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OpenAI walks back controversial stock sale policies, will treat current and former employees the same

Jun 24, 2024 - cnbc.com
OpenAI has changed its policies regarding secondary share sales, now allowing both current and former employees to participate equally in annual tender offers. This comes after concerns were raised about the ability of shareholders to liquidate some of their equity, which is worth millions of dollars. The company's new policy states that all sellers, including employees and advisors, will have the same sales limit. This change comes amid OpenAI's soaring valuation and a stagnant IPO market, making secondary stock sales the only near-term option for shareholders to cash in on their paper wealth.

The policy change also includes a reversal of a provision that could have allowed the company to forcibly repurchase shares at its discretion for the "fair market value." Former employees working at competitors will no longer be excluded from official tender offers. However, if a future tender offer is oversubscribed, current employees will be prioritized over former ones. OpenAI, backed by approximately $13 billion from Microsoft, is valued at over $80 billion.

Key takeaways:

  • OpenAI has reversed its policies towards secondary share sales, now allowing current and former employees to participate equally in annual tender offers.
  • The company has removed a provision that allowed it to forcibly repurchase shares at its discretion for the fair market value.
  • Former employees who now work at competitors will no longer be excluded from official tender offers, and will be included in the same category as other former employees.
  • However, if a future tender offer is oversubscribed, OpenAI will prioritize giving liquidity to current service providers over former service providers.
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