With its valuation skyrocketing past $80 billion, OpenAI is now grappling with growing discontent over its equity management from both current and former employees, according to CNBC. The lack of a near-term public offering has heightened issues around liquidity and control over vested shares.
Liquidity Challenges for Employees
The company has pledged to conduct yearly tender offers, allowing employees to sell a portion of their equity. However, documents show that former employees who are now at competing companies are barred from these offers. This restrictive policy has caused anxiety among shareholders, worried they might have to forfeit their equity.
Current and former staff have increasingly voiced concerns about their ability to liquidate shares. Reports that OpenAI might reclaim vested stock have added to the unease. In response, the company issued a document detailing its equity purchase practices both past and future, which has become a significant point of discussion internally, as seen in internal memos and exit agreements reviewed by CNBC.
Details of the Tender Offer Process
Since its inception in 2015, OpenAI has initiated three tender rounds. The first was in mid-2021, then from April to June 2023, and finally from November 2023 to March 2024. These rounds generally occurred months after current employees could sell their shares, and former employees faced a sales cap of $2 million as opposed to $10 million for current staff.
The company has created a separate process for those ex-employees now at rival firms. These transactions are handled directly between OpenAI or pre-approved investors and the seller, designed to avoid sale delays for current employees and to establish how much equity is being sold before setting terms for former staff.
Internal Reactions and Legal Implications
The policy has spurred internal discord, with some employees voicing their displeasure on company Slack channels. One departed employee criticized CEO Sam Altman, questioning OpenAI's commitment to ethical development while allegedly disregarding the interests of departing staff.
OpenAI has also launched “donation rounds” for current employees to donate vested equity to charity, which provides tax advantages. However, former employees seem to be excluded from these opportunities. Legal experts suggest OpenAI's approach toward ex-employees, particularly those joining competitors, could be legally problematic, especially in California. The Federal Trade Commission (FTC) has voted to ban certain practices that could impact these policies.
Growing Pushback from Employees
Last week, a group of former OpenAI employees and existing Google DeepMind employees wrote an open letter showing concern over safety measures in AI companies. The group of expressed concern that OpenAI's focus on growth and profitability may be neglecting critical issues of safety and transparency, especially in the context of developing artificial general intelligence (AGI). Elsewhere, Leopold Aschenbrenner, an ex-safety researcher at OpenAI, publicly claimed his termination was driven by his efforts to spotlight AI security flaws within the organization.
