Photo: Herbalife Nutrition’s COO, Richard P. Goudis (right) will become CEO when chairman and CEO Michael O. Johnson transitions to executive chairman in June 2017. (Business Wire)
The man who led Herbalife Ltd. through a multi-year federal investigation and battle with hedge fund manager William Ackman will transition from the top executive role in June 2017, the nutrition company said Tuesday.
Michael O. Johnson has served as CEO since 2003, when he joined the company from Disney, where he headed international operations. Succeeding him is Rich Goudis, current Chief Operations Officer and former Chief Financial Officer of Herbalife. Upon stepping down, Johnson, who was named chairman in 2007, will take on the role of executive chairman.
“Over the past 13 years, Michael’s incredible vision, leadership and passion for Herbalife Nutrition’s mission have strengthened the company’s global leadership, expanding our positive impact on the health and wellness of millions of people in more than 90 countries,” said Jeffrey Dunn, lead independent director of Herbalife Nutrition’s board. Dunn also stated that, as executive chairman, Johnson will continue to play an active role in guiding Herbalife’s strategy.
The announced transition will mark the end of an era—one that has yielded significant expansion for Herbalife, despite the regulatory scrutiny of the past few years. During Johnson’s tenure, the company has quadrupled annual net sales from $1.1 billion to $4.5 billion, making it the No. 3 direct selling company in the world, as ranked on the DSN Global 100.
“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,” Johnson said in the company’s announcement. “I look forward to continuing to advocate the importance of good nutrition, which is at the heart of my new role.”
Herbalife will benefit from Johnson’s expertise as it implements operational changes imposed by the Federal Trade Commission in its July settlement with the company. The deal concluded a 26-month probe into Herbalife’s business practices, spurred by Ackman’s claims that the model, which rewards independent resellers for recruiting new members, constitutes an unlawful scheme. In the settlement, Herbalife agreed to pay $200 million in consumer relief and modify its business practices.
Ackman’s fellow Wall Street titan Carl Icahn, one of Herbalife’s largest investors, followed up Herbalife’s announcement with a statement issued late Tuesday. “Almost four years ago, we became shareholders of Herbalife and now have five of our nominees on the Board,” said Icahn. “We would like to applaud Michael Johnson for doing a superb job navigating the company through a number of libelous attacks during this period. I am glad he intends to stay meaningfully involved in the company and I fully support the Board’s choice of Rich Goudis becoming CEO while Michael remains actively engaged as Executive Chairman.”
Expressing his own confidence in the company’s pick, Johnson said, “Rich and I have worked side by side for more than a decade, and I’ve witnessed firsthand his extraordinary integrity, judgment and passion for making Herbalife Nutrition a great company.”
Since Goudis took on the role of COO in 2010, the company has intensified its efforts to boost in-house production. Herbalife now has five H.I.M. (Herbalife Innovation and Manufacturing) facilities around the world and manufactures more than 70 percent of its own products.
“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,” said Goudis. “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.”
The news comes on the heels of Herbalife’s latest financial disclosure, which records adjusted earnings of $1.21 per share, beating the $1.09 a share predicted by analysts. The company said revenues amounted to $1.12 billion, narrowly missing analysts’ estimates.