What happened
Nvidia makes the chips that most of the world's AI runs on. On 12 November, it announced that Jensen Huang had resigned as president, CEO and board member, effective immediately. Here is how the week unfolded.
| When | What happened |
|---|---|
| Late October | The New York Times reported that US intelligence believed a former executive at Megaspeed, an Nvidia customer, had passed information to Beijing. Nvidia called Huang's dealings with her routine. China rejected the allegations. |
| Sunday 8 Nov | Huang told staff he had had an affair with her. The board opened an independent investigation. It said it had no reason to believe national security or Nvidia secrets were compromised, and that it had confidence in him. |
| Tuesday 10 Nov | Independent directors hired a former acting US Attorney and the law firm Wachtell, Lipton, Rosen & Katz to run the investigation. |
| Wednesday 11 Nov | The New York Times and The Wall Street Journal reported a second relationship, with an Nvidia employee. |
| Thursday 12 Nov | Nvidia announced Huang's resignation. Its release gave no reason. CFO Colette Kress became interim CEO, and director Harvey Jones became the board's first-ever chair. |
- Kress keeps her CFO job while serving as interim CEO. She has been CFO since 2013.
- The board is searching for a permanent CEO and will look at internal and external candidates.
- Nvidia had no board chair before this. Jones has been a director since 1993, the year Nvidia was founded.
- Shares closed at $166.19, down 4.3% on Thursday, after falling as much as 14% during the day. They had already fallen 9.6% on Monday and Tuesday. Nvidia was still worth just over $4 trillion.
- Huang owns about 3.61% of Nvidia, making him its fourth-largest shareholder, Reuters reports.
- In her email to staff, Kress called it an “extraordinarily difficult period” and announced a company meeting on 18 November.
- One analyst, Dan Ives, valued the shares at $300 with Huang as CEO and $225 without him.
Huang hasn't been accused of a crime, and the board's investigation hasn't reported any findings. For an HR student, the interesting part is what happens inside the company now. A founder who ran everything for 33 years left overnight, with no named successor.
The case
You're the chief HR officer of a large tech company. Your founder-CEO has just resigned with immediate effect after a conduct investigation. The CFO is interim CEO and still doing her old job. The share price is down about 20% in a month, and most engineers are paid partly in shares. The board asks for a 90-day people plan. What do you do?
1Clarify
- Is the interim CEO a candidate for the permanent job? If she is, people will read her every decision as a pitch. If not, she needs clear authority to act anyway.
- Who depended directly on the old CEO? Founders often have many direct reports. Those leaders now have no boss and may be getting calls from rivals.
- How much unvested stock do key people hold, and at what price was it granted? This shows who has lost the most and who might now leave.
- What did the investigation find about workplace conduct? A reported relationship with an employee raises policy questions HR must answer, whatever the board finds.
2Structure
- Steady the organisation: who decides what, starting this week.
- Keep critical people: find who is most at risk and act for them, not for everyone.
- Support the interim CEO: someone has to carry her CFO work.
- Run the CEO search: criteria, timeline and how employees hear about it.
- Fix the conduct gap: rules on relationships at work and how they are reported.
3Analyse
Why shares make this a retention problem
Many tech employees are paid partly in shares that vest over several years. When the share price drops, their future pay drops with it. Rivals can then offer to “buy out” those shares to tempt them away. All the numbers below are assumptions for the case.
Say the company has 2,000 people it truly can't afford to lose. Each held unvested shares worth about ₹1 crore a month ago. After a 20% fall, that is ₹80 lakh, so each person has lost about ₹20 lakh in future pay.
Replacement cost per senior person (hiring, time to get up to speed, lost output) is assumed at ₹1.5 crore. Top-ups vest over two years so people must stay to collect them.
Topping up everyone costs ₹400 crore and pays many people who were never going to leave. Doing nothing looks free, but if 10% of the 2,000 leave, replacing them costs about ₹300 crore. Targeting the 500 most at risk costs ₹100 crore, a third of the cost of doing nothing.
The interim CEO is doing two jobs
The interim CEO is still the CFO, in a week when results are due. If she spends half her time on CEO work, someone must run finance day to day. Name a deputy CFO with clear authority now. Otherwise the most important function during a share price crisis will drift.
4Recommend
I recommend a three-part plan for the next 90 days. Communicate clearly from week one, target retention at about 500 critical people, and publish a clear process and timeline for the CEO search.
First, at the company meeting, leaders should say who decides what and when employees will next hear about the search. That reduces the uncertainty that makes people take rival calls. Second, on our assumptions, targeted share top-ups that vest over two years cost about ₹100 crore, against roughly ₹300 crore if 10% of key people leave. Third, a named deputy CFO lets the interim CEO lead without finance slipping.
The risk is that targeted top-ups feel unfair to people left out. I'd set clear criteria, such as critical skills and outside offers, and have each list reviewed by more than one leader. I'd also review the policy on workplace relationships and reporting, and tell staff what changed.