Analyzing Power Distribution at Anthropic After IPO: The Roles of Founders, Benefit Trust, and Shareholders

What happened

As Anthropic approaches its Initial Public Offering (IPO), its corporate governance structure has drawn significant attention. Founded in 2021 with the goal of ensuring humanity can control and benefit from AI in the long term, Anthropic operates as a public benefit company committed to promoting AI safety. Despite adopting this complex governance model to maintain its mission, this structure severely limits the influence of common shareholders who purchase its public stock.

This unique arrangement goes beyond typical shareholder control, distributing corporate power across multiple stakeholders using intricate mechanisms to ensure the company's mission is not solely driven by financial interests.

Key details

Anthropic's governance architecture relies on three core control layers, supplemented by mutual checks and balances.

1. Long-Term Benefit Trust (LTBT): This independent panel holds power to guide the company's fundamental direction. The stock held by the LTBT enables it to elect and remove the majority of the company's board of directors (known as Class T directors), aimed at 'keeping the company focused on mission to benefit humanity.' Its members include global health expert Neil Shah, former Federal Reserve Chair Ben Bernanke, and others.

2. Founder Stock: The seven founders jointly hold a special class of stock that grants them 50.1% of the shareholder voting power, allowing them to elect three members of the board of directors. If there is no majority among the founders, their shares vote proportionally with common stock holders.

3. Board and Employee Veto: The board holds counter-power over the LTBT. If the LTBT nominates or removes a 'Specified' director, the board's nominating committee can decline to approve the move and refer the decision to a vote among company employees.

Why it matters

Anthropic's 'baroque' corporate governance style is a direct reflection of prioritizing AI safety over shareholder value. It adapts complex control mechanisms seen in other Silicon Valley companies, applying them to the mission-driven AI sector.

This structure sets a framework for potential shifts in power:

• If the founders' unified front fractures, common shareholders could gain more say than anticipated.
• If the board supports employee decisions, employees can overturn the LTBT's nominations to the board.

Currently, the LTBT's tenure is indefinite until 85% of common shareholders vote to end it, or it steps down with board approval. If all special classes of shares eventually disappear, common shareholders will gain ultimate control.

Who it affects

• For the founders, their control is not permanent; it ends ten years post-IPO, or automatically when fewer than three founders remain.
• For common shareholders, while the special classes of stock exist, they have almost no voice in major company decisions, including board composition.
• For LTBT and board members, they operate within a complex system of checks and balances, navigating the dynamic pressures from founders, common shareholders, and employees.

Anthropic was founded in 2021 to ensure humanity can control AI and benefit from it in the long-term. As the frontier lab approaches its initial public offering, however, there’s one class of humanity that is being shut out of control: anyone who buys its stock on public markets.

Complex structures that allow founders like Elon Musk or Mark Zuckerberg to control their public companies without owning most of them are nothing new in Silicon Valley. But Anthropic’s obsession with AI safety has resulted in a truly baroque style of corporate governance that will leave common shareholders with little say over most major decisions at the AI company, including who sits on its board.

First, Anthropic is a public benefit company — a for-profit corporation legally allowed to weigh a public mission alongside profit — with the goal of promoting AI safety. That status protects the board’s ability to make decisions about AI safety that aren’t driven entirely by shareholder value without being sued by angry investors.

Right now, the board is chaired by Anthropic president Daniela Amodei and includes CEO Dario Amodei (her brother), Netflix cofounder Reed Hastings, former Microsoft and GM CFO Christopher Liddell, Novartis CEO Vas Narasimhan, and Spark Capital partner Yasmin Razavi. There is one vacancy on the board.

Second, Anthropic has allocated significant control of its board to a Long-Term Benefit Trust (LTBT), an independent panel meant to keep the company focused on mission to benefit humanity. The trust owns a class of stock that gives it the ability to elect and remove a majority of the company’s board, known as Class T directors. The LTBT is chaired by Neil Shah, a global health expert who was managing director at GiveWell, a nonprofit that ranks charities, and includes former Federal Reserve chair Ben Bernanke, national security expert Richard Fontaine, and Harvard physicist Christopher Stubbs. There is one vacancy on the LTBT right now. The existing members will themselves choose who fills it.

Third, Anthropic’s seven founders also jointly own a special class of stock that gives a majority of them 50.1% of shareholder voting power, allowing them to elect three members of the board of directors. If, for whatever reason, there’s no majority among the founders, only then are their shares voted in proportion with holders of common stock.

Finally, the board can put a check on the LTBT. When the LTBT nominates a “Specified” one of its four directors, or removes that director without cause (that is, without alleging misconduct), the board’s nominating committee can decline to approve the move and throw the decision to the company’s employees for a vote.

Here’s what all that looks like:

**Image Credits:**Tim Fernholz/TechCrunch

The dynamics of such a complex structure are hard to predict. We’ve already seen one notable instance where a similar structure was essentially overthrown: OpenAI’s so-called blip, when OpenAI’s board briefly fired CEO Sam Altman over concerns that he was not being candid with them. Thanks to the loyalty of the company’s employees to Altman, the board backed down, reinstated him, and a new governance structure was put in place. Anthropic’s structure seems to formalize that kind of employee power.

At Anthropic, cracks in the founders’ unified front could lead to common shareholders having more say than expected, while employees can overrule the LTBT on board seats if they back the board over the assembled luminaries.

The founders’ control won’t last forever: Ten years after the IPO, the founders can choose to end their control of the company, or their control will end automatically when fewer than three of them remain. At that point, the LTBT will continue until 85% of common shareholders vote to end it, or it decides to step down with approval from the board.

If and when neither special class of shareholder exists any more — hopefully not because of an AI-driven catastrophe — common shareholders finally get control.

When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Tim Fernholz is a journalist who writes about technology, finance and public policy. He has closely covered the rise of the private space industry and is the author of Rocket Billionaires: Elon Musk, Jeff Bezos and the New Space Race. Formerly, he was a senior reporter at Quartz, the global business news site, for more than a decade, and began his career as a political reporter in Washington, D.C. You can contact or verify outreach from Tim by emailing [email protected] or via an encrypted message to tim_fernholz.21 on Signal.

View Bio

The original belongs to TechCrunch · AI and its authors and is reproduced here for reading. To have it removed, write to support@aisa.one.