Nvidia’s board weighs CEO Jensen Huang’s future amid investigations and shareholder suit
Shares fall as investors react
Nvidia shares lost 10% of their value, or about $450 billion, over the last two trading days. The disclosure has unsettled shareholders and heightened concerns about the company’s reliance on its chief executive.
Dan Ives compared the possibility of Huang’s departure with what might happen to Tesla and SpaceX valuations if Elon Musk were affected. Ives said Nvidia would change dramatically without Huang as CEO, with negative effects extending across the technology industry and AI.
Conduct policy draws scrutiny
Governance experts said the alleged relationship appears to conflict with Nvidia’s code of conduct, which warns that personal relationships can create conflicts of interest. The code also says employees are responsible for maintaining high ethical standards.
In a Sunday message to employees, Huang acknowledged being unfaithful to his wife and apologized for hurting her and their two children, who also work at Nvidia. He wrote, “There is no excuse for what I did,” and said he was deeply sorry. Jay Aldebert of International Services said Huang’s conduct was a violation, while adding that how the matter was handled under the code would remain an issue.
Board faces leadership decisions
Columbia professor Rajgopal said the case was unusual and urged Nvidia board members to show independence by bringing in a law firm for the investigation. He also called for an immediate succession plan, while saying he would not dismiss Huang even if the code had been violated because of Nvidia’s importance to the United States in AI.
Harvard Business School professor David Yoffie said the board had few good options, describing Huang as central to Nvidia and warning that removing him without a successor would be a poor outcome. Bob O’Donnell of TECHnalysis Research noted that Nvidia employs more than 40,000 people worldwide and has other strong leaders.
Key points
- Nvidia is investigating CEO Jensen Huang’s alleged relationship with a former executive at a customer company.
- The matter has prompted a shareholder lawsuit and questions from lawmakers.
- Nvidia shares fell 10%, or about $450 billion, over two trading days.
- Experts have urged the board to investigate independently and plan for succession.