Nvidia: the board of directors discusses Jensen Huang’s dismissal
The CEO has come under scrutiny following his relationship with the Megaspeed manager suspected of being a Chinese spy
Somewhat surprisingly the ranking of Jensen Huang at the helm of Nvidia has plummeted. With a acceleration of events that many experts did not foresee – not least because the chip giant has no defined succession plan – the group’s co-founder is now on the verge of being removed from office. According to reports in the WSJ, the board of directors met specifically to decide on Huang’s ‘dismissal’ as chief executive.
As is now well known, this refers to the scandal that emerged over the relationship between the CEO himself and Alice Huang, an entrepreneur suspected by US intelligence of acting on behalf of China. According to reports, the woman is alleged to have gathered information for Beijing, fuelling fears regarding national security and the transfer of advanced technologies. After initially presenting the relationship as purely professional, Huang admitted to the extramarital affair and took responsibility for it. Huang’s position – at least in terms of her ‘reputation’ – has been further compromised following the New York Times’ revelation of a second alleged affair with Kimberly Powell, vice-president of Nvidia’s Healthcare division and her direct subordinate.
A majority of the board of directors is enough to remove the CEO
That said, what procedure might the board follow? According to experts, it is the one set out in Article V of Nvidia’s Articles of Association. This provision expressly includes the Chief Executive Officer amongst the company’s officers. Section 32 stipulates that these officers may be removed at any time, even without just cause, by a majority vote of the directors in office. With an eleven-member board, six votes would therefore be sufficient to remove Huang from the post of Chief Executive Officer, without going through the shareholders’ meeting. The loss of the executive role would not automatically result in the loss of his seat on the board.
In fact, to be removed from the Board as well, a vote is required from shareholders representing a majority of the voting rights where there is just cause, or at least two-thirds where there is no such cause. Voluntary resignation remains, of course, a possibility.
The challenges of replacement
Following the event, reactions from a number of analysts, as reported by Reuters, were not long in coming. Hay Boloor, Chief Market Strategist at Futurum Equities, emphasised that ‘the market must distinguish between the leadership crisis and the actual performance of Nvidia’s business’. The demand for Blackwell, Rubin’s roadmap, the expansion into networking and the CUDA ecosystem “were already firmly established well before this incident. I therefore do not see why, with the CEO’s departure, the revenue forecasts for the next 12–18 months should suddenly fail to materialise”. The real concern ‘relates to the next decade. Jensen Huang is not simply Nvidia’s CEO: he is the person who has consistently been able to identify the direction of computing’s evolution even before customers realised they needed those technologies’. Replacing this strategic vision in a company organised around 60 executives who report directly to him, with no clear number two, represents an enormous challenge’.
