OpenAI Considers Restructuring Amid Leadership Changes and Equity Discussions

Sam Altman Could Be Worth $13B as OpenAI Seeks Restructuring

OpenAI's board is considering giving CEO Sam Altman a sizable equity stake in the company. OpenAI CEO Sam Altman, who has famously claimed he doesn't own any equity in the $157 billion A.I. company he runs, could soon be a multibillionaire as OpenAI is reportedly looking to grant him a 7 percent equity stake, worth $11 billion, according to Reuters. While Altman denied the report, OpenAI chairman Bret Taylor issued a statement saying the company's board indeed had discussions about "whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made." Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters The pressure to give Altman equity likely came from external investors. Fortune reported on last week that OpenAI investors are "pushing hard" for him to have skin in the game in order to raise massive funding. Reuters reported last month that OpenAI was ready to raise $6.5 billion from investors contingent on whether the company can change its corporate structure and remove a profit cap for investors. Restructuring the company and giving Altman equity would reassure OpenAI investors that the leadership team is committed to maximizing their returns, which is crucial as OpenAI seeks more funding to meet its ambitious goals. Earlier this year, Altman made headlines for eventually wanting to raise up to $7 trillion in funding -- more than Germany's annual GDP, the world's third largest -- to achieve its long-term goals. While Altman has not confirmed his plan to transition OpenAI into a for-profit structure, he said at a technology conference in Italy last week that OpenAI had been considering a restructuring to get to the "next stage." Also last week, OpenAI's CTO, Mira Murati, announced resignation. So did two other senior executives, Barret Zoph and Bob McGrew. Industry observers wondered whether their exits were related to the company's restructuring, although Altman denied such speculations at the Italy conference. OpenAI was founded in 2015 as a nonprofit research lab funded by donations from billionaires like Reid Hoffman and Elon Musk. Realizing that "donations alone would not scale with the cost of computational power and talent required to push core research forward," according to its website, OpenAI in 2019 introduced a for-profit arm. The arm operates by a capped-profit model but the cap is so high that it might as well not exist -- it allows OpenAI's investors to reap a gain of up to 100 times their initial investments. Altman is already a billionaire Altman, 39, is currently estimated to be worth $2 billion, according to Bloomberg. He has $1.2 billion invested across a range of venture capital funds branded as Hydrazine Capital, along with an additional $434 million in Apollo Projects. Altman owns shares in several high-flying tech companies, including a 8.7 percent stake in Reddit. In 2021, he invested $375 million in Helion Energy, a startup building the world's first fusion plant. In 2022, he invested $180 million Retro Biosciences, a startup focused on slowing aging. At a congressional hearing last May, Altman said he owned "no equity in OpenAI." In a later statement through OpenAI spokesperson Steve Sharpe, Altman confirmed he doesn't own profit-participation units either, an OpenAI scheme that gives employees a right to earn a given percentage of the company's profit, similar to equity compensation. According to regulatory filings, Altman owns 75 percent of the OpenAI Startup Fund, an independent entity associated with OpenAI but doesn't receive funding from the company. The fund manages $325 million in assets to invest in smaller A.I. companies. However, Sharpe said Altman has not invested his own money, so he cannot financially benefit from the fund. In April, Altman was removed as an owner or controller of the startup fund over scrutiny that it's too closely tied to OpenAI despite claiming independence.

Sam Altman denies plan to give him equity in for-profit OpenAI

OpenAI may be changing to a for-profit company, but according to CEO Sam Altman, that doesn't mean he's about to strike it rich. Altman told OpenAI employees in an all-hands meeting Thursday that there are no plans to give him a "giant equity stake" in the newly for-profit enterprise, CNBC reported, citing an anonymous employee. On the subject of him receiving an equity stake in the company, Altman reportedly added, "there are no current plans here." The CEO's statement contradicts reports that OpenAI considered giving him a 7% stake, which could hike his net worth by $10 billion, Bloomberg reported. OpenAI is working to raise $6.5 billion at a $150 billion valuation, which would make it one of the highest valued startups ever. The possible equity grant would also make Altman, who is already a billionaire according to Forbes estimates, one of the richest people in the world, Bloomberg reported. During the meeting, both Altman and OpenAI chief financial officer Sarah Friar said investors were concerned about Altman not having an equity stake. On Thursday, Reuters reported that OpenAI was considering changing to a for-profit Benefit corporation, with the nonprofit entity remaining intact and being granted a minority stake in the for-profit side. In response to a question about the possibility of Altman receiving equity, an OpenAI spokesperson directed Fortune to a statement by board chairman Bret Taylor. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said in the statement. The changes come as recent executive departures force the company to shake up its leadership. On Wednesday, Mira Murati, the company's chief technology officer, stepped away from her role after six-and-a-half years. Another two senior employees followed her out the door. Murati wrote in a note published to X that she felt the time was right for her to depart. "There's never an ideal time to step away from a place one cherishes, yet this moment feels right," she wrote in the note. OpenAI has in recent months faced a wave of high level exits, including two cofounders, Ilya Sutskever and John Schulman. Sutskever, a former board member, helped orchestrate Altman's short-lived ouster from the company in November before leaving to start his own AI startup, Safe Superintelligence. Schulman left OpenAI to join competitor Anthropic.

OpenAI's Sam Altman calls report of 7% equity stake 'ludicrous'

OpenAI CEO Sam Altman flatly denied that he will receive a huge equity stake in the startup worth billions of dollars as part of a corporate restructuring, according to multiple reports. Altman, 39, responded hours after a Bloomberg report on Thursday claimed OpenAI's board was discussing giving him a 7% stake as part of the pioneering AI company's pivot to a for-profit entity. Altman, who co-founded the firm, called the report that he might receive such a big chunk "ludicrous" during an all-hands meeting with OpenAI employees in Italy, The Information reported. The OpenAI boss reportedly added that investors were pushing for him to receive equity to ensure his interests remain aligned with the firm. OpenAI Chairman Bret Taylor had also pushed back on the report in an earlier statement, noting the board had "discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made." OpenAI confirmed Wednesday that it was planning to restructure itself as a for-profit benefit corporation, which would mean that the non-profit board of directors that has long overseen its operations will no longer be in control. The plans have yet to be finalized, and OpenAI insisted the nonprofit "is core to our mission and will continue to exist." OpenAI was originally set up as a nonprofit in 2015 with a goal of creating safe artificial general intelligence - a term referring to AI with human-level or higher cognitive abilities. Meanwhile, the Microsoft-backed firm's leadership remains in turmoil. Three executives, including chief technology officer Mira Murati, announced their resignations this week just as the reports about a potential restructuring surfaced. During Thursday's all-hands meeting, Altman was reportedly adamant that the abrupt departures were not related to the board's discussions. "Most of the stuff I saw was also just totally wrong," Altman said, according to CNBC. "But we have been thinking about that, our board has, for almost a year independently, as we think about what it takes to get to our next stage." "But I think this is just about people being ready for new chapters of their lives and a new generation of leadership," Altman added. Murati, who had worked closely with Altman, said in a message to OpenAI staffers that she was "stepping away because I want to create the time and space to do my own exploration. For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we've built." Chief research officer Bob McGrew and top researcher Barret Zoph also exited in what has been a mass exodus of OpenAI executives since the start of the year. Greg Brockman, OpenAI's president and co-founder, said last month that he would take an extended leave of absence through the end of the year. John Schulman, another co-founder, left for job at OpenAI rival Anthropic. In May, co-founder Ilya Sutskever and researcher Jan Leike after OpenAI dissolved its "Superalignment" team, which was responsible for overseeing the safe development of advanced AI.

Sam Altman told employees he doesn't expect a 'giant equity stake' in OpenAI

As OpenAI considers a for-profit structure, chief executive Sam Altman has reportedly told employees he doesn't plan to get a "giant equity stake" in the company. Altman told employees it's "just not true" that he will receive high equity during an all-hands meeting on Thursday, CNBC (CMCSA) reported, citing an unnamed person familiar with the matter. During the meeting with Altman and Sarah Friar, OpenAI's chief financial officer, both leaders reportedly told employees that the artificial intelligence company's investors are concerned over Altman not having equity. The meeting with employees was held after OpenAI's board decided it would consider restructuring to a for-profit model, another unnamed person told CNBC. They added that if OpenAI becomes for-profit, its non-profit business will be a separate entity. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Bret Taylor, OpenAI's chairman, told CNBC. Altman reportedly called a report that he would receive a 7% stake in the company "ludicrous," and said it was too high, according to The Information. If Altman received a 7% stake, it would be worth around $10.5 billion of equity, based on OpenAI's reported $150 billion valuation. The AI company is reportedly interested in changing its business into a benefit corporation, or a for-profit corporation committed making a positive impact. Meanwhile, chief technology officer Mira Murati announced on Wednesday that she was leaving the company. Murati, who spent six-and-a-half years at OpenAI, said she "made the difficult decision" to leave, and that she wants "to create the time and space to do my own exploration." After OpenAI chief executive Sam Altman was briefly ousted in November, Murati served as interim leader of the company. Hours after Murati's announcement, OpenAI chief research officer Bob McGrew and vice president of research Barret Zoph also announced their resignations from the company.

Sam Altman tells OpenAI employees he hasn't received 'giant equity stake' in company

At an all-hands meeting on Thursday, OpenAI CEO Sam Altman denied reports that he received a "giant equity stake" in the company, calling that information "just not true," according to a person who was in attendance. Altman and finance chief Sarah Friar both said at the meeting, conducted by video, that investors have raised concerns about Altman not having equity in the high-valued artificial intelligence company that he co-founded almost nine years ago, said the person, who asked not to be named because the gathering was only for employees. Regarding his potentially attaining an equity stake, Altman said, "There are no current plans here," the person said. OpenAI Chairman Bret Taylor told CNBC in a statement that while the board has talked about the matter, no specific figures are on the table. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said. The meeting late Thursday followed the board's decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Should the change occur, the non-profit segment would remain as a separate entity, said the person, who asked not to be named because no plan has been finalized. While directors consider OpenAI's future, key executives continue to walk out the door. On Wednesday, three execs announced their departures. OpenAI Chief Technology Officer Mira Murati, who briefly service as interim CEO, said she would be leaving after six and a half years. Later in the day, research chief Bob McGrew and Barret Zoph, a research vice president, said they were leaving the company. In an interview on Thursday at Italian Tech Week, Altman said, "I think this will be hopefully a great transition for everyone involved and I hope OpenAI will be stronger for it, as we are for all of our transitions." Altman said the departures were not related to the company's potential restructuring, contrary to some media reports. "Most of the stuff I saw was also just totally wrong," Altman said at the event in Turin, Italy. "But we have been thinking about that, our board has, for almost a year independently, as we think about what it takes to get to our next stage. But I think this is just about people being ready for new chapters of their lives and a new generation of leadership." Murati wrote in a memo to the company that she's "stepping away because I want to create the time and space to do my own exploration." She said her focus will be on ensuring a "smooth transition." Prior to Thursday's moves, OpenAI co-founder Ilya Sutskever and former safety leader Jan Leike announced their departures in May. Co-founder John Schulman said last month that he was leaving to join rival Anthropic. OpenAI, which is backed by Microsoft, is currently pursuing a funding round that would value the company at more than $150 billion, people familiar with the matter told CNBC. Thrive Capital is leading the round and plans to invest $1 billion, and Tiger Global is planning to join as well. While OpenAI has been in hyper-growth mode since the launch of ChatGPT in late 2022, it's been simultaneously riddled with controversy and executive departures, with some current and former employees concerned that the company is growing too quickly to operate safely. Altman was ousted in November, before being quickly reinstated. Almost all of OpenAI's employees signed an open letter saying they would leave in response to the board's action. Days later, Altman was back at the company and Murati moved from interim CEO back to the role of CTO.

Sam Altman is setting himself up for a massive $10 billion payday as more OpenAI executives head for the exit

OpenAI is in the process of transitioning from a non-profit business to a for-profit one -- and Sam Altman, the company's CEO and one of its eight original founders, might end up getting a huge payday as a result. Sources tell Bloomberg that OpenAI could grant Altman a 7% equity stake in the company, which could potentially lead to a $10 billion infusion of wealth for the 39-year-old CEO. Altman's net worth is currently somewhere in the ballpark between $1-2 billion, based on the latest calculations by Forbes and the Bloomberg Billionaires Index, which do not factor in his work with OpenAI. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Bret Taylor, chairman of OpenAI, said in a statement to Fortune. One person who has not taken kindly to Altman's bid to transition the corporate structure of the company behind ChatGPT is one of OpenAI's original founders, Elon Musk. In a series of X posts this week, the 53-year-old Tesla CEO and world's richest man called Altman "Little Finger," a reference to the skilled manipulator who plotted against political rivals in HBO's hit show Game of Thrones, and also criticized OpenAI's current direction, saying, "You can't just convert a non-profit into a for-profit. That is illegal." Much of Altman's current wealth stems from his extensive investment portfolio: He has holdings in over 400 companies valued at over $2.8 billion, according to Business Insider. He also owns about $90 million worth of real estate, made north of $43 million from selling the location-based social network Loopt back in 2012, and made money -- and inroads among Silicon Valley's elite -- during his time as Y Combinator president between 2014 and 2019. But while Altman may be enjoying the rocket ship that is OpenAI, his startup's transition to a for-profit B corporation has led to significant turnover as senior executives continue heading for the exit. Just this week, three crucial executives -- chief technology officer Mira Murati, chief research officer Bob McGrew, and research VP Barret Zoph -- all decided to leave the company. Earlier this year, OpenAI also lost two of its cofounders, former president Greg Brockman and former chief scientist Ilya Sutskever. Speaking Thursday in Turin, Italy, Altman insisted the executive departures were completely unrelated to the company's restructuring plans. "I saw some stuff that this was related to a restructure, that's totally not true," Altman said, per Bloomberg. "This is just about people being ready for new chapters in their lives." OpenAI is currently looking to raise $6.5 billion at an eye-watering valuation of $150 billion, Bloomberg previously reported, which would vault its market cap over companies like Ford, Target, and American Express. Recently, the company's efforts have been focused on exciting investors while also allaying concerns about the future of artificial intelligence. The company on Thursday unveiled a new AI model, internally called "Strawberry," that can perform human-like reasoning tasks to carry out multi-step actions, which is particularly helpful for math and coding. It also recently unveiled a new logo redesign to employees, although staffers were reportedly taken aback by the design saying it looked ominous, sources told Fortune's Kali Hays. Altman, meanwhile, has led the company's outward-facing efforts to get the general public feeling more comfortable about AI. The 39-year-old CEO was recently interviewed by Oprah Winfrey for an ABC primetime special, who pressed him about AI's potential dangers and the public trust, asking how Altman felt about being described as "the most powerful and perhaps most dangerous man on the planet." Altman told Winfrey he probably has "a conversation with someone in the government every few days," assuring her he is in constant communication with officials and world leaders given AI's growing importance in global politics and economics.

Sam Altman tells OpenAI staff there's no plan for him to receive a 'giant equity stake' in company

At an all-hands meeting Thursday, OpenAI CEO Sam Altman denied that there are plans for him to receive a "giant equity stake" in the company, calling that information "just not true," according to a person who was in attendance. Altman and finance chief Sarah Friar both said at the meeting, conducted by video, that investors have raised concerns about Altman not having equity in the high-valued artificial intelligence company that he co-founded almost nine years ago, said the person, who asked not to be named because the gathering was only for employees. Regarding his potentially attaining an equity stake, Altman said, "There are no current plans here," the person said. OpenAI Chairman Bret Taylor told CNBC in a statement that while the board has talked about the matter, no specific figures are on the table. "The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made," Taylor said. The meeting late Thursday followed the board's decision to consider restructuring the company to a for-profit business, according to a separate person with knowledge of the matter. Should the change occur, the nonprofit segment would remain as a separate entity, said the person, who asked not to be named because no plan has been finalized. While directors consider OpenAI's future, key executives continue to walk out the door. On Wednesday, three execs announced their departures. OpenAI Chief Technology Officer Mira Murati, who briefly served as interim CEO, said she would be leaving after 6½ years. Later in the day, research chief Bob McGrew and Barret Zoph, a research vice president, said they were leaving the company. In an interview Thursday at Italian Tech Week, Altman said, "I think this will be hopefully a great transition for everyone involved and I hope OpenAI will be stronger for it, as we are for all of our transitions." Altman said the departures were not related to the company's potential restructuring, contrary to some media reports. "Most of the stuff I saw was also just totally wrong," Altman said at the event in Turin, Italy. "But we have been thinking about that, our board has, for almost a year independently, as we think about what it takes to get to our next stage. But I think this is just about people being ready for new chapters of their lives and a new generation of leadership." Murati wrote in a memo to the company that she's "stepping away because I want to create the time and space to do my own exploration." She said her focus will be on ensuring a "smooth transition." Before Thursday's moves, OpenAI co-founder Ilya Sutskever and former safety leader Jan Leike announced their departures in May. Co-founder John Schulman said last month that he was leaving to join rival Anthropic. OpenAI, which is backed by Microsoft, is currently pursuing a funding round that would value the company at more than $150 billion, people familiar with the matter told CNBC. Thrive Capital is leading the round and plans to invest $1 billion, and Tiger Global is planning to join as well. While OpenAI has been in hypergrowth mode since the launch of ChatGPT in late 2022, it's been simultaneously riddled with controversy and executive departures, with some current and former employees concerned that the company is growing too quickly to operate safely. Altman was ousted in November, before being quickly reinstated. Almost all of OpenAI's employees signed an open letter saying they would leave in response to the board's action. Days later, Altman was back at the company and Murati moved from interim CEO back to the role of CTO.