That, according to corporate-governance veteran Nell Minow, is almost unheard of in the C-suite.
“That is really unusual,” she told Fortune. “I think that’s actually a badge of success for corporate governance, because that’s something investors have been concerned about for a long time: CEOs being dismissed and somehow getting to stay on.”
Nestlé confirmed to Fortune that Freixe will not receive a severance package.
Minow said these different outcomes show that boards are not always consistent in how they police misconduct, but said one thing remains consistent: Social media has left directors with fewer options to look the other way.
“There has been bad behavior in the boardroom for a long time,” Minow said. “But partly because of social media, partly because of the way things get out, the board is under more pressure to respond.”
Boards are slowly adapting, Minow argued. Some have begun docking bonuses or moving faster to terminate CEOs “for cause,” meaning the executive in question committed serious misconduct that warrants dismissal without severance pay. But she warned many still demonstrate a double standard.
“If you see some hypocrisy in the board, by the way that they handle the CEO versus the way they handle a middle manager, that’s a green light for employees to behave badly themselves.”
Even the apology, she said, operates as a test of governance. Minow keeps what she calls an informal “hall of shame” of poor executive apologies. The worst, she explained, dodge responsibility or fail to show how the company will prevent a repeat. The best are blunt, swift, and backed by action.
Ultimately, Nestlé’s move may prove a turning point. By denying Freixe a golden parachute, the Swiss food giant signaled that boards are starting to treat reputational risk as seriously as financial risk, and that missteps at the top no longer guarantee a cushy landing.
