Nvidia board weighs Jensen Huang's future after reports of a second affair
In brief
- Nvidia's board was preparing to remove CEO Jensen Huang, the WSJ reported, citing people familiar with the matter.
- Kimberly Powell, Nvidia's vice president of health care, had a relationship with Huang, the NYT and WSJ reported.
- US officials concluded Alice Huang was a Chinese intelligence asset, the NYT reported. China denied it.
- Nvidia shares fell 5.9% to $163.43 in Thursday premarket trading, per Yahoo Finance data.
Two relationships, two newspapers
The New York Times reported Wednesday, citing five people who worked at Nvidia, that Huang had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care, who reports to him. The Journal reported the same relationship, citing one person familiar with the matter. Nvidia's code of conduct tells employees to avoid conflicts, including personal relationships, according to the Times.
Powell didn't respond to either paper. When the Times reached Huang by phone, he said he didn't think it should be talking to him directly, then hung up.
The second relationship is the one pulling in Washington. The Times reported in October that U.S. officials had concluded Alice Huang, an executive at Singapore-based Nvidia customer Megaspeed, was a Chinese intelligence asset who'd developed a close relationship with the CEO. The Financial Times reported the previous week that a U.S. government memo said the two had been romantically involved. China has denied the allegations.
Huang admitted in a letter to staff on Sunday that he'd been unfaithful to his wife, without naming anyone. He'd told the board he'd been intimate with Alice Huang, the Times reported, prompting an independent investigation led by Wachtell, Lipton, Rosen & Katz. The Justice Department is leading multiple investigations involving Alice Huang, per the Journal, and Huang faces a proposed shareholder class action and the threat of a congressional subpoena.
Market reaction
Nvidia shares were down 5.9% at $163.43 in Thursday premarket trading, according to Yahoo Finance data. They'd closed up 2.9% at $173.73 on Wednesday, before the reports landed. The stock had already lost about $430 billion in market value on Monday and Tuesday.
Who's next?
It isn't clear.
Huang co-founded Nvidia in 1993 and is its largest shareholder (about 3.6% of the company). He's said he doesn't believe in succession planning, per the Journal, and the latest proxy statement warns Nvidia is "highly dependent" on its longstanding executive team.
One person inside the company told the Financial Times the simplest option would be naming CFO Colette Kress interim CEO. Two sources pointed to Ian Buck, who runs the data center business. Analysts cited Arm CEO Rene Haas, a former Nvidia executive, as a possible outside candidate. Bernstein's Stacy Rasgon summed up the problem to the FT:
"We always knew key man risk was an issue for Nvidia," Bernstein analyst Stacy Rasgon told the paper.
Frequently asked questions
Who could replace Jensen Huang as Nvidia CEO?
The Wall Street Journal said it wasn't immediately clear who would succeed Huang. One person inside Nvidia told the Financial Times the simplest option would be appointing CFO Colette Kress as interim CEO, while two sources pointed to Ian Buck, who runs the data center business. Analysts cited Arm CEO Rene Haas, a former Nvidia executive, as a possible outside candidate.
What investigations does Jensen Huang face?
Nvidia's board opened an independent investigation led by Wachtell, Lipton, Rosen & Katz after Huang told it he'd been intimate with Alice Huang, the New York Times reported. The Journal reported the Justice Department is leading multiple investigations involving Alice Huang. Huang also faces a proposed shareholder class action and the threat of a congressional subpoena.
