NESTLÉ CEO'S REMOVAL: PRETEXT OR PRINCIPLE?
- Juan Carlos Erdozain Rivera, MBA
- Sep 26
- 6 min read
The romantic relationship wasn't the root cause of Nestlé CEO Laurent Freixe's dismissal. It was the catalyst that allowed the board to resolve its leadership problem quickly, cleanly, and strategically. A stark reminder that, at the top, where pressure is highest, a personal error in judgment can fatally collide with professional failure.
The Situation: Justified Dismissal?
On September 1, 2025, Nestlé SA, the global food and beverage giant, announced the immediate dismissal of its Chief Executive Officer (CEO), Laurent Freixe, after just one year in office.
The official reason, communicated with incisive clarity by the Board of Directors, was a violation of the company's Code of Business Conduct: an "undisclosed romantic relationship with a direct report." However, a thorough analysis of the events leading up to and surrounding this decision reveals a much more complex narrative, largely validating the intuition that the relationship was the catalyst, but not the root cause, of her downfall.
As senior management advisors, our job is to look beyond the headlines and analyze the underlying forces that dictate the fate of leaders and corporations.
The recent and abrupt dismissal of Laurent Freixe as CEO of Nestlé is a fascinating case study that deserves a thorough deconstruction, far from sensationalism and closer to strategic analysis.
The official version is clear, incisive, and, on the surface, irrefutable: Freixe was fired for violating the code of conduct by having an undisclosed relationship with a direct subordinate. End of story.
But is it really so? For anyone who has navigated the complex waters of a boardroom, this explanation, though factual, feels incomplete. Intuition tells us there's more to it. And in this case, intuition is correct.
Freixe's absence was the spark, but the flammable material—poor corporate performance, a crisis of confidence, and immense investor pressure—had been building up in the executive suite for months.
Let's analyze the situation not as a personal drama, but as what it really was: a governance maneuver at a strategic crossroads.
The Fault: The Impeccable Pretext, the Lack of Integrity
Freixe's infraction shouldn't be downplayed. It was serious for two critical reasons:
Violation of the Code: The existence of a relationship of direct dependency with a partner creates a flagrant and unmanageable conflict of interest. It is a basic rule of governance.
The Denial (The Fatal Error): The truly unforgivable mistake was denying the relationship when confronted by the board. This act transformed a lack of judgment into an irreparable breach of trust. For a board, the CEO's integrity is non-negotiable. Trust is the bottom line; without it, everything else collapses.
Let's not forget that one of the most important principles and values in a company, organization, or corporation is Integrity.
We often talk about values like innovation, efficiency, and customer focus, and they are undoubtedly important. However, without a solid foundation of integrity, these values can become hollow and even counterproductive. As Stephen L. Carter rightly points out, integrity goes far beyond simple honesty; it is an active commitment to what is right, a moral compass that guides every decision and action within our organization.
Integrity: More than Telling the Truth, Doing the Right Thing (Even When It Hurts)
This misconduct provided the Board with an impeccable justification—a legally sound, publicly defensible, and financially advantageous (without compensation) reason—to make a change that, as we shall see, the business was already crying out for.
The Context: The Real Driver of the Decision
A CEO isn't fired in a vacuum. A board's tolerance for a leader's personal mistakes is inversely proportional to the company's performance. And Nestlé's performance under Freixe was, to put it bluntly, unsustainable.
LET'S CONSIDER THE BIG PICTURE
🟡An Inherited Throne in Crisis, Freixe was appointed after the dismissal of his predecessor, Mark Schneider, precisely because of poor results.
The message was clear: the council had run out of patience. Freixe had no room for error.
🟢 Disappointing results: during his year in office, the situation did not improve. Shares lost 17% of their value , revenue fell 1.8%, and net profit plummeted 10.3% in the first half of 2025.
These are not numbers that generate loyalty on a board.
Nestlé Financial Key Performance Indicators (2024-2025)
🔵Investors were on the warpath, the external pressure was immense. Investors in the top 30 described the situation as "historical proportions," and one in the top 20 described Freixe as a "disappointment," actively calling for a change to "slim down the company."
When your key stakeholders lose faith, your time is numbered.
In this climate of crisis, Freixe's lack of integrity wasn't a setback; it was a professional death sentence. He didn't have the political capital or the results to survive a scandal of this magnitude.
Below is a timeline of key events that illustrate the escalating crisis at Nestlé, demonstrating the lack of stability and increasing pressure on leadership.
Nestlé Leadership Timeline and Key Events (August 2024 – September 2025)
Weighing the Evidence: The Perfect Storm for an "Impeachment"
The violation of the code of conduct was, indeed, the perfect excuse. It wasn't a fabricated pretext, but a legitimate one that Freixe, through his own error of judgment, handed to the board on a silver platter. This principled justification gave the board several key strategic advantages:
A Quick and Legally Uncontested Exit
The code violation, compounded by outright lying to the board, constituted just cause for dismissal. This eliminated the need for a protracted and potentially costly exit negotiation that might have arisen if the dismissal had been based solely on "poor performance," a term often subjective and difficult to legally defend. It allowed for immediate and fair action.
A Favorable Public Narrative
For a company that prides itself on its Swiss heritage of stability and good governance, admitting the failure of two CEOs in twelve months would have been a public humiliation. Framing the dismissal as a defense of Nestlé's "values and governance" allowed the board to project an image of strength, integrity, and decisive leadership. It was a far more palatable narrative for shareholders, employees, and the public than that of a board that had made two consecutive errors in judgment in the selection of its top executive.
A Cost-Effective Solution
As noted above, the "for cause" termination meant Freixe was not entitled to a severance package. At a time when investors were demanding cost cuts and greater efficiency, the board was able to resolve its leadership issue at no additional financial cost. This economic expediency should not be underestimated as a factor in the final decision.
Final Analysis: Lessons from the Top of the Council
Laurent Freixe's dismissal wasn't a choice between "pretext or principle." It was a convergence of both. The board used a principled justification to solve a pressing performance-based problem.
For my colleagues, leaders, and board members, this case teaches us three crucial lessons:
1️⃣ Performance is your only shield
A track record of success can give a leader the benefit of the doubt in times of personal crisis. A track record of failure offers no protection. Freixe was professionally exposed, and his personal mistake was the final blow.
2️⃣ Transparency with the Council is not Optional
Freixe's lie (lack of integrity) was more serious than the relationship itself. By lying, he eliminated any possibility of a negotiated solution and forced the board's hand toward the harshest possible termination.
3️⃣ Governance is a Strategic Tool
Nestlé's board handled the situation astutely. They turned an integrity crisis into an opportunity to reset leadership, calm investors, and project an image of strength, all without publicly admitting a second consecutive mistake in their CEO selection.
The romantic relationship wasn't the root cause of Laurent Freixe's dismissal. It was the catalyst that allowed the board to resolve its leadership problem quickly, cleanly, and strategically. A stark reminder that, at the top, where pressure is highest, a personal error in judgment can fatally collide with professional failure.
Thank you very much for the privilege of your time,
Juan Carlos Erdozáin Rivera
Senior Management Advisor
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