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OpenAI Is Paying Employees More Than Any Major Tech Startup in History 24

Posted by BeauHD from the equity-is-the-new-salary dept.
OpenAI is paying employees more than any major tech startup in history, with average stock-based compensation hitting roughly $1.5 million per worker in 2025. "That is more than seven times higher than the stock-based pay Google disclosed in 2003, before it filed for an initial public offering in 2004," reports the Wall Street Journal. "The $1.5 million is about 34 times the average employee compensation of 18 other large tech companies in the year before they went public." From the report: To keep its lead in the AI race, OpenAI is doling out massive stock compensation packages to top researchers and engineers, making them some of the richest employees in Silicon Valley. The equity awards are inflating the company's heavy operating losses and diluting existing shareholders at a rapid clip. As an AI arms race intensified this summer, frontier labs such as OpenAI faced pressure to increase employee pay after Meta Platforms Chief Executive Mark Zuckerberg began offering pay packages worth hundreds of millions of dollars -- and in some rare cases $1 billion -- to top executives and researchers at rival companies.

Zuckerberg's recruiting blitz swept up 20-plus OpenAI personnel, including ChatGPT co-creator Shengjia Zhao. In August, OpenAI gave some of its research and engineering staff a one-time bonus, with some employees receiving millions of dollars, The Wall Street Journal previously reported. The financial data, shared with investors over the summer, shows that OpenAI's stock-based compensation was expected to increase by about $3 billion annually through 2030. The company recently told staff it would discontinue a policy that required employees to work at OpenAI for at least six months before their equity vests. That development could lead to further compensation increases.

OpenAI's compensation as a percentage of revenue was set to reach 46% in 2025, the highest of any of the 18 companies except for Rivian, which didn't generate revenue the year before its IPO. Palantir's stock-based compensation equaled 33% of its revenue the year before its IPO in 2020, Google's was 15% and Facebook's was 6%, the analysis shows. On average, each company's stock-based compensation made up about 6% of revenue among tech companies the Journal analyzed in the year before their IPOs, according to the Equilar data.

OpenAI Is Paying Employees More Than Any Major Tech Startup in History More | Reply

OpenAI Is Paying Employees More Than Any Major Tech Startup in History

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  • Hardly surprising (Score:3)

    by liqu1d ( 4349325 ) on Wednesday December 31, 2025 @06:14PM (#65893737)
    They've been given more money than any project I've ever known of especially given the lack of profit. Want the best you have to pay the best.
  • It's great that the people are being payed well, but as with other stock-based arrangements this only counts if it's immediately vested and can be sold. Even then if they all try to cash in it will lose most of its value.

  • The minimum price you need to pay people to help you screw up society.

  • They'll get 0 in the end (Score:4, Insightful)

    by AuMatar ( 183847 ) on Wednesday December 31, 2025 @06:38PM (#65893767)

    They can't sell those stock options on the open market. It's unlikely they are allowed to sell them at all right now. Even if they go IPO, they will likely be locked in for a significant period. And given the rate the company is burning money, it's highly unlikely to fetch anything near it's last valuation when it does go public. It's likely to fetch a fraction of that (and just going bankrupt is a distinct possibility). So yeah, when you're paying monopoly money you can give really high numbers. In the end, they will likely have made more working at any non-startup big tech company.

    • This. Stock options are zip until they're liquid. People learn this lesson in every startup boom.

      Which isn't to say they might not be worth millions... but their valuations now are basically fiction.

      • They can sell them if they choose to, and I'm sure they can find a buyer, possibly even above the current FMV, but there are consequences, typically in the form of losing their eligibility to receive anymore shares.

        • Usually not. They'd have to wait a few years, while remaining continuously employed, before being able to deliver the shares that they "sold" early. And due to clawback provisions, those shares would have a tendency to *poof* in a haze of smoke well before then if the company found out that they had been "sold" in advance.

          Personally, I wouldn't pay 10c to the dollar to someone offering their shares in advance....

        • Re: (Score:3)

          by AuMatar ( 183847 )

          They probably can't. There's limitations on the ability to sell pre-IPO options. Both legal limitations with SEC regs, and limitations by the terms of the agreement that gives them the options. Not being allowed to sell them at all pre-IPO unless given explicit permission by the company is pretty much universal. The company doesn't want to risk a hostile takeover via random entities buying stock options.

          • I'm aware of all of this, including the sophisticated investor rule. Let's just say I've got a bit of first hand knowledge. You're bound by a contract that says you can't sell without permission from some entity (usually the board of the company) that you had to agree to before you received any shares, but at the end of the day, there's really nothing anybody can do to prevent you from selling. If you disagree, then have a look:

            https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fforgeglobal.com%2Fsearch... [forgeglobal.com]

            The way shares end up there (or other places) i

            • Re: (Score:3)

              by AuMatar ( 183847 )

              I do disagree- it's frequently prohibited by the contracts you sign to get the options. It has been for every startup I've ever worked for.

              • it's frequently prohibited by the contracts you sign to get the options

                I'd be surprised if it ever wasn't. If something is yours, that is to say, it belongs to you, then you can always legally sell it, though you may have contractual obligations to meet if you do so. What you're likely thinking of is Right Of First Refusal, meaning you have to offer the company the option to buy these shares first under the exact same conditions that another buyer is willing to offer. Either way, so long as it is done in compliance with securities laws, a sale can still happen.

  • Cash those paychecks quickly, and don't count on much after March...
  • "The $1.5 million is about 34 times the average employee compensation of 18 other large tech companies in the year before they went public."
    So the others are getting $44k? Jeezuz.
  • There's a comment under the WSJ article I find worth repeating. WSJ user @LouisLin574 wrote: "They never talk about the fact that the vast majority of the stock grants go to the top executives. See how they say average not median. This is purely a recruiting tool and free PR hype. And all that stock can be worthless. It is just theoretical value at current arbitrary valuation."

  • Yes OpenAI may be one of the pinnacles of employment compensation at present, but I'm thinking there is very good pay in the entire AI creation industry these days. There's a lot more to it than crafting the architecture for the best LLM, there will be spinoff skillsets that pay very good money. The companies that generate training data for the AI companies are getting paid a huge amount of actual money. Come up with an original idea, it could be you.

    https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.techbuzz.ai%2Farticl... [techbuzz.ai]

  • You know what they're worth now? Zero.

  • How many datacenters will actually be built? How long can they keep raising money with *no* ROI?
    https://ancillary-proxy.atarimworker.io?url=https%3A%2F%2Fwww.wheresyoured.at%2Fth... [wheresyoured.at]

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