“How OpenAI’s Bizarre Structure Gave 4 People the Power to Fire Sam Altman”, Paresh Dave2023-11-19 (Anthropic, OA)⁠:

…In 2023, OpenAI’s board started to shrink, narrowing its bench of experience and setting up the conditions for Sam Altman’s ouster. Reid Hoffman left in January, according to his LinkedIn profile, and he later cited potential conflicts of interest with other AI investments. Zilis resigned in March, and Hurd in July to focus on an unsuccessful run for US president.

Those departures shrank OpenAI’s board to just 6 directors, one less than the maximum allowed in its original bylaws. With Brockman, Sutskever, and Altman still members of the group, it was evenly split among executives and people from outside of OpenAI—no longer majority independent, as Altman weeks earlier had testified to US senators.

…The leadership upheaval threw OpenAI into crisis, but arguably the board functioned as intended—as an entity independent of the for-profit company and empowered to act as it sees necessary to accomplish the project’s overall mission. Sutskever and the 3 independent directors would form the majority needed to make changes without notice under the initial bylaws. Those rules allow for removals of any director, including the chair, at any time by fellow directors with or without cause…Amending the rules of OpenAI’s board isn’t easy—the initial bylaws place the power to do so exclusively in the hands of a board majority. As OpenAI investors encourage the board to bring Altman back, he has reportedly said he would not return without changes to the governance structure he helped create. That would require the board to reach a consensus with the man it just fired. [As of 2023-12-03, there do not seem to have been any major changes to governance structure other than possibly 2 non-voting observers added to the board.]

…OpenAI’s structure, once celebrated for charting a brave course, is now drawing condemnation across Silicon Valley. Marissa Mayer, previously a Google executive and later Yahoo CEO [which she famously mismanaged], dissected OpenAI’s governance in a series of posts on Twitter. The seats that went vacant this year should have been filled quickly, she said. “Most companies of OpenAI’s size and consequence have boards of 8–15 directors, most of whom are independent and all of whom has more board experience at this scale than the 4 independent directors at OpenAI”, she wrote. “AI is too important to get this wrong.”

Anthropic, a rival AI firm founded in 2021 by ex-OpenAI employees, has undertaken its own experiment in devising a corporate structure to keep future AI on the rails. It was founded as a public-benefit corporation legally pledged to prioritize helping humanity alongside maximizing profit. Its board is overseen by a trust with 5 independent trustees chosen for experience beyond business and AI, who will ultimately have the power to select a majority of Anthropic’s board seats.

Seth Berman, CEO of Ethical Compass Advisors, which helped Anthropic design its governance structure, says the team involved spent countless hours gaming out different options. The chosen design is supposed to create a balance of power. Directors chosen by trustees will have the votes to force their will, but they can’t do so without at least listening to the rest of the board. And a supermajority of shareholders can remove trustee-backed directors, but trustees get to choose replacements, he says. “You don’t want to put all the power in either of those camps, the not-for-profit or the for-profit”, Berman says.

Anthropic’s announcement of that structure acknowledged that the novel structure will ultimately be judged by its results. “We’re not yet ready to hold this out as an example to emulate; we are empiricists and want to see how it works”, the company’s announcement said.