Nestlé has announced the immediate dismissal of CEO Laurent Freixe following an internal investigation into a breach of the company’s code of conduct related to a personal relationship with a subordinate.

The board has appointed Philipp Navratil, the head of Nespresso, as his successor, marking a significant leadership transition for the company.

Freixe, who had been with Nestlé for nearly 40 years and took over as CEO just a year ago, was removed from his position after a thorough investigation into allegations raised through the company’s internal complaints system, 'Speak Up'.

While initial findings deemed the claims unsubstantiated, persistent internal complaints prompted a second investigation, which confirmed violations of company policy regarding personal relationships in the workplace.

Nestlé’s chairman, Paul Bulcke, highlighted the importance of maintaining strong governance and values within the organisation.

“This was a necessary decision. I thank Laurent for his years of service at Nestlé,” Bulcke said in a statement of the company's website, reinforcing the company’s commitment to ethical standards.

Freixe’s departure adds to the challenges Nestlé is currently facing, including slowing sales in its core businesses and increasing regulatory scrutiny.

Earlier this year, French authorities raided Nestlé’s offices as part of an investigation into the company’s alleged use of unauthorised filtration methods in its bottled mineral water.

Furthermore, the company faced a recall of frozen meals in the US due to contamination concerns, which raised questions about its quality control processes.

Since taking the helm, Freixe had aimed to refocus the company on its core brands, which include well-known products like Kit Kat, Nescafé, and Purina pet food, amidst a backdrop of declining share prices and investor concerns.

Nestlé's stock has seen a significant drop of over 40% since hitting a peak of SFr127 in 2022, leading to increased pressure on the management team to deliver results.

Philipp Navratil, who began his career at Nestlé as an internal auditor in 2001, has held various leadership roles across Latin America and within the coffee sector, culminating in his recent position as the head of Nespresso.

His appointment comes at a critical time, and his proven track record could help stabilise the company. Jean-Philippe Bertschy, an analyst at Vontobel, noted that Navratil’s leadership is encouraging for investors who have been anxious amid recent turmoil.

Navratil's experience in managing high-profile brands and his understanding of Nestlé’s operational dynamics will be crucial as he steps into the CEO role.

His immediate priorities are expected to include restoring investor confidence, addressing operational inefficiencies, and navigating the ongoing regulatory challenges facing the company.

Navratil said: "I am honoured by the trust the board has placed in me, and it is a privilege to take on the responsibility of leading Nestlé into the future".

"I fully embrace the company's strategic direction, as well as the action plan in place to drive Nestlé's performance. I look forward to working closely with the entire leadership of the company, in alignment with the board, chairman Paul Bulcke and chairman-designate Pablo Isla, to accelerate execution and to drive the value creation plan with intensity."