Herbalife billionaire CEO to step down after $200 million pyramid scheme suit

Herbalife CEO Michael Johnson, who has the led the company for 13 years, fending off allegations that the business was a pyramid scheme and overseeing a $200 million settlement with federal regulators, will step down next year, the firm announced Tuesday.

Johnson will step aside to become executive chairman of the Los Angeles- based company on June 1, when he will be replaced by Richard P. Goudis, the company’s chief operating officer.

“It is a privilege to lead this remarkable company and work with our extraordinary management team, employees and distributors to reach the position of strength we are in today,” Johnson said. “Our mission of improving people’s nutrition and health is what attracted me to Herbalife Nutrition more than 13 years ago, and I am extremely proud that we have made incredible strides in bringing our mission to bear around the globe. I look forward to continuing to advocate the importance of good nutrition, which is at the heart of my new role.”

Jeffrey T. Dunn, lead independent director of Herbalife Nutrition’s board of directors, credited Johnson for quadrupling the company’s sales during his time as CEO and expanding the company’s global reach.

“As we move through this planned leadership transition process, we look forward to Michael’s ongoing involvement with the company as executive chairman, where his talents, experience and judgment will continue to help guide the company and deliver value for shareholders,” he said.

In July, Herbalife agreed to pay $200 million and change some of its business practices to resolve claims by the Federal Trade Commission that the company deceived customers into believing they could get rich by selling its products.

Herbalife officials denied the allegations, saying they agreed to the settlement to avoid costly litigation. Johnson said the agreement was an acknowledgement that “our business model is sound” and underscored “our confidence in our ability to move forward successfully.”

The FTC’s investigation began in March 2014 after billionaire investor William Ackman claimed that Herbalife was operating a pyramid scheme.

Goudis, who has been COO since 2010, said he looks forward to his new position.

“As a leading nutrition company, we have shown our ability to continuously innovate by bringing new products to market and improving the customer and distributor experience,” he said. “I look forward to building upon this strong foundation and working with our employees and distributors as we continue to bring quality nutrition to people around the world.”

–City News Service 

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