OpenAI made it significantly harder to remove CEO Sam Altman during its 2025 transition to a for-profit company, requiring a two-thirds supermajority vote to do so, according to court filings in a lawsuit from Elon Musk.
"Under the new Bylaws, a ⅔ supermajority of the PBC's nonemployee directors is now needed to fire the CEO," states an analysis by Columbia law professor David M. Schizer, who served as an expert witness for Musk.
The change represents a substantial increase from the simple majority required by the previous nonprofit board, which saw four of six members vote to remove Altman in late 2023 before he was quickly reinstated. Under the new structure with seven current voting directors, the same four votes would be insufficient to force a leadership change.
The new governance structure, which runs counter to accountability trends at major US corporations, is a key issue in Musk's lawsuit alleging OpenAI betrayed its founding mission. It also emerges as the company, with a $13 billion investment from Microsoft, reportedly explores an initial public offering.
The revelation comes from court documents filed in Musk's ongoing lawsuit against the AI company he co-founded. Musk alleges that he donated $38 million based on promises that OpenAI would remain a nonprofit dedicated to benefiting humanity, not a for-profit entity where the CEO is heavily entrenched.
The bylaw change occurred in October 2025 as OpenAI established its for-profit subsidiary. Altman's brief 2023 ouster was initiated by former board members concerned he was bypassing AI safety protocols and was not candid in his communications.
Under the new supermajority rule, Altman needs the support of just one-third of the board's nonemployee directors to remain CEO. Governance watchdogs generally criticize such requirements. According to proxy advisory firm ISS, the percentage of S&P 500 companies with supermajority rules has declined to just over one-third, placing OpenAI in a shrinking minority on corporate governance best practices.
The entrenchment of CEO Sam Altman through a supermajority vote requirement presents a dual-edged sword for investors. While it reduces the risk of leadership instability that rocked the company in 2023, it also weakens board oversight, a governance red flag. For a partner like Microsoft, leadership stability is paramount, but the move could attract regulatory scrutiny as OpenAI reportedly heads toward an IPO.
This article is for informational purposes only and does not constitute investment advice.
