Jen-Hsun Huang, the co-founder, president and chief operating officer of Nvidia Corp. (NASDAQ: NVDA), is reportedly a perfectionist who has little patience for screw-ups by employees.  Too bad he isn’t held to the same high standards by the company’s board of directors.

The disparity is remarkable to behold.  Here is how Wired magazine described the CEO’s management style in 2002 when the world was his  oyster.

In one legendary meeting, he’s said to have ripped into a project team for its tendency to repeat mistakes. “Do you suck?” he asked the stunned employees. “Because if you suck, just get up and say you suck.”

The message: If you need help, ask for it.

Fact is, Huang knows there’s little room for even one mistake in his business, much less the same one twice.

Eight years later,  Santa Clara, Calif-based Nvidia has gone from technology hero to zero.   Recent data from Jon Peddie Research showed that Nvidia had double-digit losses in every market segment, except notebook integrated graphics.  Rivals Intel Corp.  (NASDAQ: INTC) and Advanced Micro Devices Inc. (NYSE: AMD) posted gains and shipments for the first half of the year are 38.6% above the same period last year.  Adding to the company’s woes was the recent loss of a patent case to Rambus Inc. (NASDAQ: RMBS) and its warning that revenue would be worse than Wall Street expectations.

Shares of the chipmaker are down more than 50 percent this year.  As the company’s fortunes tumbled so has Huang’s pay.  For fiscal 2009 he earned a total of $4 million, down from $6.13 million a year earlier.  Nvidia’s proxy points out that he voluntarily agreed to only accept a $1 base salary as of 2008, a trend continuing today.  That gesture hardly seems magnanimous considering the mammoth options awards he received of $2.5 million in 2007,  $3.15 million in 2008 and $3.6 million in 2010.

This board of directors needs new blood badly.  Only two of the eight members started in the 2000s, and one of those, Mark Stevens, previously served on the board from 1993 to 2006. He works for a venture capital firm as do board members A. Brooke Seawell ,Tench Coxe and James C. Gaither. This is not exactly a recipe for shareholder accountability.

What Huang failed to realize is that the skills needed to create a company are not the same as those needed to manage it. Google Inc. (NASDAQ: GOOG) co-founders Sergey Brin and Larry Page realized this early and smartly decided to hire Eric Schmidt to give the search engine some adult supervision. Scott McNeally of Sun Microsystems learned this lesson the hard way as did Hector Ruiz of AMD and Michael Dell of Dell Inc. (NASDAQ: DELL).

It’s only a matter of time before Nvidia realizes that the adage about those that don’t learn from past mistakes are doomed to repeat. The company’s once-respected CEO said so himself before he failed to follow his own sage advice.

–Jonathan Berr

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