ago, 3 comments) https://news.ycombinator.com/item?id=50188801

Telegraph: Meta strikes deal to protect Zuckerberg from California billionaire tax (9 points, 2 days ago) https://news.ycombinator.com/item?id=50191129

WSJ: Mark Zuckerberg Threatened to Leave California. Meta’s Board Cut Him a Deal (4 points, 2 days ago) https://news.ycombinator.com/item?id=50193052 (30 points, 1 day ago, 40 comments) https://news.ycombinator.com/item?id=50199284

jprd 1 hour ago | parent

I guess only pirate billionaires born on 3rd base can imagine being this craven and petty.

My man renamed the damn corp to "Meta" and proceeded to YOLO nearly triple digit billions USD on fire, shamelessly pivots to AI like all the other bros, while holding a solid majority of voting stock, and now we have to listen to him and his pals complain they might have to give something back.

Gross.

Handy-Man 1 hour ago | parent

Well then, you haven’t really read what the situation is, have you?

He is going to pay, he just didn’t want to sell his normal shares, so he doesn’t lose his voting control. So instead, they are creating new class of shares that he can sell to pay the taxes.

winfredJa 1 hour ago | parent

if they are creating new class of shares, are they giving him this extra money from shareholders?

bonsai_spool 57 minutes ago | parent

They did a stock split

ralph84 1 hour ago | parent

If you don't like the stock don't buy it.

shimman 1 hour ago | parent

What if society doesn't like the company? We should be able to destroy it.

idiotsecant 53 minutes ago | parent

What if I don't like the human

rayiner 25 minutes ago | parent

“Born on third base.” You make him seem like minor nobility. His dad is a dentist and his mom is a psychiatrist. Kids with a background like that are a dime a dozen.

triceratops 1 hour ago | parent

Alternative headline: "Man asks for raise because his taxes went up"

FWIW I think this is better than avoiding the tax.

gexla 1 hour ago | parent

Is this hyperbole? Or did you actually look into details? I'm curious about your understanding of what happened here. I believe this is an exchange of share types, but I could be mistaken.

triceratops 55 minutes ago | parent

They gave every shareholder a non-voting share for each share they own. Effectively a stock split. Zuck can sell his non-voting shares to pay the tax without losing control of the company.

In some sense Meta has doubled the voting power of Zuckerberg's shares. Previously he had X shares with 10X votes. Now he has 2X shares, can sell half of them for close to the market price, and still keep his 10X votes.

gexla 50 minutes ago | parent

Where did you get this information? We know how this works. This is a public company. This all happens in the open.

https://www.sec.gov/Archives/edgar/data/1326801/000162828026...

triceratops 48 minutes ago | parent

Your SEC link says the exact same thing.

"The board establishes a new Class C share type with no votes. It also announces a one-time dividend of a Class C share for each Class A and B share outstanding".

Please tell me what I got wrong.

gexla 33 minutes ago | parent

You changed your post. You mentioned Levine. I don't know what else you changed. But Levine posted this in his article. I don't know where you're getting the part where he can sell half his shares.

"If Zuckerberg needs to pay taxes, he can sell his new zero-vote shares to raise money without diluting his voting rights. Not too many: He can “immediately sell or transfer up to 20% of the shares of Class C common stock that he receives in the Dividend, representing 10% of his overall economic stake in the Company, for any reason,” but the board “negotiated for and obtained Mr. Zuckerberg’s agreement that 80% of the shares of Class C common stock that he receives in the Dividend be subject to the Stapling Condition,” under which he can’t sell those no-vote shares without also selling some high-vote shares. The basic deal remains intact — he needs to own a meaningful chunk of shares to keep voting control — but there’s a liquidity buffer for taxes."

aprilthird2021 1 hour ago | parent

But they aren't "shielding" him really. They are just making it possible for him to pay the tax by selling shares in the company without giving up voting shares...

I mean maybe that is "shielding" but it's not like they are getting him out of paying the tax if it passes

idiotsecant 51 minutes ago | parent

The point of the law is to reduce the power of billionaires. Billionaires Using their power to change the rules and systemically avoid loss of power using a mechanisim available to literally nobody else is pretty much the antithesis of this idea.

triceratops 49 minutes ago | parent

I thought the point was to raise tax revenue from the people whose wealth increased the most.

rayiner 31 minutes ago | parent

The tax will probably raise negative revenue but that will be fine because revenue was never the point of it.

irishcoffee 47 minutes ago | parent

The point of the law was to generate money for the state to fund the same mistakes France and GB are currently reeling from. Reducing power had nothing to do with it.

Infernal 42 minutes ago | parent

Cui bono?

irishcoffee 37 minutes ago | parent

Squishing the budget deficit for 1 cycle in 2 years.

xboxnolifes 20 minutes ago | parent

No law is going to prevent billionaires overnight. At the stage we're in, any political change needs to aim for decades in the future.

gexla 56 minutes ago | parent

We don't have to post hyperbole or speculation (there's social media for that.) This is a public company, we can read public documents such as...

https://www.sec.gov/Archives/edgar/data/1326801/000162828026...

NOTE: Look for "Founder Alignment Agreement" in the above doc as an example if you're doing a quick scan.

https://www.sec.gov/Archives/edgar/data/1326801/000162828026...

https://investor.atmeta.com/investor-news/press-release-deta...

digitaltrees 55 minutes ago | parent

Public companies shouldn’t be allowed to have super majority shareholders that rule like a king.

CamperBob2 53 minutes ago | parent

If the stockholders are OK with it, who's to say otherwise?

I do think it would be a good idea to look at additional regulation regarding the public companies that pension and major index funds can invest in. I'm not crazy about being forced to own Musk properties just because I hold an S&P index, for example.

nothercastle 52 minutes ago | parent

They don’t have voting rights anyway. They are more like fans than stock holders

woopsn 45 minutes ago | parent

Yes since Zuck controls the board and negotiators he effectively dealt this outcome to himself, to large degree. Obviously "the shareholders" in a general sense have limited interest protecting the dual class structure.

limagnolia 37 minutes ago | parent

They can buy and sell the stock. If they weren't okay with it, they could not buy, or sell if they already own.

triceratops 50 minutes ago | parent

Shareholders are morons*. That's why the SEC was established in the first place.

*Source: am a moron.

wmf 32 minutes ago | parent

As a moron, are you allowed to decide that Zuck knows how to run Meta better than the shareholders?

nickff 30 minutes ago | parent

The SEC is very good at creating complexity, but has been terrible at protecting shareholders. The SEC has failed to detect and prosecute almost every massive fraud, including Madoff and Enron (despite being tipped off in both cases).

mayneack 32 minutes ago | parent

Why have any regulations for corporate governance?

bix6 31 minutes ago | parent

Who’s to say the stock holders are ok with it? See SpaceX as an example. Anybody with a brain who wasn’t in on the take wouldn’t accept those terms but they got forced on the general public anyways.

jdale27 12 minutes ago | parent

How do you imagine it working, this regulation whereby an index designed to track the 500 largest companies is required to exclude some of those just because they happen to be run by a guy you dislike?

minimaxa 55 minutes ago | parent

Not a big fan since we now only get 2 links a month,

But it would have been easier to relocate to the border in Tahoe than fill out mountains of paperwork; he lives on an estate in a Maui bunker anyway, not spoilt for housing options...

Not very good with building technology; he lost 80 billion on a nonexistent metaverse fail. Is that now a tax loss?

TacticalCoder 49 minutes ago | parent

I understand it's a move to keep his voting shares but... Why would the board care if the Zuck was to sell his big house in California? What was the threat to Meta/the board?

lotsofpulp 47 minutes ago | parent

The board doesn’t care. Zuckerberg has total control of Meta, so if he wants to increase his pay for whatever reason, he can.

That is all this is, a guy giving himself a pay increase, which almost everyone would if they could.

throwaway9876g 42 minutes ago | parent

He owns enough shares that there would be a significant change in the supply/demand ratio when California forces him to sell to meet his tax burden. That would tank the stock price because way too much supply when he tries to sell.

So basically meta stepped in to say they'd pay a portion of zucks tax burden to protect the supply/demand ratio of the stock, which protects the overall market price of Facebook stock and the valuation of the company as a whole.

Wealth taxes are inherently stupid in our modern financial system and this is a clear example of why.

whatisthiseven 31 minutes ago | parent

We tax houses every year, which is a wealth and land tax.

It isn't stupid. Multi hundred billionaires shouldn't exist. Then this wouldn't be a "problem".

throwaway9876g 25 minutes ago | parent

Yeah, the existence of billionaires is a problem. But then again, so is the existence of millionaires and thousandaires.

Honestly if any one has more than $999 the government should take it from them.

bickfordb 28 minutes ago | parent

Your description of the scenario does not seem to be accurate. He is being gifted a new class of stock so that he does not need to relinquish control of the company for no apparent good reason. I'm indirectly a shareholder of this company through the major stock index inclusion, and I have not been similarly been gifted the same. I hope he pays his CA taxes fairly and as shareholders we are made whole by this chicanery.