OpenAI is considering granting special voting rights to its nonprofit board in response to a recent takeover bid from Elon Musk, who is reportedly unhappy with the company’s shift towards generating profits over its original mission of creating AI for humanity.
As part of its transition into a for-profit entity, OpenAI operates as a hybrid organization, with both its capped-profit arm and nonprofit side controlled by a nonprofit board. However, this structure has led to criticism that the company is abandoning its founding mission.
To address these concerns, OpenAI’s leaders are exploring new governance options, including giving the nonprofit board special voting rights. This move could help preserve some of the board’s powers and protect it from hostile-takeover bids, allowing it to maintain control over the company’s operations.
The proposed plans involve spinning out the nonprofit arm, which will focus on charitable initiatives, while transforming the for-profit side into a public benefit corporation. The for-profit arm would then be free to court investors and raise funds, but the nonprofit board would still have some influence over the company’s direction.
OpenAI has promised to complete the transition by late 2026 as part of its latest funding round, valued at $157 billion. However, Elon Musk’s takeover bid has raised concerns about how the company will value its nonprofit assets and play a role in its new corporate structure.
Source: https://fortune.com/2025/02/18/openai-powersnon-profit-board-hostile-takeover-elon-musk