A hot potato: On Sunday, Nvidia’s board said it continued to have confidence in Jensen Huang. This trust lasted all of three days. The board is now reportedly preparing to oust him. Directors are scheduled to meet as early as Wednesday to decide the future of the man who co-founded the chip maker in 1993 and remains the only CEO the company has ever had. The turning point came after a second extramarital affair came to light, this time with an Nvidia executive who reported directly to him.
The Wall Street Journal reported the board’s plans on Wednesday, citing people familiar with the matter. Another source told Reuters that the directors met that same evening. Nvidia shares fell about 8% in after-hours trading.
The board first launched an investigation on Sunday, the same day that Huang wrote to his entire staff that he had been unfaithful to his wife. The woman involved is Alice Huang – no relation – who was an executive at Singapore-based Megaspeed, one of Nvidia’s largest customers.
The catch: US intelligence officials believe she is an employee of the Chinese secret service. Beijing has rejected the claims, Megaspeed denies wrongdoing and Nvidia has described its handling of it as routine.
At the time, the board said it had no reason to believe that national security or company secrets had been compromised. But on Wednesday, The New York Times reported a second relationship with Kimberly Powell, Nvidia’s vice president of healthcare. Five people who worked at the company were named in the newspaper. Two of them even said the couple was filmed being affectionate at a hotel in San Jose during Nvidia’s own developer conference in March.
Unlike the first affair, this one involves someone from Huang’s own team. Nvidia’s Code of Conduct encourages employees to avoid conflicts, including those arising from personal relationships.
Whoever replaces Huang would inherit an unusually flat company. He has about 60 people who report directly to him – most CEOs of large companies have a handful – and no obvious deputy. Oddly enough, he has also said that he doesn’t believe in succession planning at all. He would prefer that managers simply pass on what they know.
Bloomberg reports that the board is already working with an outside firm to identify candidates and is considering a temporary chief. Semafor, meanwhile, says some directors are favoring CFO Colette Kress for the interim position. Interestingly, Apple hardware boss Johny Srouji is also reportedly in the running for the top job.
Surprisingly, for such a powerful founder, Huang has no super-voting shares to fall back on. He is Nvidia’s largest individual shareholder, but only owns about 3.6% of the company. Vanguard holds about 9% and BlackRock about 7%. A simple majority of the Board of Directors may remove him as CEO with or without cause.
