It has lots of little things that make OpenAI look bad. It further confirms that OpenAI threatened to revoke equity unless employees signed the non-disparagement agreements Plus it shows Altman’s signature on documents giving the company broad power over employees’ equity — perhaps he doesn’t read every document he signs, but this one seems quite important. This is all in tension with Altman’s recent tweet that “vested equity is vested equity, full stop” and “i did not know this was happening.” Plus “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)” is misleading given that they apparently regularly threatened to do so (or something equivalent — let the employee nominally keep their PPUs but disallow them from selling them) whenever an employee left.
Great news:
OpenAI told me that “we are identifying and reaching out to former employees who signed a standard exit agreement to make it clear that OpenAI has not and will not cancel their vested equity and releases them from nondisparagement obligations”
(Unless “employees who signed a standard exit agreement” is doing a lot of work — maybe a substantial number of employees technically signed nonstandard agreements.)
I hope to soon hear from various people that they have been freed from their nondisparagement obligations.
Update: OpenAI says:
As we shared with employees today, we are making important updates to our departure process. We have not and never will take away vested equity, even when people didn’t sign the departure documents. We’re removing nondisparagement clauses from our standard departure paperwork, and we’re releasing former employees from existing nondisparagement obligations unless the nondisparagement provision was mutual. We’ll communicate this message to former employees. We’re incredibly sorry that we’re only changing this language now; it doesn’t reflect our values or the company we want to be.
[Low-effort post; might have missed something important.]
(Unless “employees who signed a standard exit agreement” is doing a lot of work — maybe a substantial number of employees technically signed nonstandard agreements.)
Yeah, what about employees who refused to sign? Have we gotten any clarification on their situation?
Note that it says nothing about being allowed to participate in tenders, nothing about the clause where OA can repurchase your PPUs at any time at ‘fair market value’ (not canceled at $0), nothing about what those ‘other documents’ might be, nothing about Anthropic founders...
I haven’t followed closely—from outside, it seems like pretty standard big-growth-tech behavior. One thing to keep in mind is that “vested equity” is pretty inviolable. These are grants that have been fully earned and delivered to the employee, and are theirs forever. It’s the “unvested” or “semi-vested” equity that’s usually in question—these are shares that are conditionally promised to employees, which will vest at some specified time or event—usually some combination of time in good standing and liquidity events (for a non-public company).
It’s quite possible (and VERY common) that employees who leave are offered “accelerated vesting” on some of their granted-but-not-vested shares in exchange for signing agreements and making things easy for the company. I don’t know if that’s what OpenAI is doing, but I’d be shocked if they somehow took away any vested shares from departing employees.
It would be pretty sketchy to consider unvested grants to be part of one’s net worth—certainly banks won’t lend on it. Vested shared are just shares, they’re yours like any other asset.
Trying to figure out how to update. From the downvotes and comments, I’m clearly considered wrong, but I can’t easily find details on how. Is the statement “We have not and never will take away vested equity” a flat-out lie? I’d expected it was relying heavily on the word “vested”, and what they took away was something non-vested.
Is there a simple link to a specific legal description of what assets a non-signer was entitled to, but lost due to declining to sign?
Edit: Zvi recently linked to OpenAI NDAs: Leaked documents reveal aggressive tactics toward former employees—Vox, which does have pretty compelling references that my assumptions were wrong, that the denial was a verifiably false statement, and they did, in fact, credibly threaten to take back vested equity. I’ve checked my equity in past (private, so not exercisable unless they have a liquidity event) and current (public, so exercisable immediately on vest) employers, and this doesn’t seem possible for them. OpenAI is an outlier in defining their equity that way (such that “vested” is contingent).
OpenAI told me that “we are identifying and reaching out to former employees who signed a standard exit agreement to make it clear that OpenAI has not and will not cancel their vested equity and releases them from nondisparagement obligations”
We know various people who’ve left OpenAI and might criticize it if they could. Either most of them will soon say they’re free or we can infer that OpenAI was lying/misleading.
Now OpenAI publicly said “we’re releasing former employees from existing nondisparagement obligations unless the nondisparagement provision was mutual.” This seems to be self-effecting; by saying it, OpenAI made it true.
That is, if someone signed the (standard or non-standard) agreement, and OpenAI says this, but later they decide to sue the employee anyway… what exactly will happen?
(I am also suspicious about the “reaching out to former employees” part, because if the new negotiation is made in private, another trick might be involved, like maybe they are released from the old agreement, but they have to sign a new one...?)
New Kelsey Piper article and twitter thread on OpenAI equity & non-disparagement.
It has lots of little things that make OpenAI look bad. It further confirms that OpenAI threatened to revoke equity unless employees signed the non-disparagement agreements Plus it shows Altman’s signature on documents giving the company broad power over employees’ equity — perhaps he doesn’t read every document he signs, but this one seems quite important. This is all in tension with Altman’s recent tweet that “vested equity is vested equity, full stop” and “i did not know this was happening.” Plus “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)” is misleading given that they apparently regularly threatened to do so (or something equivalent — let the employee nominally keep their PPUs but disallow them from selling them) whenever an employee left.
Great news:
(Unless “employees who signed a standard exit agreement” is doing a lot of work — maybe a substantial number of employees technically signed nonstandard agreements.)
I hope to soon hear from various people that they have been freed from their nondisparagement obligations.
Update: OpenAI says:
[Low-effort post; might have missed something important.]
[Substantively edited after posting.]
Yeah, what about employees who refused to sign? Have we gotten any clarification on their situation?
I quote Gwern
I haven’t followed closely—from outside, it seems like pretty standard big-growth-tech behavior. One thing to keep in mind is that “vested equity” is pretty inviolable. These are grants that have been fully earned and delivered to the employee, and are theirs forever. It’s the “unvested” or “semi-vested” equity that’s usually in question—these are shares that are conditionally promised to employees, which will vest at some specified time or event—usually some combination of time in good standing and liquidity events (for a non-public company).
It’s quite possible (and VERY common) that employees who leave are offered “accelerated vesting” on some of their granted-but-not-vested shares in exchange for signing agreements and making things easy for the company. I don’t know if that’s what OpenAI is doing, but I’d be shocked if they somehow took away any vested shares from departing employees.
It would be pretty sketchy to consider unvested grants to be part of one’s net worth—certainly banks won’t lend on it. Vested shared are just shares, they’re yours like any other asset.
Consider yourself shocked.
Trying to figure out how to update. From the downvotes and comments, I’m clearly considered wrong, but I can’t easily find details on how. Is the statement “We have not and never will take away vested equity” a flat-out lie? I’d expected it was relying heavily on the word “vested”, and what they took away was something non-vested.
Is there a simple link to a specific legal description of what assets a non-signer was entitled to, but lost due to declining to sign?
Edit: Zvi recently linked to OpenAI NDAs: Leaked documents reveal aggressive tactics toward former employees—Vox, which does have pretty compelling references that my assumptions were wrong, that the denial was a verifiably false statement, and they did, in fact, credibly threaten to take back vested equity. I’ve checked my equity in past (private, so not exercisable unless they have a liquidity event) and current (public, so exercisable immediately on vest) employers, and this doesn’t seem possible for them. OpenAI is an outlier in defining their equity that way (such that “vested” is contingent).
They could be lying about this.
We know various people who’ve left OpenAI and might criticize it if they could. Either most of them will soon say they’re free or we can infer that OpenAI was lying/misleading.
Now OpenAI publicly said “we’re releasing former employees from existing nondisparagement obligations unless the nondisparagement provision was mutual.” This seems to be self-effecting; by saying it, OpenAI made it true.
Hooray!
This could be true for most cases though
I am not a lawyer—is that legally binding?
That is, if someone signed the (standard or non-standard) agreement, and OpenAI says this, but later they decide to sue the employee anyway… what exactly will happen?
(I am also suspicious about the “reaching out to former employees” part, because if the new negotiation is made in private, another trick might be involved, like maybe they are released from the old agreement, but they have to sign a new one...?)
So I’m guessing this covers like 2-4 recent departures, and not Paul, Dario, or the others that split earlier