Can Huang's position as CEO be challenged?

Reuters NVIDIA CEO Jensen Huang is facing calls to step down after Republican US Senator Kevin Cramer urged him to quit over concerns that his reported relationship with a Chinese businesswoman, who is suspected of being a spy, could expose the chipmaker to extortion. But while the senator has called for Huang's exit, NVIDIA's bylaws give its board of directors the power to remove him as chief executive, even without cause. Also Read: Nvidia CEO Jensen Huang faces leadership questions as Republican senator calls for his resignation Cramer, a member of the Senate Banking Committee, told Politico that the potential for extortion was so serious that Huang should leave the company. “The potential for extortion is so tremendous that something as sensitive as NVIDIA chips, I just think he's got to go,” he said. Live Events The demand comes as NVIDIA's board has launched an independent investigation into reports that Huang was targeted by a foreign intelligence effort. The company has said it has no reason to believe that national security or NVIDIA secrets were compromised and that Huang has committed to cooperating with the review. Can NVIDIA's board fire Jensen Huang? NVIDIA's amended and restated bylaws explicitly allow the board to remove its officers, including the CEO, at any time. Section 29(a) states that officers hold office at the pleasure of the board of directors. Section 32 further says an officer may be removed from office “at any time, either with or without cause” through an affirmative vote of a majority of the directors in office. The provisions mean the board does not necessarily have to establish wrongdoing or wait for a criminal investigation to conclude before removing Huang as CEO. The authority to dismiss him exists independently of whether the allegations against him are proved. However, Cramer's demand is not a board decision. The senator's call does not automatically affect Huang's position at NVIDIA, and the company has not announced his removal. What has NVIDIA's board said about Huang? NVIDIA's board announced an independent investigation on November 8 following reports that its founder and CEO had been the target of a foreign intelligence effort. A committee of independent directors, assisted by outside counsel, will oversee the review. The board said it had no reason to believe that national security or company secrets had been compromised, but would examine all available information. Also Read: How Nvidia CEO Jensen Huang's extramarital affair could cause collateral damage in Washington It also expressed confidence in Huang and his leadership team. The investigation comes after reports about Huang's relationship with Alice Huang , a Chinese businesswoman suspected by US security services of being a Beijing intelligence asset. Huang has acknowledged being unfaithful to his wife but has not disclosed details of the relationship. China has dismissed the espionage allegations as groundless. Can Jensen Huang resign from NVIDIA? The chipmaker's bylaws also allow an officer to resign at any time by submitting written or electronic notice to the board, the president or the secretary. Section 31 states that, unless specified otherwise in the resignation notice, acceptance of the resignation is not necessary for it to become effective. This means Huang can voluntarily step down as CEO without necessarily waiting for the board to accept his resignation. Would Huang lose his board seat if he were fired as CEO? The CEO position and a directorship are separate roles under NVIDIA's governance rules. Removing Huang as chief executive would not, by itself, remove him from the board or require him to sell his shares. The rules governing directors are different from those governing corporate officers. Any change to Huang's board position would have to follow the applicable provisions for directors. What happens next? The board's investigation and Huang's response to lawmakers could determine how the controversy develops. US lawmakers have sought answers about the alleged relationship and its possible national-security implications, while Cramer has called for Huang's resignation. Huang, meanwhile, has continued with his regular engagements, attending NVIDIA's meetings as the controversy unfolds. NVIDIA has also expressed confidence in its CEO even as it investigates the allegations. Add as a Reliable and Trusted News Source Add Now! (You can now subscribe to our Economic Times WhatsApp channel ) Read More News on Jensen Huang NVIDIA CEO resignation foreign intelligence investigation Kevin Cramer espionage allegations NVIDIA bylaws Alice Huang US national security (You can now subscribe to our Economic Times WhatsApp channel ) Read More News on Jensen Huang NVIDIA CEO resignation foreign intelligence investigation Kevin Cramer espionage allegations NVIDIA bylaws Alice Huang US national security Explore More Stories Sass Jordan cause of death: How did ‘Racine’ singer die after cancelling shows over ‘serious medical condition’? 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