OpenAI has ended its policy requiring employees to complete a minimum tenure before their equity begins vesting, according to a report by The Wall Street Journal, citing people familiar with the matter. The move eliminates the company’s six-month “vesting cliff,” allowing equity to vest immediately upon joining.
The decision follows an earlier change in April, when the ChatGPT maker shortened its vesting cliff for new hires to six months from the industry-standard 12 months. With the latest update, OpenAI has now removed the vesting cliff altogether, a shift that signals greater flexibility in its employee compensation structure.
The change was reportedly communicated internally by Fidji Simo, chief-applications, OpenAI. The move is seen as an effort to encourage employees to take greater risks and focus on innovation without concerns about losing unvested equity in the event of early exits or layoffs.
Vesting cliffs are a common feature across the technology industry, designed to prevent companies from allocating equity to employees who leave within a short period. However, competition for elite AI talent has prompted several firms to revisit traditional compensation models.
OpenAI’s policy shift comes amid heightened competitive pressure in the artificial intelligence sector, with major players racing to attract and retain top researchers and engineers. The move underscores the growing importance of equity flexibility as AI companies seek to position themselves as employers of choice in an increasingly crowded and fast-moving market.
