Nestle

Nestle has fired CEO Laurent Freixe after just one year in the job following an investigation into an undisclosed “romantic relationship”, ousting its second chief executive in a year and throwing the Swiss food giant into its deepest leadership chaos in decades.

Freixe’s sudden dismissal followed an investigation into an undisclosed romantic relationship with a direct subordinate that breached Nestle’s code of business conduct, Nestle said late on Monday.

Freixe was replaced by Nespresso chief Philipp Navratil, a rising star at the world’s largest food company as it battles slowing sales, the impact of United States tariffs and eroding investor confidence after years of underperformance.

The Frenchman’s predecessor Mark Schneider failed to cope with the challenge, and it cost him his job in August 2024. Paul Bulcke, CEO from 2008 to 2016, will step down as chairman in April and will be replaced by Pablo Isla, a former CEO of Spanish fashion retailer Inditex.

“The loss of two CEOs and a chairman in a year is of historic proportions for Nestle,” said Ingo Speich, head of corporate governance and sustainability at Deka, a top 30 Nestle investor.

“The new CEO needs to fix the business model and bring volumes back. He needs to do better M&A [mergers and acquisitions] and focus more on emerging markets.”

The upheaval underscores the struggle not only at Nestle but also other consumer goods companies to reignite sales and recover stock values as the post-pandemic cost-of-living crisis drives consumers towards cheaper alternatives. Meanwhile, US tariffs threaten to further inflate prices and alienate already price-sensitive shoppers.

Shares in the maker of Nescafe and KitKat chocolate bars were down 0.8 percent in Zurich by 1:18pm (11:18 GMT).

Speak Up

The company said concerns about a possible relationship were raised by staff via the company’s internal reporting channel, Speak Up, although an initial investigation was unsubstantiated. Freixe had initially denied the relationship to the board, a company spokesperson said.

When staff concerns persisted, Nestle said it ordered an investigation overseen by Bulcke and Lead Independent Director Isla with the support of independent outside counsel. Swiss media reported that Swiss lawyers from the Baer & Karrer law firm helped with the inquiry.

Freixe, who spent 39 years with Nestle, will receive no exit package, the company told the Reuters news agency.

In a short statement, Bulcke thanked Freixe for his years of service at Nestle but said the dismissal was a “necessary decision”.

His dismissal adds to a list of top executives forced to resign after investigations into their relationships with colleagues.

Energy giant BP’s former CEO Bernard Looney and McDonald’s CEO Steve Easterbrook were both removed for failing to disclose relationships with colleagues.

The Swiss financial news website Inside Paradeplatz reported that Freixe met the woman in 2022 before he became CEO and when he was head of Nestle’s Latin America business.

Freixe was not immediately available to comment when contacted via email. The identity of the female subordinate has not been made public.

Swiss law does not prohibit relationships between senior executives nor does it require disclosure although most large companies have internal codes of conduct that require they are disclosed.

Corporate governance expert Peter V Kunz from the University of Bern said he was not familiar with Nestle’s rules but said requirements at most public companies were broadly similar.

“In this respect, Mr Freixe’s behaviour – regardless of whether it was legal or not – seems to me to be simply stupid and incomprehensible in this day and age,” Kunz told Reuters, adding that he did not think investors had grounds for legal action against Nestle.

Opportunity for overhaul

Nestle’s shares, a bedrock of the Swiss stock exchange, have lost almost a third of their value over the past five years, underperforming their European peers.

Freixe’s appointment failed to halt the slide, and the company’s shares shed 17 percent of their value during his leadership, disappointing investors.

One top 20 Nestle investor welcomed news of the change, saying Freixe had been a disappointment and bringing in Navratil was an opportunity for a more ambitious overhaul.

The new CEO needs to slim down the company, cut costs and above all reduce the headcount, the investor, who declined to be named due to the sensitivity of the matter, said, adding that it is also crucial for the company to raise organic growth to boost volumes.

“The cash flow must cover the dividend,” the investor said. “That’s an absolute priority.”

In July, Nestle launched a review of its underperforming vitamins business, which could lead to the divestment of some brands after first-half sales volumes missed expectations.

Freixe’s dismissal was featured on the front page of Swiss newspapers with Neue Zuercher Zeitung noting that Nestle had lost its “legendary stability” during which CEOs stayed on for years before eventually becoming chairmen.

AJ Bell investment director Russ Mould said the company would likely face a period of uncertainty over whether Navratil will follow the same path as his predecessor.

“While Navratil is also an internal appointment, he will want to put his own mark on strategy, and that suggests the clock could be reset when it comes to the turnaround plan,” Mould said.

Nestle has fired its chief executive after just one year in the job because he failed to disclose a “romantic relationship” with a “direct subordinate”.

The Swiss food giant, which makes Kit Kat chocolate bars and Nespresso coffee capsules, said Laurent Freixe had been dismissed with “immediate effect” following an investigation led by Nestle’s chair and lead independent director.

The BBC understands the inquiry was triggered by a report made through the company’s whistleblowing channel.

Nestle chair Paul Bulcke said: “This was a necessary decision. Nestlé’s values and governance are strong foundations of our company. I thank Laurent for his years of service at Nestlé.”

The relationship was with an employee who is not on the executive board and the investigation began because it represented a conflict of interest, the BBC has learned.

As well as Mr Bulcke, independent director Pablo Isla oversaw the inquiry into Mr Freixe “with the support of independent outside counsel”.

The Financial Times has reported that concerns were raised about Mr Freixe’s relationship with an employee earlier this year and, after an internal investigation, the claims were found to be unsubstantiated.

After the complaints persisted, the newspaper reports that Nestle conducted another investigation with help from outside counsel after which the claims were upheld.

A spokesperson for Nestle said: “We acted at all times in line with best practice corporate governance.

“The external investigation was opened shortly after the initial internal investigation, and today’s decision shows that we are taking allegations and investigations seriously.”

Mr Freixe had been with Nestle for nearly 40 years but stepped up to the global chief executive role last September, replacing Mark Schneider.

Nestle confirmed that he will not receive an exit package.

The BBC has contacted Mr Freixe for comment.

Philipp Navratil, who has been with Nestle since 2001, has been appointed as Mr Freixe’s successor.

Mr Bulcke said the company was “not changing course on strategy and we will not lose pace on performance”.

Mr Bulcke is set to step down as chair next year and Mr Isla, the former boss of Zara-owner Inditex, has been proposed as his replacement.

Other companies have parted ways with their chief executives following investigations into their personal relationships with colleagues.

BP chief executive Bernard Looney, who led the oil giant for three years, quit after admitting he was not “fully transparent” initially.

Steve Easterbrook was fired by McDonald’s in 2019 after it found he had a consensual relationship with an employee.

But McDonald’s said a further investigation found that the British executive had three additional relationships with staff.

He initially received $105m (£77.5m) in a severance package which he later returned. In 2023, he was fined $400,000 by the US financial watchdog for misleading investors. He paid the penalty without admitting or denying the claims.

Additional reporting by Dearbail Jordan.

Sept. 1 (UPI) — Nestle, the world’s largest food and beverage company, on Monday fired CEO Laurent Freixe after disclosing a romantic relationship with a subordinate one year after he took over the Swiss company.

The public company, based in Vevey, announced Philipp Navratil, who headed the Nespresso coffee unit, as the immediate successor of Freize, 63.

The employee was not on the executive board, the BBC reported.

“The departure of Laurent Freixe follows an investigation into an undisclosed romantic relationship with a direct subordinate which breached Nestle’s Code of Business Conduct,” the company said in a news release. “In line with best practice corporate governance, the Board ordered an investigation overseen by Chairman Paul Bulcke and Lead Independent Director, Pablo Isla, with the support of independent outside counsel.”

Bulcke, who announced in June that he was stepping down next year, said: “This was a necessary decision. Nestle’s values and governance are strong foundations of our company. I thank Laurent for his years of service at Nestle.

“We are not changing course on strategy and we will not lose pace on performance.”

Nestle ousted his predecessor, Mark Schneider, last September.

Freixe joined the company in France in 1986 in marketing and sales. In 2007, he took over as head of operations in Europe.

Navratil, born in 1976, began his career with Nestle in 2001 as an internal auditor. He held various commercial roles in Central America, including leadership of the coffee and beverage business in Mexico.

He was named the leader of Nespresso in July 2024, and became a member of the company’s executive board on Jan. 1.

“Philipp is recognized for his impressive track record of achieving results in challenging environments,” Nulcke said. “Renowned for his dynamic presence, he inspires teams and leads with a collaborative, inclusive management style. The Board is confident that he will drive our growth plans forward and accelerate efficiency efforts.”

Nestle’s largest operation is in the United States with 36,000 employees. Nestle USA was named in 2024 as No. 30 of top workplaces by The Washington Post.

Worldwide there are 275,000 workers.

Nestle was founded in 1866 as the Anglo-Swiss Condensed Milk Co by Henri Nestle.

The company’s annual revenue in 2024 was 91.72 billion, a decrease of 1.75% in one year. The company’s net profit was 10.88 billion, a decrease of 2.9%.

Pepsi is the second-largest company in the world.

Nestle owns thousands of brands, including food and beverage products, pet care and nutrition. Some of them were acquired from other companies.

“Nestle’s makes the very best chocolate” was a TV advertising jingle for 10 years starting in 1955.

Beverages include Nescafe, Nespresso, Coffee-Mate, Milo, Perrier and S. Pellegrino.

Pet care products are Purina, Friskies, Fancy Feast and Tidy Cats.

Chocolate and confectionery are Kit Kat, Milky Bar, Smarties, Aero and Nestle Toll House.

Culinary, chilled and frozen food are DiGiorno, Stouffers and Hot Pockets, Lean Cuisine, Maggi, Thomy and Sweet Earth.

Dairy and ice creams are Carnation, Nido, Haagen-Daz, Dreyer’s/Edy’s.

Nutrition products are Gerber, Cerelac, Boost, Vital Proteins and Narue’s Bounty.