Meta signed a Founder Alignment Agreement with Mark Zuckerberg on October 20, according to its Form 8-K. It governs the non-voting Class C stock Meta is creating, and it sets conditions on how and when he can sell it.
What Class C is
The board approved Class C on October 19, and shareholders approved it by written consent on October 20. Meta expects the charter to be filed on or about October 21 and to take effect January 19, 2027.
Meta will pay a one-time dividend of one Class C share for each existing share. Record and payment dates are set later. Payment is due no later than the fifth business day after the charter is effective. Our Q3 results story covers the dividend in brief.
What the agreement commits Zuckerberg to
- Selling: 20% of the Class C held by the Zuckerberg holder group can be sold freely.
- Stapled shares: the other 80% is stapled. Selling any requires a matching sale or conversion of Class A or Class B shares within two business days, unless Stapling Credits apply.
- Release schedule: 2.5% of the Class C shares he receives in the dividend is released each quarter the Continued Leadership Condition is met. The release completes at the 32nd such quarter, and the quarters need not be consecutive.
- California: he commits to residency for eight years from the agreement date, or wherever Meta is headquartered. This applies only while the Continued Leadership Condition is met.
The filing lets the California commitment yield to "material unforeseen circumstances".
More dividends if the stock doubles
The agreement also triggers additional 1:1 Class C dividends after "Doubling Events". A Doubling Event occurs when the 30-day volume-weighted average price of Class C reaches 2x, 4x, 8x and so on of the Class A price of $580.60 on September 10, 2026. The shareholder return from that September 10 price must also reach at least 10% compounded annually.
When Zuckerberg can walk away
Among other triggers, he may terminate the agreement if Meta does not file the charter within two business days. He may also terminate it if the charter is not effective by January 19, 2027.
Why it matters
The staple turns a share dividend into a long commitment. Most of his new stock cannot be cashed out without reducing his Class A or B holdings. The release schedule counts 32 quarters in which the Continued Leadership Condition is met, and the same condition governs the California pledge.
Related reading: Meta's New Mexico penalty.
