As part of its most recent quarterly presentation, the social media giant Meta announced that it would pay investors a quarterly dividend for the first time. Meta boss Zuckerberg will therefore have to pay taxes in the hundreds of millions. Why this is still good news for the tech visionary.
• The latest meta-quarterly figures cause price fireworks
• Meta wants to pay dividends for the first time
• Meta CEO Zuckerberg is expected to earn $700 million from dividends alone
The tech group Meta Platforms was recently able to delight investors with a jump in profits in the last quarter. Sales rose by 25 percent year-on-year to $40.1 billion. Profit jumped from $4.65 billion to $14 billion. At the same time, the Facebook parent announced that it would pay investors a quarterly dividend of 50 cents for the first time, with both groups of shares – Class A and Class B – qualifying for dividend payments. The news caused euphoria among stockholders – Meta shares ultimately left NASDAQ trading 20.32 percent stronger at $474.99 in response to the quarterly report.
Meta boss Zuckerberg can look forward to dividend income of $700 million
According to MarketWatch, Meta boss Mark Zuckerberg owns around 350 million Meta shares. With a cash dividend of 50 cents, the tech visionary can earn $700 million annually. However, with such a sum, a lot of taxes are due. The news portal, with reference to two tax experts, calculated that around $167 million in taxes would be incurred in this way. In addition, the US state of California’s income tax of 13.3 percent would apply, which means another $93.1 million in additional taxes, as university professor Andrew Belnap explains to the portal. In total, Zuckerberg receives $259.7 million annually – just because of the meta dividends. The first dividend payment is expected to take place on March 26, 2024.
Blessing in disguise
Despite this multi-million dollar tax burden, Zuckerberg can still count himself lucky, according to tax expert and university professor Andrew Schmidt, as he made clear to MarketWatch. If Zuckerberg received the $700 million not from dividends but as a salary, his tax bill would be significantly higher, the expert calculates. Because here the salary would be taxed at the highest marginal tax rate of 37 percent, the taxes would therefore amount to 259 million US dollars and thus significantly more than the 167 million US dollars in federal tax that would be due annually for the dividend payment. However, Belnap argues that the tax rate on dividends (state and federal combined) is “actually quite high” at 37.1 percent.
Zuckerberg’s base salary has been just one US dollar for years. Still, his total compensation for 2022 was $27.1 million. No information has yet been published for 2023. Due to his shares in the billion-dollar company Meta, Zuckerberg is one of the richest people in the world.
Editorial team finanzen.net
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