Core Points - Nestlé Group unexpectedly announced the dismissal of CEO Laurent Freixe after just one year in the role, appointing Philipp Navratil as interim CEO [2][4] - Freixe was initially well-regarded and had a long tenure at Nestlé, having worked there for 39 years before becoming CEO [4] - The board's decision was based on an independent investigation revealing Freixe's inappropriate relationship with a direct subordinate, violating company conduct guidelines [5][6] Company Overview - Freixe's appointment as CEO came at a time when Nestlé's stock had already dropped 40% from its 2022 peak, following a loss of confidence in the previous CEO [4] - Upon taking office, Freixe focused on core businesses like coffee and food, shifting away from the previous strategy of growth through acquisitions [4] - He also aimed to optimize operational processes and increase marketing spending to 9% of sales to enhance brand performance [4] Governance and Conduct - The board's decision to terminate Freixe highlights the importance of corporate governance and adherence to ethical standards within the company [6][19] - Similar cases in the corporate world show that relationships between executives and subordinates can lead to significant consequences, including job loss and reputational damage [10][12] - Companies often have strict policies against such relationships to prevent conflicts of interest and maintain a fair workplace [13][16] Broader Implications - The dismissal of a CEO can create instability within a company, disrupting strategic plans and requiring time to find a suitable replacement [16][18] - Historical examples, such as the case of HP's former CEO Mark Hurd, illustrate that board decisions to remove executives can have long-term negative impacts on company performance [18] - The necessity of maintaining ethical conduct in leadership roles is emphasized, as breaches can lead to significant repercussions for both individuals and organizations [19][20]