At a US public company, the CEO does not work for themselves. The CEO works for the board, which is elected by shareholders, and the board has the authority to appoint and dismiss the CEO. That holds even when the CEO is the founder, and even when the CEO is more identified with the company than anyone else. Here is how it works.
What does it take to remove a CEO?
Usually a board majority is enough. The directors vote, and if most support it, the CEO is replaced. No shareholder approval is needed, and sometimes the decision is made in a single meeting. In many cases the removal is presented publicly as a 'resignation,' to preserve the CEO's dignity and the company's stability.
Why isn't the founder protected?
A founder's power depends on how many shares they hold, and of what kind. Jensen Huang reportedly holds about 3.6% of Nvidia's shares, a vast sum in dollars, but far from control. So he cannot block a board decision or replace the directors himself.
What is the difference between Nvidia and Meta or Google?
At companies such as Meta and Google, the founders hold special share classes with enhanced voting power. Mark Zuckerberg, for example, controls a majority of the voting power at Meta, so in practice the board cannot fire him. Nvidia has no such structure. That is what makes its board the real power in the current affair.
And what does it mean for Israel?
At many Israeli companies too, especially those listed on Nasdaq, founders hold a small share of the stock after years of fundraising. The Nvidia affair is a reminder that founding a company does not guarantee continuing to run it: in the end, the board decides.
