Zuckerberg’s months of wrangling with his own board came to a head with a dinner-table ultimatum.

The 42-year-old chief executive officer of Meta Platforms Inc. had spent months locked in a back-and-forth with a special committee tasked with solving the vast financing needs of the company’s artificial intelligence buildout, which were threatening to dilute his stake.

He was also getting increasingly worried about how he might pay California’s proposed one-time 5% tax on billionaires, which will go before voters on Nov. 3.

In both instances, it came down to one sticking point: He wasn’t willing to relinquish an ounce of control over the company he founded.

His announcement came on Sept. 9, during the board’s regularly scheduled dinner. He was taking steps to leave California after the wealth-tax proposal made it onto the November ballot. Zuckerberg, who’s currently valued at $247 billion by the Bloomberg Billionaires Index, would face a multibillion-dollar bill from the potential levy, which would apply to people whose net worth exceeded $1 billion on Jan. 1, 2026.

Zuckerberg had been warning the board for weeks that this was a possibility. But now he had a timeline: He would list his home for sale in just four days — a move, he reminded them, that would quickly become public information.

Within days, the two sides reached an agreement: Meta would offer a new class of non-voting shares to existing investors, and Zuckerberg would have a special agreement that would give him the ability to sell some of that stock without diluting his majority voting power.

The revelation was one of many in a 109-page filing Meta released Wednesday that offers one of the clearest windows yet into the tense conversations playing out in board rooms across Silicon Valley as California seeks to tax extreme wealth and AI raises capital needs to unprecedented heights.

As the flurry of AI deals has started to overwhelm already overloaded debt markets, it’s meant more companies are considering equity deals to fund their ambitions. That could put founders eager to keep control of their firms at odds with boards who are eager to keep up in the AI race.

The new Class C shares will solidify Zuckerberg’s control over Meta and give his company greater financial leeway to compete in the breakneck race for AI dominance.

It will also give him greater flexibility over his personal fortune and make it easier to turn his Meta stake into cash without jeopardizing his rule over the company.

Finally, it will help offset the fallout of paying the proposed California billionaires tax — if voters actually approve it. Other billionaires like Sergey Brin and David Sacks have already taken steps to leave the state.

A Meta spokesperson pointed to Chief Financial Officer Susan Li’s comment on the company’s earnings call Wednesday that the new class of shares would “expand our funding tools and give us flexibility to invest behind the unprecedented momentum we’re seeing across every part of our business driven by AI.”Meta also said in its press release Wednesday that the approval by its board followed the unanimous recommendation of a special committee of disinterested and independent directors and that the new class of stock is “in the best interests of Meta and its shareholders.”

It emphasized that it will help Meta to finance its growth, maximize long-term value for all shareholders, and ensure Zuckerberg stays at the helm while remaining in close proximity to the company, including its Superintelligence Labs.

Meta is spending heavily on its AI buildout and foresees it will need to invest even more — about $825 billion, based on its current calculations — in the years to come. It can issue new shares to raise cash, but each new share that’s issued dilutes existing investors.

Meta currently has Class A shares, which give holders one vote, and Class B, which come with 10 votes. Zuckerberg holds a combination of the two, resulting in his controlling about 13% of Meta’s total shares but more than 60% of all votes. He told the board this year that he wouldn’t support an issuance of shares that could hamper his voting control, the filing shows.

Instead, Meta agreed to create a third category of shares – Class C – that will have no votes. Zuckerberg and every other Meta investor will receive one Class C share for every share they own from the other two categories.

Because the deal will effectively spread Meta’s market value among a greater number of shares, it won’t impact Zuckerberg’s fortune. He’s currently the fifth-richest person in the world, according to Bloomberg’s wealth index.

Investors will be able to trade Class C shares freely in the public market, although Zuckerberg will initially be able to sell only 20% of his — giving him immediate liquidity to pay the billionaires tax if voters approve the levy. While an early proposal would only have taken effect if the billionaires tax kicks in, the final agreement will be implemented regardless of what happens with the vote.

In return, he will remain a resident wherever the company’s headquarters are — currently in Silicon Valley’s Menlo Park — for the next eight years, and won’t ask for a moonshot compensation package that could hit Meta’s bottom line.

“The special committee was mindful about the difficulties the company faced during the Covid-19 pandemic when Mr. Zuckerberg could not be physically present with the company’s management team and did not want the company to face similar challenges going forward,” the filing says.

Of course, Zuckerberg controls a majority of the votes in Meta, meaning that he worked out the agreement with directors whose continued presence on the board ultimately depends on his support. And no individual or institution holding Meta stock has more to lose than Zuckerberg if his choice of residence impacts the company negatively, since more than 90% of his net worth is tied up in the company’s shares.

“The board won real concessions, headlined by a prolonged residency commitment, but it basically had to negotiate around his substantial controlling stake,” said Jason Schloetzer, an associate professor of accounting at Georgetown University’s McDonough School of Business.

A similar effort by Zuckerberg a decade ago to change the share class structure resulted in multiple shareholder lawsuits and was ultimately scrapped.

The agreement was a long time coming. Negotiations started in February when Meta’s board established a committee comprised of Robert Kimmitt, Charles Songhurst, and Tony Xu that was ultimately asked to study creating a new class of shares to help the company fund its AI buildout. Xu, DoorDash Inc. co-founder and a fellow California billionaire, has financially backed efforts to undercut the state’s wealth tax.

The group tapped Skadden, Arps, Slate, Meagher & Flom as its legal counsel and Moelis & Co. as its financial adviser.

By June, Meta’s management had presented three different forecasts for the company’s future. In every single one of them, it needed to raise hundreds of billions of dollars and it needed to start that process within months.

Moelis bankers got to work drawing up different scenarios. At first, the hope was that Meta would be able to announce the new class of shares during its July earnings call.

There was just one problem. The committee’s counsel wasn’t getting timely responses from Zuckerberg’s lawyers. Zuckerberg, for his part, started the process being represented by Wachtell, Lipton, Rosen & Katz but eventually he was relying on partners at Gibson, Dunn & Crutcher LLP.

The first bombshell from Zuckerberg arrived on July 8. In a meeting with Kimmitt, a former US ambassador to Germany and deputy Treasury secretary, Zuckerberg said if the proposed wealth tax were to pass in California, it might force him to sell some of his stake and leave him with less voting control in the company. He also noted that he’d only taken a $1 salary since 2013, and later requested a pay package “comparable to those recently approved for other founders of a similar profile and importance to their companies.”Within weeks, he was telling Kimmitt that the impending levy might have him leave California altogether.

By that point, it had become clear that Meta wouldn’t be able to announce the new share class during its July earnings as hoped. Weeks of negotiations followed as lawyers on both sides sought to solve the twin problems of keeping Zuckerberg in California even if the tax were to pass, and also hand Meta a way to raise vast sums of cash from equity markets.

Ultimately, Zuckerberg’s threat at the Sept. 9 dinner seemed to have done the trick: The special committee told the board it was now “moving expeditiously” with Zuckerberg’s timing in mind. Within days, the two sides had hammered out the agreement.