OpenAI CEO Sam Altman faced backlash over the company’s restrictive exit policies that threatened to revoke vested equity from departing employees. Altman claimed he was unaware of these provisions, which have now been scrutinized through leaked documents and employee testimonies.
On social media, Altman expressed his embarrassment and apologized for the oversight. He stated, “We have never clawed back anyone’s vested equity, nor will we do that if people do not sign a separation agreement (or don’t agree to a non-disparagement agreement). Vested equity is vested equity, full stop.”
However, leaked documents obtained by Vox and other sources suggest that senior leadership, including Altman, had signed off on these provisions. Even Altman’s post has been fact checked by users to add context that “senior leadership at OpenAI, including Altman, were very much aware of these equity clawback provisions and signed off on them.”
According to Vox, the controversial exit documents were not only known but signed by top executives, including Altman himself. The documents included clauses that threatened to cancel vested equity unless employees signed non-disparagement agreements within a short period, sometimes as brief as seven days.
“If you don’t sign, it could impact your equity”
Throughout the hundreds of pages of documents leaked to Vox, a troubling pattern emerges. OpenAI reportedly pressured ex-employees to sign ultra-restrictive nondisparagement and nondisclosure agreements by threatening to cancel their equity holdings, but the situation was even more complex.
In two instances reviewed by Vox, the lengthy and intricate termination documents OpenAI issued had a mere seven-day expiration period. This tight timeline forced former employees to make significant decisions — potentially involving millions of dollars — within a week, leaving insufficient time to seek outside legal counsel.
When ex-employees requested more time to obtain legal advice and review the documents, they encountered significant resistance from OpenAI. “The General Release and Separation Agreement requires your signature within 7 days,” a representative informed one employee in an email after the employee asked for an additional week to review the documents.
“We want to make sure you understand that if you don’t sign, it could impact your equity. That’s true for everyone, and we’re just doing things by the book,” an OpenAI representative emailed a second employee who requested two more weeks to review the agreement.
Four experts in employment and labor law were consulted to determine if the termination agreement and related conduct were standard in the industry. “For a company to threaten to claw back already-vested equity is egregious and unusual,” said California employment law attorney Chambord Benton-Hayes in an emailed statement.
Most ex-employees succumbed to the pressure. For those who persisted, the company employed another tactic described by a former employee as the “legal retaliation toolbox.” When he refused to sign the first termination agreement and sought legal counsel, OpenAI shifted strategies. Instead of threatening to cancel his equity, they warned he could be barred from selling his equity.
Later documents sent by the company, reviewed by Vox, stated, “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.” In essence, it was a choice between signing or losing the opportunity to sell vested equity.
Additionally, the incorporation documents contained clauses stating that vested equity would disappear if a former employee did not sign a general release within 60 days. They also included provisions allowing the company, at its sole and absolute discretion, to reduce a terminated employee’s vested equity holdings to zero. Furthermore, the company had absolute discretion over which employees could participate in tender offers to sell their equity.
“These documents are supposed to be putting the mission of building safe and beneficial AGI first but instead they set up multiple ways to retaliate against departing employees who speak in any way that criticizes the company,” a source close to OpenAI said.
These documents bear the signature of Altman. OpenAI did not respond to Vox’s questions about whether there was a contradiction between Altman’s public statements claiming ignorance of the clawback language and the inclusion of these clauses in documents he signed.
Former OpenAI employee Daniel Kokotajlo shared his experience, stating that refusing to sign the NDA led to the loss of equity worth about 85% of his family’s net worth. This personal testimony underscores the severity of the policy’s impact on employees.
The controversy has stirred significant internal conflict at OpenAI, a company valued at $80 billion and known for its mission to develop ethical AI.
Altman has promised corrective actions, stating that former employees can reach out to have their agreements reviewed and amended.
“There was a provision about potential equity cancellation in our previous exit docs; although we never clawed anything back, it should never have been something we had in any documents or communication. this is on me and one of the few times i’ve been genuinely embarrassed running openai; i did not know this was happening and i should have,” Altman added in his post.
OpenAI also committed to removing non-disparagement clauses from future exit documents and ensuring former employees are released from existing non-disparagement obligations unless they were mutual.
Information for this briefing was found via Vox, Yahoo News, TechGig, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
