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by twoodfin 950 days ago
Your forward-looking value to an organization is your value whether it’s realized in equity or not.

In the world where Sam Altman leads OpenAI to market dominance and eventual acquisition by Microsoft for $400B or whatever, he obviously would represent an important part of what Microsoft would be buying and would be compensated accordingly.
2 comments
bcherny 949 days ago
If getting paid was his motive all along, wouldn’t taking equity have been a more straightforward way to do that?

Like, why would he not take equity, but instead rely solely on an acquisition?

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n2d4 950 days ago
No he wouldn't, if the CEO is substantially compensated for a $400B acquisition despite not owning equity that would be fraud. It's the CEO's fiduciary duty to act in the best interest of shareholders, if they take a $10bil cut for themselves that is $10bil that could've gone to the shareholders and hence not in their best interest.

It is the reason why CEOs (not Sam, apparently) are usually compensated in stock options. Golden parachutes are some sort of severance when the CEO gets fired immediately from the new company, eg. Twitter.

He's totally the guy who made OpenAI into ClosedAI, but money was clearly not his motivation.

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twoodfin 949 days ago
Steve Jobs ended up handsomely rewarded for his return to Apple well beyond whatever equity he held in NeXT. That’s the kind of ultimate compensation I’m talking about.

Yes, it’s a strategy that would/did require—among other chancey things—Altman to make a big bet on himself rather than OpenAI on him.

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LeafItAlone 950 days ago
Can they not be paid a (very substantial) retention bonus? I’ve know people at startups that had no equity that were paid retention bonuses during acquisitions. Is a CEO different here?
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n2d4 950 days ago
Yes, but not too substantial, or the shareholders have grounds to sue based on what I said above.

A similar (but even more complicated) case is currently going on over at Sculptor Capital Management, where former management is suing current management because they have chosen to go with a "worse" acquisition deal that would let current management stay on-board. This is despite shareholder approval to the "worse" deal. https://www.pionline.com/hedge-funds/ex-sculptor-executives-...

In fact, to prevent this situation is exactly why golden parachutes exist.

It's also totally unproportional compared to what Sam would've gotten if he owned equity.

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LightMachine 950 days ago
You completely miss OP's point. He is basically saying that the market value of Sam is appreciated regardless of his equity. And one example on how that is true is that whatever company Sam starts next will have an insanely high valuation from the go.
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n2d4 950 days ago
Of course that's true, but what's the point of building a decacorn company just so you have higher chances of building another decacorn company afterwards?

If money was his motivation, why wouldn't he spend his time building a company like that in the first place? As the head of YC, I don't think he would've had any trouble raising for anything, even prior to OpenAI.

Also, it's not really parent's "point" as you claim; they quite explicitly talk about compensation in case of acquisition.

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