AI chip giant Nvidia has shed more than $600 billion of market value since revelations about CEO Jensen Huang’s personal life surfaced, leading to his resignation on 12 November, just days before the company was scheduled to report third-quarter earnings.
Chief financial officer Colette Kress has been appointed interim CEO while long-term director Harvey Jones has become Nvidia’s first ever board chair.
These unexpected events show the importance of having robust corporate governance in place including a well-articulated succession plan for the CEO and top executives.
The ramifications spread further than just Nvidia to the entire AI ecosystem given Nvidia’s key role as equity investor and provider of hundreds of billions of infrastructure financing commitments.
Huang has led Nvidia since co-founding the company in 1993 and the organisation is unusually centred around him. His vision and the business connections which helped to build Nvidia into the world’s largest company will be hard for his successor to emulate.
There is now important distinction between Nvidia and other large technology companies which is that Huang controlled Nvidia operationally as CEO rather than through the voting structure.
His beneficial ownership is around 3.6%, and Nvidia’s shares are structured as a one-share, one-vote system rather than a dual-class system where the founder owns super-voting shares.
Which other companies could be impacted by this risk?
One obvious candidate for key person risk is SpaceX and Tesla which are inextricably linked to Elon Musk and his vision for both businesses. Musk acts as the public face, chief strategist and driver of shareholder value.
Critics have long flagged a board of directors populated by close personal friends and family alongside protracted legal battles over Musk’s huge compensation packages.
Meta Platforms is controlled by founder Mark Zuckerberg who owns 61% of voting stock through super-voting class B shares.
He is synonymous with Meta’s strategy, and the dual class share system effectively prevents independent directors or institutional investors from enforcing accountability on capital allocation or leadership succession.
Although Google-owner Alphabet’s founders Larry Page and Serge Brin have stepped back from day-to-day management, they retain 51% of Alphabet’s voting control via class B shares. This means public shareholders have no power to override board decisions or executive pay.
Companies which have suffered from leadership change
A falling share price is not unusual when a key leader exits. Warren Buffett’s investing prowess and track record created a big key man risk for investors in Berkshire Hathaway, which also has a dual class voting system which gives Buffett control.
Despite Berkshire revealing that Buffett’s successor would be Greg Abel as far back as 2021, the shares still underperformed the S&P 500 from the date Buffet announced he would step down in May 2025, showing that even a clear succession plan is no guarantee of a smooth transition for the share price.
When Steve Jobs stepped down as CEO of Apple due to declining health in 2011, the shares fell at the opening wiping out more than $10 billion of market value.
More recently, Chipotle Mexican Grill shares tumbled in August 2024 on the CEO Brian Niccol’s sudden exit to run Starbucks. Niccol had helped turn Chipotle into a restaurant powerhouse under his leadership.
When Angela Ahrendts suddenly left Burberry in 2013 the company saw £500 million wiped off its market value. Ahrendts was credited with transforming the iconic British brand Burberry into a global luxury powerhouse.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...