OpenAI is paying its 4,000 employees an average of $1.5 million each in stock-based compensation for 2025, according to financial documents reviewed by investors and reported by the Wall Street Journal. The figure represents the highest average compensation ever recorded for a tech startup and consumes nearly half of the company's projected 2025 revenue.
The $1.5 million per employee average is 34 times higher than pre-IPO norms for major technology companies. It surpasses Google's 2003 pre-IPO stock grants by more than sevenfold and dwarfs Facebook's 6% revenue allocation to stock compensation before its 2012 public offering.
Meta's aggressive talent poaching campaign triggered the compensation surge. CEO Mark Zuckerberg offered packages worth hundreds of millions, with some reaching $1 billion, to lure OpenAI researchers. Meta recruited over 20 OpenAI employees earlier this year, including ChatGPT co-creator Shengjia Zhao.
OpenAI responded with multimillion-dollar retention bonuses in August and eliminated its six-month equity vesting cliff. Employees can now access stock awards immediately instead of waiting half a year, a move designed to counter Meta's recruitment blitz.
Stock-based compensation now accounts for 46-50% of OpenAI's projected 2025 revenue, compared to the 6% average for mature tech companies before their IPOs. The company expects these costs to increase by approximately $3 billion annually through 2030 as it continues hiring and accelerating AI model development.
The compensation strategy creates a financial paradox for OpenAI. While necessary to retain top AI talent in a fiercely competitive market, the equity-heavy packages contribute to widening operating losses and dilute existing shareholders. Traditional tech companies typically allocate single-digit percentages of revenue to stock compensation in pre-IPO years.
OpenAI's pay structure reflects what game theory describes as a "prisoner's dilemma" in the AI talent war. No single company can afford restraint when competitors offer billion-dollar packages, even though collective restraint would benefit all participants through lower costs and less diluted equity.
The company recently created a Head of Preparedness role focused on AI safety, risk mitigation, and cybersecurity. The position carries a $555,000 base salary plus significant equity, according to CEO Sam Altman, who warned it would be "a stressful job" requiring immediate immersion in high-stakes challenges.
Founded in 2015 as a nonprofit, OpenAI shifted to a capped-profit model in 2019 to attract outside investment. The company completed a restructuring earlier this year that established a hybrid structure with a public benefit corporation for commercial operations and the original nonprofit foundation retaining control.
As generative AI becomes central to corporate strategy worldwide, researchers and engineers with relevant expertise command unprecedented compensation. The escalating talent war pushes AI development economics into uncharted territory, raising questions about long-term financial sustainability beyond the current investment boom.
