OpenAI Breaks Record for Highest Tech Startup Salaries
A report reveals that OpenAI is compensating its employees at a higher rate than any other tech startup in recent history. The average stock-based compensation for each employee at the company amounts to approximately $1.5 million. OpenAI currently employs approximately 4,000 individuals. This figure significantly exceeds the amounts that other major tech firms disbursed prior to their public offerings. It exceeds the stock-based compensation reported by Google in 2003 by more than seven times, the year prior to its initial public offering. The average compensation of $1.5 million stands approximately 34 times greater than the average pay at 18 major technology companies in the year preceding their public offerings. This comparison draws upon an analysis from the Wall Street Journal, utilizing data gathered by Equilar. The examination focused on significant technology IPOs spanning the last quarter-century. On average, stock-based compensation constituted merely around 6 percent of revenue for these companies in the year preceding their IPOs.
OpenAI has raised equity payouts for its leading researchers and engineers to sustain its dominance in artificial intelligence. The news report indicated that these packages have positioned some employees among the wealthiest in Silicon Valley. Nonetheless, the substantial payouts are simultaneously escalating OpenAI’s operating losses and rapidly diluting the interests of existing shareholders. The urgency to increase salaries escalated this summer as the race for AI talent intensified. Meta Platforms CEO Mark Zuckerberg has started to provide compensation packages valued in the hundreds of millions of dollars, with some instances reaching as high as $1 billion, to senior executives and researchers at competing AI companies.
Zuckerberg’s assertive recruitment strategy attracted over 20 employees from OpenAI, among them ChatGPT co-creator Shengjia Zhao. In August, OpenAI granted a one-time bonus to certain members of its research and engineering teams. A prior report indicated that certain employees were awarded payouts amounting to millions of dollars. Stock compensation is projected to increase through 2030. Documents shared with investors during the summer indicate that OpenAI anticipates its stock-based compensation will rise by approximately $3 billion annually until 2030. The company has informed staff that it will discontinue a policy mandating employees to remain for a minimum of six months before their equity starts to vest. This alteration could potentially elevate compensation levels even more.
OpenAI’s stock-based compensation is projected to account for 46 percent of its revenue by 2025. This would represent the highest figure among the 18 companies assessed, excluding Rivian, which reported no revenue in the year prior to its IPO. OpenAI announces a position with a compensation of $555,000. OpenAI founder Sam Altman has revealed a new senior position at the company, accompanied by an annual compensation package exceeding half a million dollars. The role, titled “Head of Preparedness,” will concentrate on mitigating the risks linked to the swift progression of AI systems. Altman characterized it as an essential function as AI models advance rapidly. “This will be a stressful job, and you’ll jump into the deep end pretty much immediately,” Altman stated. The position provides an annual compensation of $555,000, in addition to equity opportunities. Altman stated that the role will entail assisting cybersecurity teams in utilizing advanced AI tools, all while ensuring that attackers do not exploit the same technology.
