The change to the “vesting cliff,” announced by applications chief Fidji Simo, is designed to encourage new employees to take risks without fear of being let go before accessing their first chunk of equity, according to people familiar with the matter.
OpenAI shortened its vesting period for new employees to six months from the industry standard of 12 months in April. Elon Musk’s xAI, an OpenAI competitor, made a similar change in the late summer, people familiar with the change said.
XAI didn’t respond to a request for comment.
The decision to loosen or do away with restrictions meant to ensure new hires stick around reflects the frenzied competition for top-tier technical talent within the AI industry. Tech companies typically have a one-year vesting cliff for new employees, preventing them from having to give away stock to hires who leave quickly or don’t work out.
But with AI companies including Meta Platforms, Google and Anthropic wooing top researchers with pay packages that can be worth $100 million or more, researchers and engineers have been able to hold out for the most-attractive terms, and in many cases have been quick to leave jobs they have found not to their liking.
OpenAI is already doling out far more stock-based compensation than other tech companies, owing to an intense talent war it is waging with its competitors. The company expects to spend $6 billion this year on such costs—almost half of its projected revenue—according to financial documents sent to investors over the summer and viewed by The Wall Street Journal.
Tech investors have privately complained about the ballooning stock-based compensation associated with fast-growing AI startups, arguing that it eats into shareholder returns.
“Companies that are needing to be more competitive are dropping the traditional first-year vesting cliff,” said Zaheer Mohiuddin, co-founder of Levels.fyi, a platform that gathers data on compensation in tech careers.
In August, after Meta Chief Executive Mark Zuckerberg launched a full-scale raid of OpenAI’s staff and offered giant pay packages, OpenAI gave some of its top researchers and engineers a one-time bonus, with some employees receiving millions of dollars, the Journal previously reported.
At xAI earlier this year, hiring managers were having to work harder to persuade potential recruits to be interviewed, according to people involved in hiring decisions at the time. Already facing a rash of departures and reputation issues, xAI quietly made the decision in the third quarter to shorten the vesting period for new hires, according to people familiar with the change.
Musk, who has said he works “every waking hour,” is known for expecting long, grueling hours of his employees and burning through executives who struggle to keep up with his demands. Since the summer, xAI has lost leaders in charge of X, legal, finance and engineering. One legal executive announced his departure on LinkedIn with a meme of a man in a suit shoveling coal.
In late 2024 and early 2025, Musk’s close political alliance with Donald Trump and his outspokenness on right-wing culture-war issues increasingly posed a challenge for his companies, with many Tesla buyers souring on the brand and at least two engineers publicly saying they left jobs at the company over Musk’s political activities.
At xAI, some product decisions created an additional image problem that came up in recruiting, the people involved in hiring said. In July, the company’s Grok chatbot published a series of antisemitic posts. Also that month, the company launched Ani, a racy animated chatbot with blond pigtails and revealing outfits. While some job applicants expressed interest in working on Ani, other prospects were deterred, some of the people said.
The rate at which recruits have been accepting xAI’s offers has increased since the startup implemented the shorter period, they said.
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