OpenAI revamps pay structure for new hires amid fierce AI talent race

OpenAI is changing how it pays new employees, scrapping a long-standing equity rule as competition for artificial intelligence talent reaches new highs.

The company has ended its requirement that new hires remain at OpenAI for a fixed period before earning their first tranche of equity, the Wall Street Journal reported. Until now, employees had to wait months before any shares vested, a practice known in the technology industry as a vesting cliff.

The change was communicated to staff last week by Fidji Simo, OpenAI’s head of applications, according to the Journal. The aim, people familiar with the matter said, is to give new hires greater security and encourage risk-taking without the fear of losing out on equity if they exit early.

OpenAI had already moved earlier this year to shorten its vesting cliff to six months from the more common one-year period. The latest step removes the waiting period altogether, placing the company among a small but growing number of AI firms rethinking compensation norms to stay competitive.

The shift reflects intensifying pressure in the market for AI researchers and engineers, where demand far outstrips supply. Rivals including Meta, Google, Anthropic and Elon Musk’s xAI have been offering increasingly rich pay packages, with total compensation in some cases running into tens of millions of dollars, the Journal reported.

With candidates fielding multiple offers, companies are finding that rigid employment terms can deter recruits or prompt early departures. “Companies are dropping traditional filters that once helped weed out short-term hires,” Zaheer Mohiuddin of compensation data firm Levels.fyi told the Journal.

The move comes despite growing concern over OpenAI’s spending on employee compensation. Financial documents reviewed by the Journal showed the company expects to spend around $6 billion this year on stock-based pay, close to half of its projected revenue. Some investors have privately raised concerns that such costs could weigh on long-term returns.

OpenAI is not alone in revising its approach. The Journal reported that rival xAI has also shortened its vesting period after facing retention and hiring challenges, with recruiters saying the change made offers easier to close.

As the AI boom reshapes labour markets, companies appear increasingly willing to rewrite established rules. For OpenAI, the decision signals that in the current cycle, securing scarce talent may matter as much as managing costs.