Nvidia’s governance gap: no succession plan, no chair, and a CEO Bernstein says “is Nvidia”

Nvidia’s board opened what it calls an independent investigation after its CEO admitted an extramarital affair, reportedly with an executive at a large Nvidia customer whom U.S. officials allege was a Chinese spy (investigation). A special committee of sitting directors, with outside counsel, runs it, likely led by director Stephen C. Neal, the former Cooley chief executive. Shares were down more than 5% by midday Monday, and lawmakers wanted him before congressional committees (Congress).

The board says it has no reason to believe national security or company secrets were compromised. That is a statement, not a finding, and the investigation exists to test it. As one large shareholder told the FT, a compromise of information would be a very different story from an affair.

Nvidia’s chips sit beneath most of the AI boom, and its CEO personally stood behind investments and guarantees worth hundreds of billions across startups and data center builders. When Bernstein analysts write that he is Nvidia, they mean the risk is concentrated in one person. Biographers describe him running much of marketing, sales and product himself; one calls him the company’s single point of failure. Longtime lieutenant Jay Puri stepped down in August, replaced on the executive team by Microsoft veteran Nick Parker.

Nvidia’s filings make no specific reference to succession planning and describe no emergency process for replacing the CEO, beyond a belief in leadership development and a bench of more than 60 direct reports. That isn’t a plan, and for a company this important it is a glaring omission boards should fix before a crisis.

Nvidia was also the only S&P 100 company with no designated chair, and several directors have served since the 1990s. Long tenure can mean deep knowledge, or a board that has never had to say no to a founder. Huang co-founded Nvidia more than 30 years ago and owns about 3.6%, worth more than $150 billion, but lacks the special voting shares that let founders at Meta and Google control their boards, so the board had real power (governance experts).

The too-big-to-fire argument doesn’t hold. A code of conduct that bends for the most powerful person in the building isn’t a code. If facts show judgment that put sensitive relationships at risk, the board has to act, whatever the market thinks. Protecting the AI industry means protecting its institutions, not just its heroes.

The board did act within days: after a second reported affair with a direct report surfaced (coverage), it accepted his resignation, named CFO Colette Kress interim CEO (profile) and appointed its first chair. Nvidia had already ceded the top market-value spot to Apple amid a wider AI stock selloff, and rivals building their own chips have a fresh talking point. More in our Nvidia coverage and business coverage.