Swiss food conglomerate Nestle dismissed chief executive Laurent Freixe effective immediately after only one year in office because he concealed a romantic relationship with an employee who reported directly to him, the BBC and NDTV disclosed Monday.
The Switzerland-headquartered producer of Kit Kat chocolate bars and Nespresso coffee capsules stated Freixe's termination followed a probe overseen by the company's board chair and lead independent director that confirmed the allegations, the BBC reported.
Sources indicate the inquiry originated from a complaint filed through the corporation's whistleblowing mechanism called "Tell Us," which allows workers and external stakeholders to confidentially report possible breaches of corporate principles, including conflicts of interest, harassment, or improper conduct, according to the BBC.
Company chairman Paul Bulcke declared, "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."
The relationship involved an employee not serving on the executive board, with investigators examining conflict of interest concerns, sources familiar with the matter revealed to the BBC.
Chairman Bulcke and independent director Pablo Isla, former Inditex chief executive who led Zara's parent company, directed the inquiry with support from independent external legal advisors.
The Financial Times reported that concerns regarding Freixe's relationship with an employee emerged earlier this year; however, an initial internal investigation concluded that the allegations were unsubstantiated. After complaints continued to suggest possible favoritism and conflicts of interest, the newspaper reported that Nestle launched another investigation with the assistance of external counsel, which substantiated the allegations, according to the Financial Times.
A Nestle spokesperson commented: "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," the representative continued.
Freixe, who was born in France, joined Nestle France in 1986 and climbed the corporate ladder over almost four decades, NDTV reported. He managed operations across Europe and Latin America before advancing to the global chief executive position last September, replacing Mark Schneider.
Charged with reinvigorating consumer demand and refocusing attention on core brands, he had served in the role for less than one year.
Nestle verified the dismissed executive will not receive exit compensation.
His removal comes amid difficult circumstances for the company. Company shares have declined nearly 17% since Freixe assumed leadership, weighed down by slowing sales and shrinking profit margins, according to NDTV. French authorities searched company offices in July over alleged improper filtration methods in the firm's bottled water division.
Philipp Navratil, employed by Nestle since 2001, has been selected as Freixe's replacement. Navratil started as an internal auditor before overseeing businesses across Latin America and managing the global coffee portfolio, joining the executive board earlier this year.
