OpenAI board considers special voting powers to prevent Elon Musk takeover

Poison pill another option

OpenAI was founded as a nonprofit in 2015 and created an additional “capped profit” entity in 2019. Any profit beyond the cap is returned to the nonprofit, OpenAI says.

That would change with OpenAI’s planned shift to a for-profit public benefit corporation this year. The nonprofit arm would retain shares in the for-profit arm and “pursue charitable initiatives in sectors such as health care, education, and science.”

Before making his offer, Musk asked a federal court to block OpenAI’s conversion from nonprofit to for-profit. The Financial Times article suggests that new voting rights for the nonprofit arm could address the concerns raised by Musk about the for-profit shift.

“Special voting rights could keep power in the hands of its nonprofit arm in future and so address the Tesla chief’s criticisms that Altman and OpenAI have moved away from their original mission of creating powerful AI for the benefit of humanity,” the FT wrote.

OpenAI could also consider a poison pill or a shareholder rights plan that would let shareholders “buy up additional shares at a discount in order to fend off hostile takeovers,” the FT article said. But it’s not clear whether this is a likely option, as the article said it’s just one that “could be considered by OpenAI’s board.”

In April 2022, Twitter’s board approved a poison pill to prevent a hostile takeover after Musk offered to buy Twitter for $43 billion. But Twitter’s board changed course 10 days later when it agreed to a $44 billion deal with Musk.