OpenAI has set a new benchmark for startup compensation, paying its employees more than any other tech company in recent memory. According to a report in The Wall Street Journal, the company’s stock-based awards now average about $1.5 million per employee, a figure lower than what most tech companies offer before going public.

The company employs approximately 4,000 people, and this level of compensation is unprecedented. For context, Google’s stock-based pay in 2003, a year before its IPO, was seven times less than OpenAI’s current packages. OpenAI’s payout is about 34 times more than what employees at 18 major technology firms received in the year before their IPOs, according to an analysis using Equilar data compiled by the Wall Street Journal.

The massive compensation packages reflect the fierce competition for AI talent. OpenAI is increasing equity payouts to top researchers and engineers to maintain its lead in the artificial intelligence race. These awards have made some employees among the wealthiest people in Silicon Valley. But the higher payouts are not without consequences – they are contributing to rising operating losses and diluting existing shareholders.

This summer, the struggle for talent intensified. Meta CEO Mark Zuckerberg reportedly offered AI researchers and senior executives salary packages worth hundreds of crores, and in some rare cases, up to $1 billion. The aggressive hiring drove more than 20 employees away from OpenAI, including ChatGPT co-creator Shengjia Zhao. In response, OpenAI gave one-time bonuses to select research and engineering staff, with some payouts in the millions of dollars.

Investor filings indicate that OpenAI expects stock-based compensation to grow further, potentially reaching $3 billion per year by 2030. The company has also removed the previous rule requiring employees to wait six months before vesting their equity, which could further increase total pay. By 2025, stock-based compensation is projected to account for 46 percent of OpenAI’s revenue, which would outpace almost every other tech company in recent history except Rivian, which had no revenue in its pre-IPO year.

Apart from high compensation, OpenAI is also creating senior roles with attractive packages. Founder Sam Altman recently announced a new position, “Head of Readiness,” with an annual salary of $555,000 plus equity. The role will focus on mitigating risks from rapidly evolving AI systems. “It’s going to be a stressful job, and you’re going to jump into the deep end right away,” Altman said. The position also involves helping cybersecurity teams utilize advanced AI tools and prevent attackers from exploiting the same technology.