Can Anthropic’s Shadow Board Cripple Its IPO?
Anthropic plans to sell shares to the public in an initial public offering (IPO). But the company has a hidden system of control. An outside trust could have the power to control its board. The trust's job is to guide AI development in ways that benefit humanity. Investors are beginning to ask what will happen if this goal conflicts with the company's growth.
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Anthropic's Long-Term Benefit Trust owns just 5% of the company's shares, but it can choose four board members and block important company decisions.
Ben Bernanke, the former Chair of the Federal Reserve, is already a member of the trust. The trust's mission is to guide Anthropic's AI work for the long-term benefit of humanity.
The trust's power to block management decisions could make it harder for Anthropic to compete with OpenAI and Chinese AI companies.
The media and experienced investors have closely examined Anthropic's IPO documents. On Sunday, they discovered an organization called the Anthropic Long-Term Benefit Trust. It owns only 5% of Anthropic's shares. Among other things, it can give shares to non-profit organizations. More importantly, it appears to have control over Anthropic's board.
The Long-Term Benefit Trust can appoint most of the AI company's board members. It can choose 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 decisions to borrow money and sell more than half of the company.
Anthropic has already appointed a very influential person to the group that oversees the company. 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 common for one group or person to have the power to choose a company's board members. Several companies, including Meta (NASDAQ: META), Alphabet (NASDAQ: GOOG) and Ford (NYSE: F), use systems in which different classes of shares have different voting powers. However, the founders usually control these systems, likely because their main goal is to make the business financially successful. They also control the sale of all or part of the company.
The new trust could create major uncertainty about the AI company's advanced technology and future plans. If the LTBT decides that a management decision does not serve humanity's “long-term benefit,” what can the managers and the rest of the board do?
Anthropic is competing with advances in AI from China and major rivals such as OpenAI. Can it afford to have any of its plans blocked? So far, the federal government has not stepped into these decisions about how the company is run. Investors considering buying shares in the IPO may see the trust's power as a risk that could prevent Anthropic from developing new technology without interference.
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