OpenAI Under Fire for Threat to Claw Back Vested Equity From Former Employees

By Madz Dizon

May 23, 2024 08:58 AM EDT

OpenAI Under Fire for Threat to Claw Back Vested Equity From Former Employees
OpenAI CEO Sam Altman speaks during the Microsoft Build conference at the Seattle Convention Center Summit Building in Seattle, Washington on May 21, 2024.
(Photo : JASON REDMOND/AFP via Getty Images)

OpenAI's turbulent month persists, as several reports shed light on the company's approach towards departing employees and their valuable asset: stock.

According to a recent Vox report, it has been reported that the company has the ability to reclaim vested equity from employees who leave without signing a non-disparagement agreement.

OpenAI Reportedly Threatens to Revoke Equity of Fired Workers

It is common for tech employees' compensation packages to be primarily composed of equity. They accept lower initial salaries in exchange for the possibility of significant future gains. If the company becomes successful, their equity could potentially be worth millions of dollars.

According to Kelsey Piper, a reporter from Vox, the document includes several sections that grant the private company extensive power to reclaim equity from former employees or prevent them from selling it.

Compensation packages in the tech industry, particularly at startups, frequently incorporate equity shares and guidelines regarding the sale of shares by investors, including employees, prior to a company's public offering. Startups often have a keen interest in overseeing the ownership of equity shares.

OpenAI executives, including general counsel and chief strategy officer Jason Kwon, have signed separation agreements that include non-disclosure language.

Kwon expressed internal apologies for the language used in the documents, which had been in use since 2019, stating that the team had noticed this issue about a month ago. I take full responsibility for the delay in catching this fact.

Altman stated during an interview on Saturday that OpenAI has never taken back anyone's equity and has no intention of doing so, regardless of whether employees sign a non-disparagement agreement or not.'

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ChatGPT Parent Company Pressured Former Employees

Certain former employees were given a tight deadline of seven days to sign their separation agreements. OpenAI responded firmly to the requests of a couple of employees who sought additional time to review the agreement.

OpenAI reportedly warned one of them that not signing could have an impact on their equity. The company has faced some challenges in the past week after showcasing its latest model, GPT-4o, which was met with positive feedback.

VCPost previously reported that Altman had approached Scarlett Johansson to lend her voice to OpenAI's latest assistant, but unfortunately, she turned down the offer.

However, the demo from last week quickly led to comparisons being made between the voice of the now-removed "Sky" assistant and Johansson's. She has sought the assistance of a lawyer.

The recent events surrounding Sky have raised concerns about the management of the company, which is at the forefront of developing groundbreaking AI technology. These events include multiple high-profile departures, the dissolution of the Superalignment team.

READ MORE: OpenAI Co-Founder Ilya Sutskever Quits Startup Months After Kicking Sam Altman Out in Board Coup 

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