CEO asked ChatGPT how not to pay a $250 million bonus, but got it wrong

When Changhan Kim, CEO of South Korean gaming company Krafton, decided he needed a way out of an expensive acquisition deal, he didn’t call his lawyers — he opened ChatGPT. The result is one of the most striking examples of warning about AI-assisted decision-making in corporate America, and ended with a Delaware judge ordering the company to reverse everything it had done.

A Delaware judge concluded that Kim used ChatGPT to engineer the removal of Ted Gill, CEO of Unknown Worlds Entertainment — the independent studio behind the underwater survival game Subnautica — from the company, to avoid paying a $250 million bonus.

Also read: CEO candidates who are not selected receive million-dollar bonuses as compensation

“Fearing that he had agreed to an unfavorable contract, Krafton’s CEO consulted an artificial intelligence chatbot to devise a corporate ‘takeover’ strategy,” Vice Chancellor Lori Will of the Delaware Court of Chancery wrote in her decision.

In 2021, Krafton, the publisher behind the global phenomenon PUBG: Battlegrounds, acquired Unknown Worlds Entertainment for $500 million. As part of the deal, Krafton agreed to pay an additional $250 million milestone bonus if the studio’s highly anticipated sequel, Subnautica 2, reaches certain sales numbers.

The contract also guaranteed that Unknown Worlds would remain independent, with co-founders Charlie Cleveland and Max McGuire, along with Gill, maintaining operational control — and could only be removed for cause.

Normally, meeting and even exceeding sales targets is a positive thing, but for Krafton, the problems began when their own internal projections showed that Subnautica 2 was well on track to trigger that payment.

When Maria Park, head of corporate development at Krafton, told Kim that a “for cause dismissal” wouldn’t free the company from the obligation to pay the $250 million bonus without exposing it to “lawsuit and reputational risk,” Kim turned to an AI chatbot for guidance.

Kim, upset by what he privately called an unfavorable settlement, ignored his own legal team and turned to ChatGPT for help. When the chatbot responded that the result bonus would be “difficult to cancel,” Kim didn’t accept the answer.

He insisted — and the chatbot responded with a detailed, multi-step corporate takeover strategy, dubbed “Project X.”

Project X

ChatGPT advised Kim to form an internal task force to renegotiate the bonus or force takeover of the studio; if negotiations failed, he suggested “locking” publishing rights on Steam and consoles and control over the game’s code; framing the entire conflict as being about “fan trust” and “quality,” not money; and prepare legal defense materials systematically, recording all communications.

The chatbot even suggested creating a public message to win over Subnautica fans — a message that Kim then asked ChatGPT himself to write.

The plan backfired spectacularly, alarming the gaming community and increasing suspicions that something was very wrong at the studio.

Throughout this entire process, Kim’s own team warned him that the strategy was dangerous, but he went ahead anyway. Cleveland, McGuire and Gill were all removed from their positions without the court finding it to be just cause.

Will concluded that Krafton improperly removed Unknown Worlds’ leadership and highlighted that executives are required to exercise independent human judgment — and not outsource decisions made in good faith to an AI.

Gill has now been reinstated as CEO, with authority to bring back the co-founders. The bonus period has been extended to compensate for the interruption.

Neither Krafton nor Unknown Worlds responded to Fortune’s requests for comment.