Nvidia Board Meets to Decide Jensen Huang's Fate After Report of Second Affair With Top Company Executive

Nvidia Corp.'s board met late Wednesday to decide whether to remove Chief Executive Jensen Huang, a person familiar with the matter told Reuters. The meeting followed a New York Times report that Huang had a second extramarital relationship, this time with a senior Nvidia executive who reports directly to him.

The Wall Street Journal first reported that Nvidia's board was preparing to oust Huang, the company's co-founder, and could meet as soon as Wednesday to determine his future. Nvidia did not immediately respond to requests for comment on the meeting. As of late Wednesday, no decision had been announced.

Nvidia shares fell as much as 9% in after-hours trading following the reports. CBS News reported the stock slid to $159.51 after the close. Earlier on Wednesday, the shares had rebounded nearly 5% during regular trading.

Including Wednesday's after-hours selloff, Nvidia has lost about $600 billion in market value this week, according to Reuters. The losses began after the board announced an investigation into Huang's relationship with a Chinese businesswoman.

Second relationship alleged

The New York Times reported Wednesday that Huang had an extramarital relationship with Kimberly Powell, Nvidia's vice president of health care. The newspaper cited five people who previously worked at Nvidia. Powell reports directly to Huang, and both are married.

According to the report, Huang and Powell were seen being affectionate at a hotel near the venue of Nvidia's annual GTC developer conference in San Jose, California, in March.

Someone reportedly recorded the encounter on a mobile phone. Members of Huang's security team then allegedly took the person aside and asked them to sign a nondisclosure agreement. The Times said it had not seen the video.

When a Times reporter reached Huang by phone and asked about Powell, he said, "I don't think you should be talking to me directly," before hanging up. Nvidia declined to comment, and Powell did not immediately respond to a request for comment.

Nvidia, Huang and Powell have not confirmed the report.

Powell had been scheduled to speak Thursday morning at the Milken Institute Health Summit in Washington. The moderator, CNN reporter Meg Tirrell, announced that Powell had canceled her appearance and did not give a reason, according to reports citing the Times.

Powell joined Nvidia in 2008 and led efforts to apply the company's chip technology to health care, including medical imaging. She was promoted to senior director of AI business development in 2016 and became vice president of health care in late 2017. She gave a presentation at the March GTC conference on how artificial intelligence could transform medicine and life sciences.

Governance concerns

Analysts said the new allegation could raise questions about Nvidia's internal controls and corporate governance, beyond the issue of Huang's personal conduct.

Nvidia's code of conduct directs employees to avoid situations that could create conflicts of interest, including personal relationships. Many U.S. companies strictly limit romantic relationships between senior executives and employees who report to them.

Several high-profile CEOs have lost their jobs over workplace relationships in recent years, including former Intel CEO Brian Krzanich and former McDonald's CEO Steve Easterbrook.

Spy scandal

The latest report adds to a scandal that began Oct. 29, when The New York Times reported that Huang had a "close relationship" with Alice Huang. She is a former executive at Singapore-based Nvidia customer Megaspeed, and U.S. intelligence officials believe she is a Chinese spy. The two are not related.

In a memo to staff on Sunday, Huang admitted to being "unfaithful" to his wife but did not name the woman. "Leading NVIDIA is the privilege of my life," the message read.

Nvidia's board launched an independent investigation on Sunday and hired former acting U.S. Attorney Joon H. Kim and the law firm Wachtell, Lipton, Rosen & Katz to lead it.

"While the Board has no reason to believe that either national security or NVIDIA secrets were compromised, the Board's inquiry will examine all available information," the board said in a statement Sunday.

The Chinese government has denied the spying allegations, calling them "baseless and purely slanderous smears against China." Alice Huang has not commented publicly.

Succession questions

Huang's potential departure would leave a leadership vacuum at the roughly $4 trillion chipmaker. He co-founded the company in 1993 and built it into the world's dominant supplier of artificial intelligence chips.

Huang, 63, has no obvious successor. He owns about 3.6% of Nvidia's stock and has dozens of direct reports, reflecting the tight control he keeps over the company.

Bloomberg reported Wednesday that Nvidia is working with an outside firm to explore potential replacements for Huang.

"Huang being removed immediately could be challenging for Nvidia since it does not have a succession plan in place," said Gil Luria, head of technology research at D.A. Davidson.

Wedbush analyst Dan Ives has warned that Nvidia could be worth 25% to 30% less without Huang.

Nvidia's board has 11 directors. The company considers all of them independent except Huang.

The meeting marks a sharp shift from Sunday, when the board expressed confidence in Huang and his leadership team.

Pressure from Washington

Huang also faces mounting pressure from lawmakers. House Foreign Affairs Committee Chairman Brian Mast and two other Republican committee chairs have asked Huang to attend a closed-door briefing on Nov. 18 about his contacts with Alice Huang. Huang faces a possible congressional subpoena if he does not respond.

Republican Sen. Kevin Cramer of North Dakota has called on Huang to step down. He told Politico that "the potential for extortion is so tremendous" and that Huang has "got to go."

President Donald Trump has said he has not discussed the allegations with Huang, but he has voiced support for the Nvidia chief. Trump called Huang "an honorable guy" who had "done an amazing job for our country."

CBS News reported that the Trump administration is aware of the board's plans, citing sources.

Earnings ahead

The turmoil comes days before Nvidia's fiscal third-quarter earnings report, scheduled for Nov. 17. Investors had been looking to the results for reassurance about demand for AI chips after a recent selloff in technology stocks.

The scandal has also rattled Asian markets. South Korea's Kospi slipped Thursday amid concerns over the Nvidia controversy.

This article is for informational purposes only and does not constitute investment advice.