Jensen Huang built Nvidia and never owned the votes

In November 1993 Harvey Jones was the chief executive of Synopsys, which sold software for designing chips, and he agreed to sit on the board of a company that had existed for seven months and had never sold anything. It would not sell anything the next year, either. The company was Nvidia. Three engineers had started it that April, and the one they made president, Jen-Hsun Huang, known as Jensen, was 30 years old. Four years later Jones bought 24,334 shares of its preferred stock for $127,997, on much the same terms as everybody else in the round, and then he went on sitting there, through the initial public offering and the video-game years and the years in which Nvidia's chips became the thing artificial intelligence runs on. In all that time he was a director and nothing grander, because Nvidia's board had no chairman and said it did not need one.

On Wednesday it decided it did. Nvidia's press release calls Jones, who is 73, the "first-ever Chair of the Board," and the filing that came with it opens with the only piece of business that mattered: "On November 11, 2026, the Board of Directors, or the Board, of NVIDIA Corporation accepted the resignation of Jen-Hsun Huang, as NVIDIA's President, Chief Executive Officer and member of the Board, effective immediately." That is 33 words, one for each year he ran the place.

The filing gives no reason. The newspapers filled in the week that came before it. The San Francisco Chronicle reported that Huang had been under an internal investigation after confirming a relationship with a woman it described as a suspected Chinese spy, and that the New York Times had reported a second, with an executive who reported to him. Beijing, according to CNN, calls the spying allegation "groundless speculation."

Jones had been one of the people doing the accepting since before there was anything for a board to oversee, and you can see what kind of seat he had in the prospectus Nvidia handed the public in January 1999, when it first sold shares. There are seven people on the board: Huang, who is 35, and six others, Jones among them. Huang owns 13.1 percent of the company going in, about what Sequoia Capital held and a hair more than each of his two co-founders. Every share gets one vote. And in the section where the lawyers list what might go wrong, they write that none of the company's officers "is bound by an employment agreement," that all of them are therefore employed at will, and that losing any of them, "particularly Jen-Hsun Huang," would do the business material harm.

So Jones was one of six people who could, at any meeting, vote out the one man the company said it could least afford to lose, and in 1999 that was just how it was done. Of the 370 technology companies that went public that year, 22 had two classes of stock, by the count Jay Ritter keeps at the University of Florida. Last year it was 15 of 31. At Meta, the famous case, the directors can advise the founder where Jones could replace his. Its proxy statement this spring reports that Mark Zuckerberg holds 60.8 percent of the voting power, through shares that carry ten votes apiece, and explains that because of this the company is "not required to have a majority of our board of directors be independent."

The strange part of the Nvidia story is that nobody ever fixed this. Twenty-seven years went by. The company came to be worth more than $4 trillion, and through all of it Huang's share of the votes went the other way, until it ended at 3.58 percent. There was still no contract. This year's proxy says what the prospectus said, that the executives are at-will employees and "we do not have employment, severance, or change-in-control agreements" with any of them. He never took the chairman's title, either. The board explained in May that it wanted each director to have "an equal voice" and so kept a lead director "rather than a chairperson."

The directors, meanwhile, made their own seats less comfortable. In 1999 they sat for staggered three-year terms. Now every one of them stands for election every year, as Huang did, and this June the stockholders kept him by 16.65 billion votes to 166 million, which is about a hundred to one.

So a man who never controlled the vote, and ended with fewer than four in a hundred, held his job for a third of a century the way a school superintendent holds his, by being kept. A handful of people, ten by the end, could have replaced him at any meeting, and at every meeting they didn't. Four of the ten are named in the 1999 prospectus: Jones, Tench Coxe, Brooke Seawell and Mark Stevens. Three of them joined in 1993, when there was nothing yet to sell. Stevens left the board in 2006 and came back in 2008. Three of them had been deciding what Jensen Huang was worth, over and over, since he was 30.

Then on Wednesday the same people took his resignation, and the arrangement that had looked for 33 years like a formality turned out to be a working part. None of this came cheap. CNN put Thursday's damage at 4.34 percent, or roughly $182 billion, and by the Chronicle's count at midday the shares were down about a quarter in a month. And on Thursday morning Nvidia had an interim chief executive, Colette Kress, who has been its chief financial officer since 2013, a chairman who has been in the room since 1993, and an earnings call still on the calendar for Tuesday at 2 p.m. Pacific.

About half the technology companies that went public last year chose two classes of stock, which can leave a board with nothing to decide. Huang spent 33 years where Harvey Jones could reach him, and built a $4 trillion company there, and I doubt those two facts are unrelated.

The board says it will consider candidates from inside and outside. If it keeps to its habits, whoever gets the job will get it the way Huang had it: one vote a share, no contract, and Harvey Jones in the room.

Columns are the views of their authors. They are not legal advice and not the position of the firm.