Insights / November 24th, 2023

EP2: OpenAI Messiah is Resurrected (Altman 1 – OpenAI Board 0)

There’s only one thing worse than a poorly planned and/or executed termination of employment scenario...reinstatement. Like getting back with an ex… it is usually a toxic outcome! – (not advice).

It’s not entirely clear how the battle of the OpenAI board turned out so badly in relation to their decision to remove Sam Altman as CEO.  They cannot have contemplated that a decision to dismiss would result in the threat of mutiny, the potentially disloyal actions of a major investor and the ultimate resurrection (reinstatement) of the CEO who was somewhat mysteriously dismissed without public explanation and now almost as equally mysteriously reinstated.

We have seen this before, poorly executed terminations (particularly senior staff) resulting in potential or actual staff losses, financial loss, customer/client losses and damage to the reputation of the board and/or the company.

Part of the problem is that in conjunction with a planned process, you must also factor in:

  • Whether you have the support of other stakeholders.

  •  The type of person you are dealing with -their relationship with staff, customers and stakeholders.  

  • Are they going to ‘go around’ you and gain traction by engaging with those staff, customers and stakeholders?

In this case, it seems Microsoft was kept in the dark and ultimately appeared to implement moves that were contrary to the board’s interest/decision.  If you keep stakeholders in the dark, this will leave you open to scrutiny and potentially being undermined with any decision being overturned/reversed.

If you believe what you read in the newspapers, you would not be blamed for forming the view that Altman fits the profile of a ‘messianic’ leader - one who has a spell-like hold over the staff (and potentially other stakeholders).  

A key lesson here is that it is a mistake to move quickly and brutally on a messianic leader.  The strategy for doing so must be deployed over a period of time and must involve careful consideration as to how such an individual should be ultimately ‘revealed’ (generally the belief that staff have in such cult-like leaders is based on delusions or constructed truths) and removed.

There is one deeply concerning thing about what has happened here, Altman is on record as publicly saying that one of the ‘controls’ the board of OpenAI had available was that they could dismiss him.  The issue of ‘controls’ here relates to the ability of the board to manage the risk arising from the unregulated environment that OpenAI operates in, and the alleged danger of its potential if not carefully controlled.  That concern now seems to be realised with the board's ability to dismiss (and keep dismissed) undermined by Altman’s Lazarus-like resurrection (flashbacks to Miles Dyson in Terminator 2, with his hand on the detonator trigger, gasping for air).

Where to from here? This is not over. More lessons are being learned as more details are publicly exposed. Tune back for more as we closely watch the unfolding and how it applies to employment law.

Feel free to contact the authors and employment law specialists Joe Murphy or Zoe McQuillan.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.