OpenAI sets new record for highest employee pay in tech startup history

OpenAI's employee pay has hit historic highs, with average stock rewards of $1.5 million, as the company spends heavily to retain staff amid a fierce AI talent race

OpenAI is paying its employees more than any other tech startup in recent history, according to a report by The Wall Street Journal. The company’s stock-based compensation works out to about $1.5 million per employee on average.

 

OpenAI currently has a workforce of around 4,000 people. This figure is far higher than what other major tech firms paid before going public. It is more than seven times the stock-based pay disclosed by Google in 2003, a year before its initial public offering.

 

The $1.5 million average compensation is about 34 times higher than the average pay at 18 large technology companies in the year before they went public. This comparison is based on a Wall Street Journal analysis using data compiled by Equilar.

 

 

The analysis looked at major technology IPOs over the past 25 years. On average, stock-based compensation made up only about 6 per cent of revenue for these companies in the year before their IPOs.

 

Talent war pushes OpenAI to raise rewards

 

OpenAI has increased equity payouts to top researchers and engineers to maintain its lead in artificial intelligence. These packages have made some employees among the wealthiest in Silicon Valley, the news report said.

 

However, the large payouts are also increasing OpenAI’s operating losses and diluting existing shareholders at a fast pace.

 

The pressure to raise pay intensified this summer as competition for AI talent heated up. Meta Platforms CEO Mark Zuckerberg began offering pay packages worth hundreds of millions of dollars, and in rare cases up to $1 billion, to senior executives and researchers at rival AI firms.

 

Zuckerberg’s aggressive hiring drive drew more than 20 OpenAI employees, including ChatGPT co-creator Shengjia Zhao. In response, OpenAI awarded a one-time bonus to some research and engineering staff in August. According to a previous Wall Street Journal report, some employees received payouts worth millions of dollars.   

 

Stock compensation to rise through 2030

 

Investor documents shared over the summer show OpenAI expects its stock-based compensation to increase by around $3 billion per year through 2030.

 

The company has also told staff it will end a policy that required employees to stay for at least six months before their equity began to vest. This change could further raise compensation levels.

 

OpenAI’s stock-based compensation is expected to reach 46 per cent of its revenue in 2025. This would be the highest among the 18 companies reviewed, apart from Rivian, which had no revenue in the year before its IPO.

 

OpenAI announces role with $555,000 pay

 

OpenAI founder Sam Altman has announced a new senior role at the company with an annual pay package of more than half a million dollars.

 

The position, called “Head of Preparedness”, will focus on reducing the risks associated with rapidly advancing AI systems. Altman described it as a crucial role as AI models continue to improve at speed.

 

“This will be a stressful job, and you'll jump into the deep end pretty much immediately,” Altman said.

 

The role offers compensation of $555,000 a year, along with equity. Altman said the job will involve helping cybersecurity teams use advanced AI tools while preventing attackers from misusing the same technology.