OpenAI CEO Sam Altman speaks at the Microsoft Build conference at Microsoft headquarters in Redmond, Washington on May 21, 2024.
Jason Redmond | AFP | Getty Images
According to a CNBC report, OpenAI is changing its policy regarding secondary stock sales, and will now allow current and former employees equal participation in its annual tender offer.
As CNBC reported earlier this month, the artificial intelligence startup had previously taken a restrictive approach, setting rules that allowed it to decide who was eligible to participate in the stock sale, raising concerns among many shareholders about whether they would be able to liquidate some of their millions of dollars’ worth of shares.
In a document shared last week through OpenAI’s stock management software, the company said it was changing its policy to “hold all sellers (current and former service providers) the same sales restrictions.” In the document seen by CNBC, OpenAI said service providers include employees and advisors.
An OpenAI spokesperson did not immediately respond to a request for comment.
Tender offers have become an especially sensitive topic recently due to OpenAI’s skyrocketing valuation following the launch of ChatGPT in late 2022 and a relatively stagnant IPO market for over two years. With no IPO planned and the company priced prohibitively for potential acquirers, secondary share sales are the only way shareholders can pocket some of their paper assets in the foreseeable future.
Current and former OpenAI employees previously told CNBC that concerns about access to liquidity were growing following reports that the company had the power to take back vested interests. Microsoft, valuable Over $80 billion.
For former employees, secondary sales typically occur several months after current employees’ transactions, and sale limits can vary significantly: In at least two tender offers, the limit for former employees was $2 million, compared with $10 million for current employees, according to previous documents.
The changes announced last week also included removing a provision that some feared would allow the company to mandatorily repurchase shares at “fair market value” in its “sole and absolute discretion.” Previous documents had stated that “the Company may at any time, in its sole and absolute discretion, redeem (or sell) any of the Transferee’s interests in the Company for cash equal to the fair market value of such interests.”
In an updated document, OpenAI said it would “not enforce any provisions in our employee stock documents that would force us to redeem shares at fair market value and will revise the documents to reflect that.”
According to internal documents, former employees now working for competitors will no longer be excluded from the formal tender offer and will be included in the same category as other former employees.
The only area where current employees would still be prioritized is if a future tender offer is oversubscribed — meaning shareholders want to sell more shares than investors agree to buy — in which case “we will prioritize providing liquidity to current service providers over previous service providers,” which could result in “attrition” of people who have left the company, OpenAI said.
OpenAI has taken further steps to ease employee fears by reversing its tender offer policy. Following reports of a potential clawback, OpenAI recently distributed a document obtained by CNBC titled “Overview and Summary of OpenAI’s Tender Offer Process,” which details how the company has conducted stock purchases in the past and how it plans to do so going forward.
Last month, OpenAI announced it was reversing a controversial decision to force former employees to choose between signing non-expiring non-disparagement agreements or keeping their vested shares in the company.
But one notable issue that isn’t addressed in the latest changes is employee equity. OpenAI previously opened up a “donation round” to current employees, allowing them to donate a set amount of vested stock to charity in exchange for tax benefits. According to a message seen by CNBC earlier this month, the donation round will be “only offered to active employees and may not necessarily be held,” potentially excluding former employees. The new document doesn’t elaborate on whether that policy is still in effect.
