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Illustration of OpenAI Company Structure: Sam Altman and the Board of Directors Have No Equity? Why Can Microsoft Only Watch From the Sidelines?

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Illustration of OpenAI Company Structure: Sam Altman and the Board of Directors Have No Equity? Why Can Microsoft Only Watch From the Sidelines?

The unique corporate structure of OpenAI has become the core of a series of AI dramas. CEO Sam Altman and former chairman of the board Greg Brockman have been kicked out of OpenAI, with major shareholder Microsoft only able to act as a mediator. Who exactly is on the OpenAI board of directors? And what powers do they possess?

OpenAI employees have collectively demanded the reinstatement of Sam Altman, threatening to resign en masse to Microsoft otherwise.

Illustration of OpenAI Company Structure: Top Level of OpenAI Board

According to OpenAI's official website, the for-profit company "OpenAI Global," which has been widely discussed and invested in by Microsoft, is at the lowest level. Entities such as the non-profit organization OpenAI, Inc., the management entity OpenAI GP LLC, employees and investors, and Microsoft collectively own the for-profit company "OpenAI Global."

Non-profit organization OpenAI, Inc. has full control

The for-profit subsidiary "OpenAI Global" is fully controlled by the non-profit organization OpenAI. OpenAI allows the non-profit organization to have full ownership and control of a management entity, OpenAI GP LLC, which has the authority to control and manage the for-profit subsidiary.

Who is on the OpenAI Board after Sam Altman's resignation?

Before the return of OpenAI founder Altman to the board

  • Quora CEO Adam D'Angelo
  • Fellow Robotics co-founder and RAND Corporation scientist Tasha McCauley, who is also the wife of famous actor Joseph Gordon-Levitt
  • OpenAI co-founder and Chief Scientist Ilya Sutskever expressed regret for the split decision on 11/20
  • Director of the Center for Security and Emerging Technology at Georgetown University Helen Toner

Chairman of the Board resigns

  • Former Chairman of OpenAI and co-founder and CEO Greg Brockman

Greg Brockman stated on 11/18 that founder Sam Altman was informed of his resignation by other board members, and then Greg Brockman was also informed by the board members that he had been removed from the board.

New OpenAI CEO Emmett Shear: Removal of Sam Altman not based on AI safety risks

Microsoft announces Sam Altman and Greg Brockman joining its new AI team

OpenAI Board after Sam Altman's return

On 10/23, following protests from OpenAI employees, Sam Altman returned to OpenAI as CEO, and a new board was formed by Bret Taylor (Chair), Larry Summers, and Adam D'Angelo.

  • Quora CEO Adam D'Angelo
  • Former Salesforce CEO and former Twitter board member Bret Taylor
  • Former Secretary of the Treasury and economist Lawrence H. Summers

Sam Altman and the Board have no equity stake? OpenAI Company Structure for Sustaining the Mission

Starting from a non-profit organization, OpenAI hopes to maintain a for-profit organization that has a legal obligation to pursue the mission of the non-profit organization through the structure of splitting out a limited-profit subsidiary. By engaging in research, development, commercialization, and other core activities, OpenAI aims to build safe and beneficial AGI (Artificial General Intelligence) for all humanity.

Therefore, the equity structure of the for-profit organization will have limits, restricting the maximum financial return for investors and employees. This aims to encourage a balance between commercial interests and the research, development, and deployment of AGI in a way that prioritizes safety and sustainability over pure profit maximization. The non-profit organization, through its board, manages and supervises, with the primary beneficiaries being humans rather than OpenAI investors.

Microsoft reaches new highs, OpenAI speaks out collectively! CTO Mira Murati: Without the OpenAI team, it is nothing

Sam Altman and the Board have no equity stake

OpenAI made it clear:

  • The board remains mostly independent, with independent directors not holding equity in OpenAI
  • OpenAI CEO Sam Altman also does not directly hold equity; he only indirectly holds it through the Y Combinator investment fund, which made a small investment before he became a full-time employee.

Microsoft investors have limited profits: 100 times

OpenAI further specifies that profits distributed to investors and employees, including Microsoft's, are limited, with any excess returns beyond the limit being returned to the non-profit organization for the benefit of humanity. OpenAI provides investors with a 100x "cap" on returns, with Microsoft investing $1 billion.

The Board has high decision-making power: AGI exclusion clause

The Board can decide when to achieve AGI (Artificial General Intelligence). AGI refers to a highly autonomous system that outperforms humans in the most economically valuable tasks. This system is excluded from Microsoft's IP licensing and other commercial terms, which only apply to technologies before AGI.

Conclusion: Sam Altman has returned

Update on 10/23: OpenAI: Principally agreed to have Sam Altman return as CEO, co-founder, and CEO Greg Brockman happily celebrates the reunion of all employees.

Prior to Sam Altman's return: The OpenAI Board has not yet disclosed the reasons for Sam Altman's dismissal, pending the investigation results by the new OpenAI CEO Emmett Shear. In addition, the ultimatum letter from all OpenAI employees adds significant variables to this drama. Will Sam Altman establish himself through Microsoft or return to OpenAI? On the other hand, OpenAI also seems to have its own plans, with rumors of discussions with the CEO of another AI company, Anthropic, with intentions of a merger, adding to the intrigue.