Herbalife names a new CEO as it tries to move on from FTC settlement
Los Angeles supplement maker Herbalife Ltd. said it will promote Chief Operating Officer Richard Goudis to become its next chief executive.
Company head Michael Johnson will become the company’s executive chairman when the “planned leadership transition” takes place in June, Herbalife said in a statement Tuesday.
Jeffrey Dunn, lead independent director of Herbalife’s board of directors, praised Johnson’s “vision, leadership and passion,” saying he strengthened the company’s global leadership.
Johnson became Herbalife’s chief executive in 2003 and guided the company through a Federal Trade Commission investigation that stemmed from allegations in December 2012 by activist investor Bill Ackman that the firm was operating a pyramid scheme.
Ackman’s hedge fund had bet $1 billion that Herbalife’s stock would plummet.
In July, Herbalife agreed to pay $200 million to settle FTC claims that the company misled people into becoming distributors for its weight-loss shakes, protein powders and other products by telling them they could get rich quick.
Herbalife also agreed to change its business practices as part of the settlement. Separately, the company agreed to pay $3 million to settle an investigation by the Illinois attorney general’s office.
At the time, Johnson said the settlements were “an acknowledgment that our business model is sound and underscore our confidence in our ability to move forward successfully,” otherwise the company would not have agreed to the terms.
Since then, Johnson pushed to transition Herbalife into a global nutrition company. As of July, 80% of the company’s sales were overseas, where the FTC has no oversight authority.
Herbalife also sponsors athletes and sports teams, including the L.A. Galaxy soccer team.
For more business news, follow me @smasunaga