OpenAI is set to pay its 4,000 employees an average of $1.5 million each in stock-based compensation for 2025, marking a record high for tech startups and consuming nearly half of its projected revenue. This figure is 34 times greater than pre-IPO compensation norms for major tech firms and exceeds Google’s pre-IPO stock grants by over sevenfold. The surge in compensation is largely due to Meta’s aggressive talent acquisition, leading to multimillion-dollar retention bonuses and immediate stock access for employees.
While necessary to retain top AI talent, this strategy results in significant operating losses and shareholder dilution. OpenAI’s compensation aligns with a “prisoner’s dilemma” in the competitive AI market, where restraint is impractical. The company, founded in 2015, transitioned to a capped-profit model in 2019 and aims to navigate the challenges of escalating costs and talent wars as generative AI becomes critical to corporate strategy globally, prompting questions about long-term financial viability.
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