Microsoft to Become Non-Voting Observer in Latest Shake-up of OpenAI Board
Nov. 29, 2023 5:30 PM PST · Comments by Robert Dvorak and Daniel Poarch
Microsoft is to become a non-voting observer on the non-profit board that governs OpenAI, newly reinstated CEO Sam Altman told employees on Wednesday, while confirming he had officially rejoined the firm.
Microsoft’s new status will give it some insight into the board’s deliberations, but it won’t have a vote, thereby limiting its ability to influence decisions. Microsoft is the biggest shareholder in OpenAI, with a more than 49% stake in its profits, but OpenAI’s charter severely limits the power of investors in its governance. Microsoft executives had been given little notice by the outgoing board’s decision to fire Altman.
THE TAKEAWAY
• Microsoft will have non-voting role
• Former directors Sutskever, Toner, McCauley off board
• Role of former chief scientist Sutskever to be determined
A newly reconstituted board, put in place as part of a deal struck to reinstate Altman after his surprise firing, includes Chair Bret Taylor, the former Salesforce co-CEO, former Treasury Secretary Larry Summers, as well as Quora CEO Adam D’Angelo, who was already on the board. Altman, as part of his compromise to rejoin the firm, is not a director.
In a memo to employees, Altman also said Mira Murati, who was briefly appointed interim CEO following Altman’s firing, is returning to her role as chief technology officer. Murati had been replaced by former Twitch CEO Emmett Shear as interim CEO for a couple of days, before a staff rebellion helped persuade the OpenAI board to reinstate Altman.
Greg Brockman, who was ousted from the board of directors and resigned from the company shortly after Altman’s firing, is returning as president and will not rejoin the board.
As part of the board shakeup, directors Helen Toner, Tasha McCauley and Ilya Sutskever left the board, according to a person familiar with the matter. That finalizes a change, underway since last Tuesday, when the company announced a three-person board that did not include Toner, McCauley or Sutskever. There continues to be a search for additional board members, according to the person.
Altman said the role of Sutskever, previously the company’s chief scientist and a member of the six-person board that fired Altman, is still being determined. “While Ilya will no longer serve on the board, we hope to continue our working relationship and are discussing how he can continue his work at OpenAI,” Altman said. The incoming board will oversee an independent review into the recent events, Altman said.
In a post on X, the site formerly known as Twitter, Wednesday evening, Altman addressed the board’s allegations that he had not been “consistently candid” with its members, limiting their ability to oversee the company. “It is clear that there were real misunderstandings between me and members of the board,” he wrote.
The board members who fired Altman on November 17 have never specified what led to their decision except to cite a lack of candor on Altman’s part. But in the weeks leading up to his temporary ouster, Altman argued with board member Toner over a paper she wrote about AI safety and tried to get her off the board, The Information reported last week. And employees had argued over AI safety, or whether the company had adequate safeguards to ensure fast developments in AI would not harm humanity.
Toner, in a post on X Wednesday evening, said “our decision was about the board's ability to effectively supervise the company,” and “we were not motivated by a desire to slow down OpenAI’s work.”
OpenAI was founded as a nonprofit in 2015 but restructured four years later to bring in outside investors and accelerate the pace of its development. As part of that process, the organization established a for-profit subsidiary. In an unusual arrangement, the non-profit board controls the for-profit unit and is beholden to a mission of “ensuring the creation and adoption of safe and beneficial” artificial general intelligence, rather than financial incentives.
That structure has limited Microsoft, which has invested more than $11 billion in the company, and venture investors such as Thrive Capital and Khosla Ventures from holding traditional voting roles. Only a minority of board members can hold financial stakes in the for-profit entity at one time, and only board members without a financial stake can vote on decisions where there is a potential conflict between financial stakeholders and the nonprofit’s mission, according to the company.
A board observer seat gives Microsoft the right to attend regular board meetings but not the voting power or the right to participate in discussions.
In his note to staff, Altman suggested the company’s governance structure could soon change. Taylor, the new board chair, also said in a separate note to employees that one of the board’s top priorities was improving its governance structure “so that all stakeholders – users, customers, employees, partners, and community members – can trust that OpenAI will continue to thrive.”
The Verge first reported on the memo.