OpenAI has scrapped the stock compensation restriction for new hires known as the "vesting cliff." The company is eliminating the practice that required employees to wait a set period after joining before they could exercise stock options, and will grant stock compensation rights immediately upon joining. The move is seen as a gambit to gain an edge as competition to recruit talent in the artificial intelligence (AI) industry has intensified recently.
On the 13th, the Wall Street Journal (WSJ) reported that OpenAI notified employees last week of this compensation policy change. A vesting cliff refers to the minimum period an employee who has received stock options or stock compensation must remain employed to exercise those rights. Typically, Silicon Valley tech corporations set a one-year vesting cliff to discourage early departures by new hires and encourage long-term tenure.
In April, OpenAI sharply shortened this period from the industry-standard one year to six months. This time, it went a step further and abolished the restriction period altogether. Fidji Simo, OpenAI applications institutional sector CEO, said the move is meant "to encourage new hires to take bold risks without fearing they will be fired before the first stock allocation date."
Industry watchers say the decision shows the AI talent war is turning into a "money game." That is because rivals such as Google, Meta and Anthropic are launching offensives by offering compensation packages exceeding $100 million (about 143 billion won) to recruit top-tier researchers. OpenAI is expected to spend $6 billion—nearly half of its revenue—this year on stock compensation expense alone.
Zahir Mahiuddin, co-founder of the tech industry salary data platform Levels.fyi, said, "Corporations that need to secure competitiveness are breaking with the traditional 'one-year vesting' practice," analyzing it as "a last-ditch measure by corporations to avoid losing talent."
Meanwhile, xAI, a rival led by Tesla CEO Elon Musk, also moved to recruit talent this summer by halving its vesting cliff period. xAI has struggled with hiring due to Musk's characteristic high-intensity work demands, frequent executive firings, and the recent ethical controversy surrounding its chatbot. Citing sources, the WSJ said, "xAI, which had trouble attracting talent because of Musk's 24-hour work philosophy and political moves, saw a higher offer acceptance rate after shortening its vesting period."