OpenAI CEO Sam Altman speaks during the Microsoft Build conference at Microsoft headquarters in Redmond, Washington, on May 21, 2024.
Jason Redmond | AFP | Getty Images
OpenAI plans to allow stakeholders to sell a portion of their shares every year, but the company, which has been valued at over $80 billion, is taking a restrictive approach that’s raised concerns among current and former employees about the startup’s power to determine who participates, CNBC has learned.
Due to OpenAI’s skyrocketing valuation following the launch of ChatGPT in late 2022, many early employees are sitting on millions of dollars worth of equity. With no IPO on the horizon and a price tag that makes the company too expensive to be acquired, the only way for shareholders to realize any value from their equity in the near term is through secondary stock sales.
However, current and former OpenAI employees have been increasingly concerned about access to liquidity, according to interviews and documents shared internally. Those fears have intensified in recent weeks after reports that the company had the power to claw back vested equity, said people familiar with the matter, who asked not to be named because the information they shared is confidential.
In an attempt to assuage some of those concerns, OpenAI recently circulated a document, obtained by CNBC, titled, “Overview and Recap of OpenAI’s Tender Process,” detailing how the company has conducted equity purchases in the past and how it plans to handle them in the future. The issue has become a major topic of conversation at OpenAI and among people who have recently left, according to internal documents, Slack messages and exit agreements viewed by CNBC, as well as conversations with multiple former OpenAI employees.
OpenAI has told employees that it will try to hold one tender offer roughly every year, but that depends on how both the company and the market are faring at the time, a person with knowledge of the matter said.
It’s the latest controversy at OpenAI, which has been at the center of the tech universe for much of the past 18 months, most recently announcing a partnership with Apple on Monday to integrate ChatGPT and Siri. Backed by roughly $13 billion from Microsoft, OpenAI has an atypical “capped-profit” model, with a nonprofit as the governing entity for the for-profit subsidiary.
Less than seven months ago, co-founder Sam Altman was suddenly ousted as CEO due to a conflict with the board, before being abruptly reinstated days later after an uproar among investors and loyal staffers.
The Federal Trade Commission and the Justice Department, meanwhile, are set to open antitrust investigations into Microsoft, OpenAI and Nvidia, examining their influence on the AI industry, a source familiar with the matter confirmed to CNBC last week. And last month, OpenAI disbanded its team focused on the long-term risks of AI just a year after forming the group. That came shortly after OpenAI co-founder Ilya Sutskever and Jan Leike, announced their departures, with Leike writing in a post on X that OpenAI’s “safety culture and processes have taken a backseat to shiny products.”
As OpenAI has grown, the company has used aggressive tactics to get employees to sign exit agreements that affect the future of their stock holdings.
“If you have any vested Units and you do not sign the exit documents, including the General Release, as required by company policy, it is important to understand that, among other things, you will not be eligible to participate in future tender events or other liquidity opportunities that we may sponsor or facilitate as a private company,” OpenAI wrote in the agreement, which was viewed by CNBC.
The paperwork for departing employees says that in order to participate in tender events and liquidity opportunities, the person must be in compliance with “all applicable company policies, as determined by OpenAI.”
Last month, OpenAI announced it would backtrack on a controversial decision to make former employees choose between signing a non-disparagement agreement that would never expire and keeping their vested equity in the company. An internal memo, viewed by CNBC, was sent to former employees and shared with current staffers.
The memo, addressed to each former employee, said that at the time of the person’s departure from OpenAI, “you may have been informed that you were required to execute a general release agreement that included a non-disparagement provision in order to retain the Vested Units [of equity].”
“We’re incredibly sorry that we’re only changing this language now,” an OpenAI spokesperson told CNBC after the company changed course. “It doesn’t reflect our values or the company we want to be.”
In an email sent to CNBC late Monday, an OpenAI spokesperson said, “All eligible current and former employees have been offered opportunities for liquidity at the same price in the past, regardless of where they work or what they signed at departure.” The company doesn’t expect that to change, the spokesperson said.
‘Further questions to address’
A former employee, who shared his OpenAI correspondence with CNBC, asked the company for additional confirmation that his equity and that of others was secure.
“I think there are further questions to address before I and other OpenAl employees can feel safe from retaliation against us via our vested equity,” the ex-employee wrote in an email to the company in late May. He added, “Will the company exclude current or former employees from tender events under any circumstances? If so, what are those circumstances?”
The person also asked whether the company will “force former employees to sell their units at fair market value under any circumstances” and what those circumstances would be. He asked OpenAI for an estimate on when his questions would be addressed, and said he hasn’t yet received a response. OpenAI told CNBC that it is responding to individual inquiries.
According to internal messages viewed by CNBC, another employee who resigned last week wrote in OpenAI’s “core” Slack channel that “when the news about the vested equity clawbacks provisions in our exit paperwork broke 2.5 weeks ago, I was shocked and angered.” Details that came out later “only strengthened those feelings,” the person wrote, and “after fully hearing leadership’s responses, my trust in them has been completely broken.”
The person then tagged CEO Sam Altman in the message, highlighting what he described as a paradox in Altman’s stated effort to responsibly build artificial general intelligence, or AGI.
“You often talk about our responsibility to develop AGI safely and to distribute the benefits broadly,” he wrote. “How do you expect to be trusted with that responsibility when you failed at the much more basic task” of not threatening “to screw over departing employees,” the person added.
