Meta Platforms has approved a new class of non-voting common stock that it will distribute as a one-for-one dividend to existing holders of its Class A and Class B shares. The structure takes effect on January 19, 2027, and is designed to give the company flexibility to raise equity capital, compensate employees, and pursue acquisitions without reducing Mark Zuckerberg’s controlling voting stake.

The board’s special committee of independent directors recommended the recapitalization. It cited the scale of investment required to compete in artificial intelligence, the desire to maintain Meta’s long-term value creation under founder leadership, and the need for a currency that supports corporate purposes without altering the dual-class voting framework.

How the Class C Dividend Works

Holders of Class A shares, which carry one vote each, and Class B shares, which carry ten votes each, will receive one publicly traded Class C share for every share they own. Class C shares carry no voting rights except where required by law or the corporate charter. Meta expects the distribution to cause Class A shares to trade as if they had undergone a two-for-one stock split. The board has not yet set the record or payment dates, though payment must occur within five business days after the amended certificate of incorporation becomes effective.

Zuckerberg beneficially holds approximately 60.6 percent of the company’s voting power while owning about 13.4 percent of the economic interest. The new shares leave that voting percentage unchanged. Advisers indicated the company could issue substantial amounts of Class C equity over time before his voting interest would fall below 50 percent.

Founder Alignment Terms and Residency Commitment

On October 20, Meta and Zuckerberg signed a Founder Alignment Agreement that restricts his ability to monetize most of the new shares without reducing his voting power. Twenty percent of the Class C shares issued to him and certain permitted transferees are freely transferable. The other 80 percent are subject to a stapling condition: each sale must be matched, within two business days, by the sale or conversion of an equivalent Class A or Class B share.

Those restrictions lift gradually. On the last day of each full calendar quarter after the dividend is paid, 2.5 percent of the original Class C distribution is released from the stapling condition, provided Zuckerberg remains employed full-time on the executive team or as executive chair. After 32 such qualifying quarters, all remaining restrictions fall away.

Zuckerberg also agreed to remain a resident of California, or any jurisdiction where Meta maintains its corporate headquarters, for eight years while he continues in full-time leadership, subject to exceptions for material unforeseen circumstances. The commitment is linked to California’s Proposition 40, a proposed one-time wealth tax scheduled for a vote on November 3. Filings note that Zuckerberg had considered leaving the state because paying such a tax by selling Class B shares could reduce his voting interest to roughly 53 percent. The freely saleable portion of the Class C shares is intended to provide liquidity without that dilution.

The agreement further requires Meta to use best efforts to repurchase at least as many Class C shares as Class A shares whenever it conducts buybacks of the voting class, once the new shares are outstanding.

Capital Needs and Recent Financial Results

The announcement accompanied third-quarter results that showed the intensity of Meta’s investment cycle. Revenue rose 26 percent year over year to $64.6 billion. Operating cash flow reached $32.79 billion, yet capital spending of $34.91 billion produced free cash flow of negative $2.12 billion. A year earlier, free cash flow had been positive $10.63 billion.

Meta held $82.45 billion in cash and marketable securities at the end of September. It raised $24.91 billion in long-term debt during the year and conducted no Class A share repurchases through September, compared with $26.25 billion of buybacks in the same period of 2025. The company has guided full-year 2026 capital spending in a range that implies continued heavy outlays in the fourth quarter.

Management told the special committee that long-term forecasts indicated a need to raise hundreds of billions of dollars over several years. Chief Financial Officer Susan Li later described that figure on an analyst call as a theoretical maximum calculated to test the point at which founder control would be lost, not a current financing plan. She stated the company has nothing to announce regarding equity raises at this time.

The board has also authorized the possibility of additional one-for-one Class C dividends if the 30-day volume-weighted average price of the Class C shares reaches successive doublings of a September 10 reference price of $580.60 for Class A shares, adjusted for the initial dividend, provided compound annual returns meet or exceed 10 percent.

Precedents and Market Reaction

The structure mirrors Alphabet’s 2014 creation of non-voting Class C shares, which were distributed to existing holders and later traded alongside the voting classes. Meta intends to list the new Class C shares on Nasdaq, subject to exchange approval.

Shares of Meta rose 2.17 percent in after-hours trading following the earnings release and disclosure, closing the regular session near $712 before the move. The company guided fourth-quarter revenue between $73 billion and $76 billion.

The recapitalization was approved by written consent of entities controlled by Zuckerberg and his wife that hold a majority of the voting power, so a broader shareholder vote was not required. Full terms appear in the company’s SEC filings, including the preliminary information statement and the Founder Alignment Agreement.