Under Investor Pressure, Herbalife’s CEO Resigns
The top executive of Herbalife International has resigned his $3.3-million-a-year position amid investor pressure to auction the company.
Chris Pair, Herbalife’s 46-year-old president and chief executive, said Thursday that he is leaving the Los Angeles-based multilevel marketing firm, which he joined in 1985. He declined to comment further on his departure.
Pair became president after Herbalife’s charismatic founder and leader, Mark Hughes, died last year at 44 of a combination of alcohol and a prescription antidepressant. Pair had previously served as chief operating officer.
Pair’s leadership had come under fire by two of the company’s investors, New York-based Steel Partners II and Jana Partners.
The two firms, which own a combined 3.9% of the company’s Class B stock, in July accused Pair and two other top management officials, Conrad Klein and Hughes’ father, Chairman Jack Reynolds, of conflict of interest because they have positions with both the company and the Mark Hughes Family Trust, which controls 42% of the company.
In an open letter, Steel Partners II and Jana Partners asked the company’s board to investigate a possible conflict by the three executives and to consider putting the company on the auction block. Their letter was prompted by reports that the board had rejected an outside offer for the company and was considering a buyout by Pair, Klein and Reynolds.
Speculation about a deal has pushed the company’s shares up 53% from their 52-week low in March to close at $10.80 on Nasdaq.
The company’s performance has continued to slide. Herbalife’s retail sales for the second quarter ended June 30 declined to $413.4 million from $441.2 million in the comparable period last year. Its net income dropped to $10 million, or 33 cents a diluted share, compared with net income of $11.7 million, or 39 cents a diluted share, in the same period a year ago.
Herbalife sells a variety of diet, nutrition and personal-care products in 49 countries through a network of 100,000 independent distributors.
