What happened at Nestlé?
Nestlé, the Swiss company that owns Kit Kat, Nespresso, and Perrier, has fired its chief executive, Laurent Freixe, after only one year in the role.
The company said Mr. Freixe failed to disclose a romantic relationship with an employee who was directly reporting to him. Nestlé confirmed this was a conflict of interest and a violation of company policy.
The move came immediately after an investigation by Nestlé chairman Paul Bulcke and independent director Pablo Isla, with the help of external legal advisers.
How was the issue discovered?
Nestlé was alerted through its whistleblowing hotline, under which employees can report concerns anonymously, according to the BBC.
Early investigation: Nestlé had investigated the allegations earlier this year but had not come across any definite proof at that time.
Second investigation: After additional complaints, Nestlé brought in external lawyers to conduct a more detailed review. That review confirmed the relationship.
Nestlé stated that it had adhered to best practices in corporate governance throughout the process.
Who is Paul Bulcke?
Paul Bulcke is chairman and former chief executive of Nestlé. He served as CEO of Nestlé from 2008 to 2016, when he was appointed chairman of the board.
A consistent and values-driven leader, Bulcke emphasised that the choice was necessary to protect Nestlé’s values and reputation. He said:
“This was a necessary decision. Nestlé’s governance and values are firm foundations of our company. I thank Laurent for his years of service.”
Bulcke will retire as chairman next year, and Pablo Isla—former boss of fashion group Inditex (owner of Zara)—has been nominated to succeed him.
What’s next for Nestlé?
Nestlé has named Philipp Navratil, an executive at the company since 2001, as the new CEO.
The company highlighted that:
- Its business strategy will not alter.
- Its performance targets remain on track.
Laurent Freixe, who worked at Nestlé for nearly 40 years, will not receive an exit package. The company declined to comment on whether Freixe has responded to the decision.
Why are personal relationships a problem for CEOs?
Companies tend to have strict policies on manager-direct report relationships because they can:
- Create conflicts of interest (promotional or salary favouritism).
- Erode trust within the corporation when employees perceive there are unfair advantages being offered.
- Expose companies to legal liability when the relationships turn sour.
- Other senior executives have lost their jobs for the same reasons:
- Bernard Looney, BP CEO, resigned in 2023 for not being fully transparent about past relationships.
Steve Easterbrook, McDonald’s former CEO, was fired in 2019 for dating workers. He later returned his $105 million departure package after further investigation and paid a $400,000 fine to U.S. regulators.
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The big picture for Nestlé
Despite this leadership upheaval, Nestlé is confident in its strategy. Bulcke and Isla have worked to maintain business as usual and to assure shareholders that this will not impede the company.
The swiftness of the decision also illustrates Nestlé’s zero tolerance for undisclosed conflicts of interest, communicating to employees, investors, and the public that company ethics take precedence—even at the highest levels of management.
