Nestlé’s Leadership Turbulence: Implications for Governance and Shareholder Value

Nestlé’s recent leadership turmoil has exposed deep-seated governance risks that threaten its long-term value creation. The abrupt exits of two CEOs—Mark Schneider in 2024 and Laurent Freixe in 2025—have eroded investor confidence, with the stock underperforming peers by 12% in the year following the 2025 restructuring [2]. These transitions, coupled with a scandal involving Freixe’s undisclosed relationship with a subordinate, underscore systemic weaknesses in board oversight and ethical governance [5]. The resulting instability has not only dented shareholder trust but also raised questions about the company’s ability to execute its strategic vision in a sector where consistency is paramount.

The governance risks are multifaceted. Nestlé’s board, despite restructuring efforts, has struggled to maintain independence and enforce accountability. The Freixe scandal, which violated the company’s Code of Business Conduct, revealed lapses in internal controls and a failure to prevent conflicts of interest [4]. Meanwhile, the rapid succession of CEOs has created a vacuum in strategic coherence, with analysts warning of “strategic drift” as each new leader pivots priorities [2]. This instability is compounded by Nestlé’s ESG performance, which ranks 59th in the Food Products industry, lagging behind peers like Danone and Costco [6]. Critics argue that the company’s reliance on land-based carbon removals and opaque climate targets creates a “misleading impression of progress” [3], further alienating stakeholders demanding transparency.

Philipp Navratil, appointed CEO in September 2025, faces an uphill battle to restore confidence. While his 23-year tenure at Nestlé and expertise in sustainability offer promise, his restructuring plan—merging regional divisions into five global zones—has been met with skepticism. Centralization risks eroding market-specific knowledge, and the push for AI-driven supply chains requires cultural buy-in from a workforce still reeling from leadership upheaval [2]. Investors remain wary of Navratil’s ability to balance operational efficiency with ethical governance, particularly given the board’s recent track record of oversight failures [1].

The financial implications are stark. Nestlé’s stock has declined 15% since 2024, outpacing the sector’s average [1], while its elevated weighted average cost of capital (WACC) and declining return on invested capital (ROIC) signal deteriorating value creation [5]. In contrast, Danone’s proactive climate strategies—such as a 30% methane reduction target for fresh milk by 2030—and PepsiCo’s clearer packaging sustainability goals highlight the competitive gap Nestlé must close [3]. For Navratil to succeed, he must not only stabilize operations but also overhaul governance frameworks to ensure board independence, enforce ESG accountability, and align with global best practices [2].

Investors should monitor three key metrics: (1) Navratil’s ability to integrate ESG initiatives with measurable outcomes, (2) the board’s commitment to transparency in leadership appointments, and (3) the company’s progress in addressing supply chain controversies, such as the €3 billion mineral water fraud in France [2]. Until these governance risks are mitigated, Nestlé’s shareholder value will remain vulnerable to volatility and reputational damage.

Source:
[1] Nestlé's Leadership Crisis and Market Implications [https://www.ainvest.com/news/nestl-leadership-crisis-market-implications-corporate-governance-investor-confidence-times-executive-instability-2509/]
[2] Leadership Instability and Strategic Drift at Nestlé [https://www.ainvest.com/news/leadership-instability-strategic-drift-nestl-implications-shareholders-2509/]
[3] New report accuses Big Food of corporate greenwashing [https://agfundernews.com/new-report-accuses-big-food-of-corporate-greenwashing-danone-and-nestle-hit-back]
[4] Nestlé Board appoints Philipp Navratil as CEO following the departure of Laurent Freixe [https://www.globenewswire.com/news-release/2025/09/01/3142260/0/en/Nestl%C3%A9-Board-appoints-Philipp-Navratil-as-CEO-following-the-departure-of-Laurent-Freixe.html]
[5] Corporate Governance and Risk Management: A Systematic Review [https://www.researchgate.net/publication/372192229_Corporate_governance_and_risk_management_a_systematic_review_and_synthesis_for_future_research]
[6] Nestlé SA - Company ESG Risk Rating [https://www.sustainalytics.com/esg-rating/nestl-sa/1007910219]