> If it turns out those were not ultimately motivated by actual concern for the good of the company then they have a lot of problems.
The boards duty is to to the charitable mission, not any other concept of the “good of the company”, and other than the government if they are doing something like pursuing their own private profit interest or acting as an agent for someone elses or some other specific public wrongs, the people able to make a claim are pretty narrow, because OpenAI isn't membership-based charity in which there are members to whom the board is accountable for pursuit of the mission.
People keep acting like the parent organization here is a normal corporation, and its not, and even the for-profit subsidiary had an operating agreement subordinating other interests to the charitable mission of the parent organization.
I don't think you can wave away your duty of care to close to a thousand people based on the 'charitable mission' and I suspect that destruction of the company (even if the board claims that is in line with the company mission) passes that bar.
I could be wrong but it makes very little sense. Such decisions should at a minimum be accompanied by lengthy deliberations and some very solid case building. The non-profit nature of the parent is not a carte-blanche to act as you please.
Board members are supposed to exercise diligence and prudence in their decisions. They are supposed to take into account all of the results of their actions and they are supposed to ensure that there are no conflicts of interest where their decisions benefit them outside of their role as board members (if there are they should abstain from that particular vote, assuming they want to be on the board in the first place with a potential or actual conflict of interest). Board members are ultimately accountable to the court in the jurisdiction where the company is legally established.
The thing that doesn't exist is a board that is unaccountable for their actions and if there are a thousand people downstream from your decisions that diligence and prudence translates into a duty of care and if you waltz all over that you open yourself up to liability.
It's not that you can't do it, it's that you need to show your homework in case you get challenged and if you didn't do your homework there is the potential for backlash.
Note that the board has pointedly refused to go on the record as to why they fired Altman and that by itself is a very large indicator that they did this with insufficient forethought because if they had there would be an iron clad case to protect the board from the fall out of their decision.
> Board members are supposed to exercise diligence and prudence in their decisions.
Yes, and if they fail to do so in regards to the things they are legally obligated to care for, like the charitable mission, people who have a legally-cognizable interest in the thing they failed to pursue with diligence and prudence have a claim.
But whose legally cognizable interest (and what specific such interest) do you think is at issue here?
> The thing that doesn't exist is a board that is unaccountable for their actions
Sure, there are specific parties who have specific legally cognizable interests and can hold the board accountable via legal process for alleged failures to meet obligations in regard to those specific interests.
I’m asking you to identify the specific legally-cognizable interest you believe is at issue here, the party who has that interest, and your basis for believing that it is a legally-cognizable interest of that party against the board.
We're going around in circles I think but to me it is evident that a somewhat competent board that intends to fire the CEO of the company they are supposed to be governing will have a handy set of items ready: a valid reason, minutes of the meeting where all of this was decided where they gravely discuss all of the evidence and reluctantly decide to have to fire the CEO (handkerchiefs are passed around at this point, a moment of silence is observed), the 'green light' from legal as to whether that reason constitutes sufficient grounds for the dismissal. Those are pre-requisites.
> Yes, and if they fail to do so in regards to the things they are legally obligated to care for, like the charitable mission, people who have a legally-cognizable interest in the thing they failed to pursue with diligence and prudence have a claim.
I fail to see the correlation between 'blowing up the entity' by a set of ill advised moves and 'taking care of the charitable mission'.
The charitable mission is not a legal entity and so it will never sue, but it isn't a get-out-of-jail-free card for a board that wants to decide whatever it is that they've set their mind to.
> But whose legally cognizable interest (and what specific such interest) do you think is at issue here?
For one: Microsoft has a substantial but still minority stake in the for-profit, there are certain expectations attached to that and the same goes for all of the employees both of the for-profit and the non-profit whose total compensation was tied to the stock of OpenAI, the for profit. All of these people have seen their interests be substantially harmed by the board's actions and the board would have had to balance that damage with the weight of the positive effect on the 'charitable mission' in order to be able to argue that they did the right thing here. That's not happening, as far as I can see it, in fact the board has gone into turtle mode and refuses to engage meaningfully, two days later they did it again and fired another CEO (presumably this is still in line with protecting the charitable mission?).
> Sure, there are specific parties who have specific legally cognizable interests and can hold the board accountable via legal process for alleged failures to meet obligations in regard to those specific interests.
Works for me.
> I’m asking you to identify the specific legally-cognizable interest you believe is at issue here, the party who has that interest, and your basis for believing that it is a legally-cognizable interest of that party against the board.
See above, if that's not sufficient then I'm out of ideas.
> We're going around in circles I think but to me it is evident that a somewhat competent board that intends to fire the CEO of the company they are supposed to be governing will have a handy set of items ready: a valid reason, minutes of the meeting where all of this was decided, the 'green light' from legal as to whether that reason constitutes sufficient grounds for the dismissal. Those are pre-requisites.
I think the difference here is that I am fine with your belief that this is what a competent board should have, but I don't think this opinion is the same as actually establishing a legal duty.
> The charitable mission is not a legal entity and so it will never sue, but it isn't a get-out-of-jail-free card for a board that wants to decide whatever it is that they've set their mind to.
The charitable mission is the legal basis for the existence of the corporation and its charity status, and the basis for legal duties and obligations on which both the government (in some cases), and other interested parties (donors,
and, for orgs that have them, members) can sue.
> For one: Microsoft has a substantial but still minority stake in the for-profit, there are certain expectations attached to that and the same goes for all of the employees both of the for-profit and the non-profit whose total compensation was tied to the stock of OpenAI, the for profit
Given the public information concerbing the terms of the operating agreement (the legal basis for the existence and operation of the LLC), unless one of those parties has a non-public agreement with radically contradictory terms (which would be problematic for other reasons), I don't think there can be any case that the OpenAI, Inc., board has a legal duty to any of those parties to see to the profitability of OpenAI Global LLC.
> I think the difference here is that I am fine with your belief that this is what a competent board should have, but I don't think this opinion is the same as actually establishing a legal duty.
I don't think we'll be able to hash this out simply because too many of the pieces are missing. But if the board didn't have those items handy and they end up being incompetent then that by itself may end up as enough grounds to show they violated their duty of care. And this is not some nebulous concept, it actually has a legal definition:
I went down into this rabbit hole a few years ago when I was asked to become a board member (but not of a non-profit) and I decided that the compensation wasn't such that I felt that it offset the potential liability.
> The charitable mission is the legal basis for the existence of the corporation and its charity status, and the basis for legal duties and obligations on which both the government (in some cases), and other interested parties (donors, and, for orgs that have them, members) can sue.
Indeed. But that doesn't mean the board is free to act with abandon as long as they hold up the 'charitable mission' banner, they still have to act as good board members and that comes with a whole slew of luggage.
> Given the public information concerning the terms of the operating agreement (the legal basis for the existence and operation of the LLC), unless one of those parties has a non-public agreement with radically contradictory terms (which would be problematic for other reasons), I don't think there can be any case that the OpenAI, Inc., board has a legal duty to any of those parties to see to the profitability of OpenAI Global LLC.
It is very well possible that the construct as used by OpenAI is so well crafted that it insulates board members perfectly from the fall-out of whatever they decide, but I find that hard to imagine. Typically everything down stream from the thing you govern (note that they retain a 51% stake and that that alone may be enough to show that they are in control to the point that they can not disclaim anything) is subject to the duties and responsibilities that board members usually have.
It's pretty standard to get DAO insurance which covers errors, omissions, and negligence, as a board member.
At any rate, we don't know that the board doesn't have those minutes. I see no reason to assume they've failed duty of care.
And being a non-profit does, in fact, give the board sole right to so much as dissolve the entire company and donate the proceeds to Anthropic if they decide in five minute zoom call, of their own discretion, that doing so aligns best with mission statement in its charter.
DAO insurance doesn't cover malice and purposeful destruction.
If the minutes exist I'm sure they'll be leaked, if they don't they're in trouble. ANd if you don't see any reason to assume they've failed their duty of care that is fine by me but I think the last few days alone pretty much confirm that they did not.
The boards duty is to to the charitable mission, not any other concept of the “good of the company”, and other than the government if they are doing something like pursuing their own private profit interest or acting as an agent for someone elses or some other specific public wrongs, the people able to make a claim are pretty narrow, because OpenAI isn't membership-based charity in which there are members to whom the board is accountable for pursuit of the mission.
People keep acting like the parent organization here is a normal corporation, and its not, and even the for-profit subsidiary had an operating agreement subordinating other interests to the charitable mission of the parent organization.