Nvidia advisor claims $1B in disputed stock options from 1993

An early advisor to Nvidia was granted 25,000 stock options in 1993, but he now contends that 9,375 of them were never delivered, a shortfall worth roughly $1.05 billion at current share prices.

According to the advisor, Nvidia did not argue that his documents were fraudulent. Instead, the company said his claim was made three decades too late.

A Houseboat Demo and a Letter From Jensen Huang

The advisor is Eric Gullichsen, a virtual reality pioneer. In 1993, Nvidia's founders visited his houseboat in Sausalito to view his graphics work.

Nvidia CEO Jensen Huang asked Gullichsen to join the company's Technical Advisory Board. In a letter, Huang offered 25,000 options that "vests over 4 years."

A stock option gives the holder the right to purchase shares later at a set price. Vesting refers to the schedule for acquiring that right.

The signed option agreement, however, stated different terms. Gullichsen cites the agreement as saying vesting would occur fully "upon the expiration of one year from Grant Date."

A stock option error from 1993 may have cost a former Nvidia advisor more than $1 billion. The disputed 9,375 options would be worth roughly $1.01 billion today, but Nvidia maintains the claim is time-barred.

In April 1996, Nvidia's finance chief wrote that only 15,625 options had vested, a figure matching 10 quarterly vestings under a four-year schedule.

Gullichsen bought those shares and then set the matter aside.

Why the $1 Billion Claim Never Reached a Judge

In 2024, Gullichsen reviewed the documents again. Under a one-year vesting schedule, all 25,000 options should have become exercisable.

Gullichsen says the stock has split 480-for-1 since then. The 9,375 missing options now equate to 4.5 million shares, valued at roughly $1.05 billion based on Friday's closing price of $233.95 on a day when Nvidia hit a new record high.

Gullichsen retained legal counsel. After a year of correspondence, Nvidia's external law firm, Cooley, responded essentially with a challenge to file a lawsuit.

“NVIDIA did not dispute the authenticity of the option agreement, only that my claims were long since time-barred,” Gullichsen wrote in an essay.

The term "time-barred" means the legal deadline for filing a lawsuit has expired. California, Nvidia's home state, typically provides a four-year statute of limitations for written contracts. Gullichsen's essay does not specify which governing law applies.

Gullichsen's lawyers anticipated that the case would be dismissed at an early stage, and ultimately no lawsuit was initiated.

A $1,000 investment in Nvidia's IPO would have grown to approximately $8.39 million by late August, according to a study.

“Here in the land of the free, it turns out a company only has to honor its contractual obligations for a little while,” Gullichsen remarked.