OpenAI completed a round of employee stock cash-outs at the end of last year, where over 600 current and former employees collectively cashed out $6.6 billion, with about 75 people cashing out the maximum of $30 million each.

Written by: Long Yue

Source: Wall Street Headlines

Recently, news about SK Hynix employees receiving an average bonus of 6.1 million RMB has gone viral—however, compared to the cash-outs of OpenAI employees, this figure may seem just "a small matter."

In October last year, OpenAI completed a rare large-scale employee stock cash-out. According to The Wall Street Journal, more than 600 current and former employees collectively cashed out $6.6 billion (approximately 48 billion RMB) in this round of transactions. Among them, about 75 people received the maximum—$30 million each.

This was the first large-scale cash-out since OpenAI raised the individual cash-out limit from the previous $10 million to $30 million. Reports quoting insiders state that this limit adjustment was made "at the request of investors."

The timing is also noteworthy: OpenAI requires employees to hold shares for two years before selling, which means this cash-out represents the first opportunity for many employees who joined the company only after the release of ChatGPT to truly convert paper wealth into real money.

7 Years 100 Times: The Moment of Cashing a "Lottery Ticket"

OpenAI first issued equity to employees 7 years ago. Reports indicate that the current book value of these shares has increased more than 100 times.

In comparison, the Nasdaq composite index has only tripled during the same period.

OpenAI is currently the highest-valued tech startup in the world, with its latest round of financing corresponding to a valuation of $852 billion.

This speed of wealth appreciation is also rare in the history of the tech industry. While hundreds of companies went public during the dot-com bubble, most employees had to wait a long time to cash out after the IPO, and some even walked away with nothing after the bubble burst. This time, OpenAI employees have completed large-scale cash-outs before the company has even gone public.

$30 Million Ceiling, Yet Some Still "Feel It’s Too Little"

This cash-out limit is set at $30 million per person, but for some top researchers and engineers, this amount still isn’t enough.

Previously, OpenAI set the cash-out limit at $10 million, which had already left some "core employees who could theoretically sell more" feeling dissatisfied.

In terms of compensation, OpenAI's offers are similarly aggressive. According to its website, some technical positions have annual salaries exceeding $500,000. Last August, there were reports that OpenAI awarded some employees one-time bonuses amounting to millions of dollars.

Last year, Meta offered up to $300 million in compensation packages to retain top researchers. The talent war across the entire AI industry has pushed salaries to unprecedented heights in modern tech history.

Wealth Effect: San Francisco Rents Have Increased, and Some Are Starting to Donate

The $6.6 billion cash-out is more than just a set of numbers.

This wave of wealth is driving up rents in San Francisco and raising concerns about the increasing wealth disparity within the city.

Some employees have chosen another way to handle this money—putting the remaining stocks into donor-advised funds, a type of charitable investment account committed to charitable uses while also enjoying tax deductions for the current year. Reports indicate that some ordinary employees who did not expect to receive such wealth have also joined the ranks of donors.

At the executive level, the scale of wealth is even more astonishing. OpenAI President Greg Brockman testified in court this week that his equity is valued at approximately $30 billion. CEO Sam Altman stated that he does not hold shares in the company, citing the company's non-profit origins—however, reports suggest that some investors expect that if he wins a legal battle with Musk regarding OpenAI's transformation, he will receive equity.

IPO is Yet to Come, with Greater Wealth Effects Ahead

This cash-out is merely a preview.

OpenAI and Anthropic are preparing for their respective IPOs, which will be among the largest listings in tech history. At that time, thousands of ordinary employees will have the opportunity to sell their stocks, many of whom will become millionaires overnight.

The Wall Street Journal characterized this cash-out as "a preview of the wealth flood that is about to pour into San Francisco and other tech hubs."

In comparison to the story of SK Hynix: the 6.1 million RMB bonuses for Hynix employees are based on the semiconductor super cycle and bets on HBM technology, backed by the cyclical shifts of the entire industry. OpenAI employees' wealth, however, comes from the valuation explosion of a single company during the AI wave—and this company's door to going public has yet to open.