Nestle CEO Axed After Probe Into Complaints of Favouritism, CFO Says

Nestle CEO Dismissed Amid Allegations of Favoritism and Misconduct

Nestle's Leadership Crisis

By John Revill

Details of the Allegations

ZURICH (Reuters) -Nestle staff complained in May about improper favouritism by former CEO Laurent Freixe towards an employee with whom they alleged he was romantically involved, a senior executive said on Wednesday, two days after Freixe was sacked.

Impact on Nestle's Future

Freixe was fired due to an undisclosed relationship with a subordinate, exactly a year after he replaced Mark Schneider, plunging the Swiss food giant into turmoil.

Succession Planning

Chief Financial Officer Anna Manz said the relationship between Freixe and the employee, who has not been named, was first examined in an internal investigation following concerns raised via Nestle's internal reporting system, called Speak Up.

"Back in May, we received a Speak Up through our internal channels alleging a romantic relationship with an employee and improper favouritism," Manz told a Barclays investor conference.

The matter was investigated by the board, but no evidence was found, she said.

"And it was at that point that Laurent also made a personal statement stating that there had been no such thing," Manz said, referring to the concerns about Freixe raised by whistleblowers.

But complaints continued to be made, Manz said, leading to a second, broader inquiry being launched with help from Swiss lawyers Baer & Karrer.

"And it was that that triggered information that led to the board believing that there had been a breach of conduct and that they needed to act to change the CEO," she said.

Freixe, who had denied the relationship throughout the course of both investigations, was dismissed on Monday following a board meeting, and will not receive an exit package.

He could not be immediately reached for comment.

Investors and analysts have described the dismissal of the 39-year company veteran as a crisis of historic proportions at Nestle, traditionally seen as a pillar of the Swiss business establishment.

'STRATEGIC, THOUGHTFUL LEADER'

Freixe was replaced by Nespresso boss Philipp Navratil. Manz said he will bring a fresh perspective to the company.

Navratil, 49, has spent 24 years at Nestle, mainly in its coffee business, and joined the executive board in January.

"He's a really strategic, thoughtful leader. He's also very pragmatic and executionally focused," Manz said.

Nestle denied reports Manz's appearance had been hastily arranged to present the company's side of Freixe's sacking to investors. The company said Freixe had also been due to attend the conference with Manz before his dismissal.

The company, famous for KitKat chocolate bars and Nescafe instant coffee, has been struggling since the tenure of Freixe's predecessor Schneider, the first outsider to lead Nestle since 1922.

Some analysts accused Schneider of focusing too much on acquisitions and cutting spending in vital areas.

Schneider was fired in August 2024 following Nestle's slow post-pandemic recovery, triggering what has become one of the messiest managerial periods in the 159-year-old company's history.

Manz said Navratil's quick appointment was possible because the Nestle board had already begun succession planning due to the fact that Freixe is 63.

Navratil would be present for Nestle's third-quarter results on October 16, and would likely meet investors before then, Manz said.

(Reporting by John Revill;Editing by Dave Graham and Emelia Sithole-Matarise)