Nestlé CEO abruptly ousted as board seeks better cultural fit
Summary
Mark Schneider was pushed out of Nestlé and learned he would be losing his job just 24 hours before it was announced publicly.
Mark Schneider, Nestlé’s chief executive, was pushed out of the company and learned he would be losing his job just 24 hours before it was announced publicly, according to a person familiar with the matter.
Schneider was asked on Wednesday to resign by Nestlé’s chairman. Paul Bulcke told him that he would be succeeded by Nestlé veteran Laurent Freixe.
The surprise move—announced Thursday evening—comes after Schneider has grappled with a string of issues over the past two years, muddling what had been viewed by many as a strong run as Nestlé CEO over the past eight years.
The CEO change came after mounting concerns over several months among senior leaders and board members over whether Schneider was still a good fit for Nestle’s deeply rooted culture, according to a person familiar with the matter.
Bulcke, who has worked at Nestlé since 1979 and been chairman for eight years, had increasingly heard from other senior employees that Schneider had trouble connecting with many of Nestle’s customers during market visits and appeared increasingly focused on the short term. Nestlé’s brands include Gerber baby food, Haagen-Dazs ice cream and Purina pet food.
Nestlé shares were trading slightly lower on Friday, the first full day of trading since the CEO change was announced.
Soon after becoming CEO in 2017, Schneider overhauled Nestlé, selling slow-growth businesses, acquiring others that looked promising and injecting a sense of urgency into a company many once saw as complacent and slow-moving. His ousting marks a stunning fall for a CEO who, just two years ago, many saw as the best leader in the European consumer-goods industry.
Nestle’s announcement that it was replacing Schneider, who formally steps down next week, caught employees and investors off guard.
It published the announcement at 6 p.m. in Switzerland after most local Nestlé employees had left for the day. As of Friday afternoon, employees hadn’t received any further updates, leaving many speculating about why Schneider had resigned, according to another person familiar with the matter. The person said some employees are worried that appointing a longtime company insider could make it more challenging to shake up the company’s culture.
Nestlé has long seen—and portrayed—itself as stable and steady. And yet, a string of recent events has been highly disruptive.
Nestlé received a wave of negative publicity in Europe when two children died in 2022 after eating pizza made by one of the company’s pizza brands in France that was contaminated with E-Coli. The company is still being investigated over the issue. Last year Nestlé took a $2.1 billion write-off of its peanut-allergy treatment and said it would sell the business.
Nestlé also struggled with a technology integration that hurt sales in its health-sciences unit. Earlier this year French prosecutors said they were investigating Nestlé for flouting rules on how it treated its mineral water.
More recently, shares dropped sharply after Nestlé last month reported half-year results. Shares at one point plunged to levels last seen in 2017. The results weren’t bad enough to explain the depth of the drop. Board members saw it as indicative of a lack of investor trust in Schneider, according to the person familiar with the matter.
Board members began discussions last Friday over replacing Schneider. They spoke over the weekend and decided that Freixe was the best man for the job. Freixe learned he would be CEO several days before Schneider was asked to resign, according to the person familiar with the matter.
Schneider was the first outsider to run Nestlé since 1922, when banker Louis Dapples was chosen to lead the company after its only financial loss. Schneider joined from European healthcare company Fresenius SE, succeeding Bulcke, who became chairman.
Schneider successfully pivoted Nestlé further toward fast-growing coffee and pet food while jettisoning slower-growing businesses like its North American candy unit and cold meats. The shifts helped him fend off activist investor Dan Loeb and held Nestlé in good stead during Covid, when many consumers drank more coffee at home and acquired more pets.
He showed his commitment to Nestlé by giving up external board seats and moving his family from Germany to Nestlé’s hometown of Vevey in Switzerland. He spent about half the year on the road, often visiting one of the 190 countries where Nestlé sells its products. Culturally, some employees say he brought more accountability to the company.
“Mark introduced dynamism," says one Nestlé employee. “He gave the sense that you’re rewarded for the work you do."
Frexie joined Nestlé as a trainee in 1986. He headed its Europe business through the 2008 financial crisis and served as the head of its Americas business. He has been its Latin America head since 2022. Among board members, he is viewed as a safe pair of hands—someone who knows Nestle’s business inside out, buys into its culture and won’t rock the boat too much.
On an investor call on Friday morning, the incoming CEO talked about how he wanted to improve market share and productivity, raising eyebrows among some analysts who said the ideas, while sound, weren’t in any way new.
“While we absolutely understand that he will not have had much time to gather his thoughts, his priorities around market share and sales growth, investment in the business and productivity savings do not sound radical," said RBC analyst James Edwardes Jones after the call had ended.
Bulcke on the call said Schneider had “decided to explore new opportunities outside of Nestlé." He said Freixe has a “profound understanding" of Nestle’s markets and understands “what our consumers want." Freixe, Bulcke added, knows Nestle’s “cultural values."
Write to Saabira Chaudhuri at Saabira.Chaudhuri@wsj.com
