Can Anthropic’s Shadow Board Cripple Its IPO?
Anthropic’s planned IPO has a hidden power structure. An outside trust could control most of the company’s board. Its job is to guide AI development for the good of humanity. Investors are beginning to ask what will happen if this goal conflicts with the company’s business interests.
News reporters and experienced investors have carefully studied Anthropic’s IPO documents. On Sunday, they found a group called the Anthropic Long-Term Benefit Trust. It owns only 5% of Anthropic’s shares. Among other things, it can give shares to nonprofit organizations. More importantly, it appears to have control over the company’s board.
The Long-Term Benefit Trust can choose most of the AI company’s board members. It can appoint four members. According to The Wall Street Journal, “Trustees can also block corporate actions. Its mandate is to steer AI for humanity’s long-term benefit.” Board members do not get paid. The trust also has some power over the company taking on debt and selling more than half of the business.
Anthropic has already appointed a powerful person to this oversight group. In a government filing, the company announced: “Anthropic’s Long-Term Benefit Trust (LTBT) has appointed Dr. Ben Bernanke, a Distinguished Fellow at the Brookings Institution and former Chair of the Federal Reserve, as its newest member.” Dr. Neil Buddy Shah, the CEO of the Clinton Health Access Initiative, has also been appointed.
It is not unusual for one person or group to have the power to choose a company’s board members. Many companies, including Meta (NASDAQ: META | META Price Prediction), Alphabet (NASDAQ: GOOG) and Ford (NYSE: F), have two classes of shares with different voting rights. However, founders almost always control these systems, likely because making the business financially successful is their main goal. They also control the sale of all or part of the company.
This new group could create a great deal of uncertainty about Anthropic’s advanced AI work. If the LTBT decides that a management decision does not serve the company’s long-term benefit, what can the managers and the rest of the board do?
Anthropic is racing to keep up with advances in Chinese AI and those of major competitors such as OpenAI. Can it afford to have any of its plans blocked? So far, the federal government has not stepped into this governance issue. Investors considering the IPO may see the trust’s power as a risk that could stop Anthropic from developing new technology without interference.