In [22]: # openai_anthropic.ipynb
Abstract
OpenAI and Anthropic are the two largest frontier AI labs by revenue and employee count, and the two highest-profile destinations for senior ML engineer compensation in 2026. Following its October 2025 recapitalization, OpenAI now grants conventional equity in OpenAI Group PBC (a public benefit corporation), replacing the capped Profit Participation Unit (PPU) structure it used previously. Anthropic uses capped pre-IPO option grants with mechanics designed to balance employee upside against the company's mission-control governance. Senior L5 total compensation at OpenAI is approximately $700,000 to $1,100,000; at Anthropic approximately $650,000 to $1,000,000 [1].
1 Bands triangulated from Levels.fyi OpenAI, Levels.fyi Anthropic, and public reporting in The Information and Bloomberg. Equity and option terms vary by cohort and offer; candidates should request explicit terms.
table oa-1 : total comp
| Level | OpenAI TC | Anthropic TC | Note |
|---|---|---|---|
| L4 / Mid-senior | $520k - $750k | $480k - $700k | Both use non-standard titling; entry-to-mid track |
| L5 / Senior | $700k - $1.1M | $650k - $1.0M | Equity-driven; refresh cadence active |
| L6 / Staff | $1.0M - $1.6M | $950k - $1.5M | Slot-limited; named role variation |
| L7 / Principal | $1.5M - $2.5M+ | $1.4M - $2.3M+ | Very small population at this band |
Figure oa-1. OpenAI vs Anthropic total compensation by L-equivalent level, May 2026. Both labs use non-standard internal titling; mapping to the L4-L7 ladder is approximate.
section oa-2 : from PPUs to PBC stock
Until late 2025, OpenAI's compensation was unusual among frontier AI labs: the company operated under a capped-profit structure (a for-profit operating entity with a cap on investor returns, governed by a non-profit parent), and employees received Profit Participation Units (PPUs) rather than conventional equity. A PPU was a contractual right to a share of OpenAI's profit distributions, subject to a stated per-unit cap, rather than an ownership stake.
That structure ended on 28 October 2025. After approval from the California and Delaware attorneys general, OpenAI converted its for-profit entity into OpenAI Group PBC (a public benefit corporation), with the renamed OpenAI Foundation retaining control. The OpenAI Foundation holds roughly 26 percent of the PBC, Microsoft roughly 27 percent, and employees and other investors the remaining roughly 47 percent. Outstanding PPUs converted into PBC shares and the prior return cap was removed, so equity value now tracks the company's valuation without a contractual ceiling.
For ML engineers evaluating OpenAI offers in 2026, the practical implication is that new grants are conventional equity (restricted stock units or options in OpenAI Group PBC) on a standard 4-year vesting schedule, rather than capped PPUs. Realisation still depends on a liquidity event: OpenAI has run periodic employee tender offers and has signalled an eventual IPO, but vested equity remains illiquid until one of those occurs.
Tax treatment now follows conventional equity rules rather than the old PPU distribution model. RSUs are taxed as ordinary income at vesting (or at the vesting-plus-liquidity event for double-trigger grants); NSO options are taxed on the spread at exercise. For an ML engineer in California, the combined marginal federal-plus-state rate at these compensation levels approaches 50 percent, so the timing of vesting events and tender-offer sales is the main tax-planning lever.
section oa-3 : option mechanics
Anthropic uses pre-IPO option grants with capped value mechanics. The cap structure is designed to balance employee upside against the company's long-term mission-control governance (Anthropic's stated long-term governance model emphasises continued employee and founder alignment with its safety-focused mission). The detailed cap mechanics are non-public, but in functional terms, options vest over 4 years with conventional cliffs.
The cap structure means that even if Anthropic's eventual public-market valuation grows substantially, the realisable value per option is bounded above. For most ML engineers, the cap is set at levels that still allow meaningful upside (the cap binds in extreme high-valuation scenarios), but the headline maximum realisable value is lower than an uncapped pre-IPO option at a peer lab. The cap structure also affects how Anthropic equity should be valued relative to OpenAI's PBC equity or to standard pre-IPO options at smaller frontier labs.
Vesting and exercise mechanics are conventional. Options typically have a 10-year expiration from grant date and require exercise before that date or before separation from the company. Anthropic has run periodic tender offers (most recently in 2024 to 2025) that allow employees to sell a portion of vested equity at secondary-market valuations; this provides intermittent liquidity without requiring full company exit. Tender-offer participation is at the company's and outside investors' discretion and is not guaranteed.
Tax treatment: Anthropic options are typically NSOs (non-qualified stock options), which means exercise triggers ordinary income tax on the spread between strike price and current fair-market value. For options exercised at high spread, the tax bill at exercise can be substantial and is owed in cash even though no actual cash has changed hands. Exercise timing matters; many Anthropic employees exercise vested options at tender-offer events to align tax with cash availability.
section oa-4 : common questions
What is the average salary at OpenAI for ML engineers?
Senior (L5-equivalent) ML engineer total compensation at OpenAI in 2026 is approximately $700,000 to $1,100,000, comprising base salary $280,000 to $400,000 and equity grants whose annualised paper value is $400,000 to $700,000. Since OpenAI's October 2025 recapitalization into OpenAI Group PBC, these grants are conventional equity (restricted stock units or options); they replaced the capped Profit Participation Unit (PPU) structure OpenAI used before the restructuring.
What is the average salary at Anthropic for ML engineers?
Senior (L5-equivalent) ML engineer total compensation at Anthropic in 2026 is approximately $650,000 to $1,000,000, comprising base salary $260,000 to $380,000 and pre-IPO equity option grants whose annualised paper value is $390,000 to $620,000. Anthropic uses a capped-option structure designed to balance employee upside against the company's long-term mission-control governance. The cap mechanics are not fully public; candidates should ask for the specific cap structure on any offer.
How does OpenAI equity work after the 2025 restructuring?
On 28 October 2025 OpenAI converted its capped-profit for-profit entity into OpenAI Group PBC, a public benefit corporation controlled by the renamed OpenAI Foundation, after approval from the California and Delaware attorneys general. The conversion removed the previous return cap and converted employees' Profit Participation Units (PPUs) into conventional PBC shares; new grants are stock-based (RSUs or options) vesting over a standard 4-year schedule. Equity is taxed under normal rules (ordinary income for RSUs at vesting, NSO spread at exercise) rather than the old PPU model of ordinary income at profit distribution. The equity remains illiquid until a tender offer or IPO; OpenAI has run periodic tender offers and has signalled an eventual public listing.
Are Anthropic options exercisable like standard ISOs?
Anthropic options are pre-IPO instruments with vesting and exercise rules similar to standard private-company options, but with specific cap-structure modifications that affect the maximum realisable value. The detailed terms are negotiated per offer and per cohort. Candidates evaluating Anthropic offers should ask explicitly: what is the strike price, what is the vesting schedule and cliff, what is the cap structure, what is the recent history of tender offers or liquidity events. For tax purposes, options are typically NSOs (non-qualified stock options) at this scale of private company.
Which pays more, OpenAI or Anthropic, for senior ML engineers?
OpenAI typically pays approximately 5 to 10 percent higher headline total compensation at L5 and L6 levels, reflecting its larger revenue base and longer history of established PPU distribution. Anthropic's compensation is competitive but slightly below in median terms. The choice between the two for most senior ML engineers is rarely driven by the 5 to 10 percent comp difference; it is driven by research focus, team fit, organisational culture, and the candidate's view of which lab's strategy is more likely to succeed long-term. Both are competitive top-of-market offers.
How risky is OpenAI or Anthropic equity compared to public-company RSUs?
Substantially riskier. Both companies are pre-IPO with illiquid equity instruments. Realisation depends on either tender-offer participation (which both companies have run periodically), an eventual IPO, or an acquisition. The downside risk is the company failing to monetise foundation-model capability at scale sufficient to support current valuations. OpenAI and Anthropic both have substantial revenue and broad commercial deployments, which reduces this risk relative to earlier-stage frontier labs, but the equity remains illiquid and contingent until a defined liquidity event.
How do offers from xAI, Mistral, and Cohere compare?
xAI offers are comparable to OpenAI and Anthropic for senior ML engineers, with base salaries in similar ranges and pre-IPO equity grants tied to xAI's current private-market valuation. Mistral offers in Paris are materially lower in base salary (EUR-denominated, France labour-market norms) but with European-tax-favourable equity structures; total compensation in euro terms is competitive. Cohere offers in Toronto and SF are below US-frontier-lab averages on base salary but competitive on equity. All four labs operate in the same talent pool and compete for similar candidates; offer packages converge on rough parity in risk-adjusted total comp.