What the ousting of Nestlé’s CEO shows about office romance today

The consequences for an improper romance can be severe

The devil is in the details of disclosure

Boards have been known to look past misconduct

If your spouse used to report to you, you probably shouldn’t be a CEO

EuropeWhat the ousting of Nestlé’s CEO shows about office romance todayBy Lila MacLellanBy Lila MacLellanSenior

It seemed like such a clean break, like snapping off a piece of a Kit Kat bar. 

Last week, Nestlé, the $244 billion food conglomerate behind some of the world’s most beloved candy and coffee brands, announced that its CEO, Laurent Freixe, had been dismissed for violating the company code of conduct after just one year on the job. 

An investigation had confirmed reports that he was having an inappropriate relationship with a direct report, the company said. Nestlé, a category laggard whose share price has been slipping, had already installed a new CEO, Philipp Navratil, an internal hire who previously led the company’s Nespresso business. The subtext of the press release was clear: Nothing to see here. 

Despite the lack of kiss cams and celebrity hijinks, however, the story has continued to hold people’s attention, prompting conversations about the ethical nuances of consensual office romances, changing norms for how companies handle them, and the standards for personal behavior that CEOs are held to.Here are some takeaways from Nestlé’s CEO ouster: 

Boards have less tolerance now for CEO misconduct, like office romances, compared to 20 or 30 years ago, and are generally moving quickly to replace problematic leaders. The exits following a scandal like this can be far more punitive than when leaders are removed for performance issues, often with “golden parachutes.” As my colleague Eva Roytburg reported, Freixe left Nestlé without any pay package. 

The shift toward tough enforcement is partly due to concerns about perceptions of the company. “The scrutiny is both internal and external,” says Schloetzer, adding that it goes beyond shareholders. “It’s boards, it’s peers in the C suite, it’s people one level below the C suite. Everybody has a heightened sense of what’s the right thing to do, and the leash for not doing the right thing has become shorter and shorter.”

Nestlé’s news release said the ex-CEO was being dismissed not just for having a relationship, but for having an undisclosed relationship. (Freixe was reportedly investigated twice and denied the affair during the first inquiry.) 

So would he have been safe if he had come clean?Probably not, as a chief executive. Most companies have a zero-tolerance policy for CEOs dating employees because no matter where they are on the org chart, the power imbalance is too great for there not to be questions about the CEO’s decision-making and ethics. “I mean, human re

Although star CEOs have been taken down

But complaints from employees about a leader’s behavior can sometimes force action. “While a hypothetical board member might turn a hypothetical blind eye,” she says, employees don’t have the same incentive to do so.

The Nestlé board overlooked an important detail about Freixe when he was first nominated for the corner office, argues Guido Palazzo, a professor of business ethics at the University of Lausanne and co-

Nestlé’s board would likely have been aware of that background, and hiring him anyway sent a mixed message. “He should never have become CEO if this behavior was not acceptable at Nestlé,” says Palazzo. “Instead, it was tolerated, and he continued to be promoted.”