Nvidia board preparing to oust Jensen Huang, WSJ says

Nvidia's ↗ 2.87% board is preparing to remove co-founder and Chief Executive Jensen Huang, The Wall Street Journal News Corp ↗ 0.40% reported Wednesday, November 11. The report says the move comes after scrutiny of two extramarital relationships, one of them allegedly with a suspected Chinese spy, and that directors could meet as early as Wednesday to decide his future. Nvidia's shares rose after the report.wsj.com

The report is a sharp turn from where things stood three days earlier. On November 8, the board opened an independent investigation and said it "has confidence in Jensen and his leadership team".nvidianews.nvidia.com

A fast-moving scandal

The crisis started after reports that Huang had been intimate with Alice Huang, an executive at Singapore-based Megaspeed who, according to The New York Times, U.S. intelligence determined was gathering information for Beijing. In a November 8 email to employees, Huang admitted the affair and wrote, "you deserve better from me". China has called the spying accusations "baseless".apnews.com+2

Pressure built quickly from there. The independent directors hired former acting Manhattan U.S. Attorney Joon H. Kim and the law firm Wachtell, Lipton, Rosen & Katz to run the investigation. The FBI is also looking into the case, and House Republicans have asked Huang to attend a closed-door briefing on November 18. Shareholders have filed a class-action suit in San Jose accusing the company of misleading investors. Nvidia lost about $450 billion in market value over two trading days.nvidianews.nvidia.com+3

Board has the power, but no heir

Huang owns about 3.5% of Nvidia and holds no super-voting shares. Under Delaware law, a majority of directors can remove him as CEO, but taking him off the board would require a shareholder vote or his resignation.news.bloomberglaw.com

Nvidia has no public succession plan. Speculation about replacements has focused on Chief Financial Officer Colette Kress and co-founder Chris Malachowsky. The Information reported that executive search firms may be looking at outside candidates, including AMD Advanced Micro Devices, Inc. ↗ 7.32% CEO Lisa Su and Arm ↗ 12.05% CEO Rene Haas.biz.chosun.com+2

Until Wednesday's report, Wall Street had mostly expected Huang to keep his job. On Tuesday, analyst Dan Ives put the chance of his removal at roughly 15%. The company's last public word was a spokesperson saying "Jensen is committed to continuing to lead NVIDIA as CEO without interruption".abcnews.com+1