Nvidia Board Meets on Whether to Remove CEO Jensen Huang, Source Says
Nvidia's board met late Wednesday, November 11, to decide whether to remove CEO Jensen Huang after reports of a second extramarital affair. The stock fell more than 8 percent in extended trading. Quarterly results are due November 17.
Nvidia's board met late Wednesday, November 11, to decide whether to remove chief executive Jensen Huang, following a report of a second extramarital affair, according to a source familiar with the matter. Nvidia did not immediately comment on the meeting.
The stock slid more than 8 percent in extended trading after reports that the board was preparing to fire him. If the losses hold, Nvidia will have lost about US$600 billion in market value since its board announced an investigation into Huang's relationship with a businesswoman, Alice Huang, who is alleged to be a Chinese spy.
What the reports allege
The latest report says Huang had an affair with Kimberly Powell, Nvidia's vice president of healthcare, who joined the company in 2008. It says the two were seen being affectionate at a hotel during a company conference in March. It also says a security guard sequestered them after a bystander took a photo and offered them a nondisclosure agreement.
Huang declined to comment. Asked by phone about Powell, he said, "I don't think you should be talking to me directly," and hung up, according to the report. Nvidia and Powell did not immediately respond to requests for comment.
How the week unfolded
Reports last week said US intelligence officials believed Alice Huang, a former executive at Singapore-based data center operator Megaspeed, may have acted as an intelligence asset for Beijing. She is not related to the CEO. Nvidia said his interactions with her were "not unusual." A Chinese embassy spokesman, Liu Chang, called the reporting "unsubstantiated."
On Sunday, Huang told staff in a memo that he had been "unfaithful to my wife." He wrote: "There is no excuse for what I did. I am deeply sorry." He said he would cooperate fully with an investigation.
The board said that day that independent directors, assisted by outside counsel, would oversee the inquiry. It said it had "no reason to believe that either national security or NVIDIA secrets were compromised." It also said it had confidence in Huang and his leadership team.
Who decides, and what comes next
Under Nvidia's bylaws, a majority of directors can remove the CEO "with or without cause." The company has 11 directors and considers all but Huang independent. A separate report said the board has been working with an outside firm to identify potential replacements.
Huang, 63, has no obvious successor and owns about 3.6 percent of Nvidia's stock. The company is worth roughly US$4 trillion.
"The market is starting to price Nvidia without its founder as the likely outcome, not a tail risk," said Armina Rosenberg, a portfolio manager at Minotaur Capital, which holds Nvidia shares. She said Chief Financial Officer Colette Kress would be the natural interim choice, but the larger question is who would lead the company's technology plans over the longer term.
Nvidia is due to report quarterly results on November 17. The board has not announced a decision.
