Herbalife Names New CEO: A New Chapter for the Controversial Nutrition Company
Herbalife has announced a significant leadership change with the appointment of Stephan Gratziani as the new CEO. The move marks a transformative step for the Los Angeles-based nutrition products company, which has navigated a turbulent decade marked by numerous controversies.
Stephan Gratziani Takes Over as CEO
Stephan Gratziani, who started his journey with Herbalife as an independent distributor nearly 34 years ago, will assume the CEO role on May 1, 2024. Gratziani most recently served as the company’s president and chief strategy officer, roles he has held since January 2024 and January 2023, respectively.
Michael O. Johnson Transitions to Executive Chairman
Michael O. Johnson, the company’s current CEO and board chairman since 2022, will step into the role of executive chairman. Johnson, a seasoned executive with a storied past at Walt Disney Co., has led Herbalife on three separate occasions, including its most controversial era from 2003 to 2017.
Herbalife’s Complex Past
Johnson’s tenure at Herbalife has been marked by significant regulatory issues. During his first stint, the company faced an investigation by federal regulators into its business practices and structure. In 2016, the Federal Trade Commission (FTC) filed a lawsuit against Herbalife, alleging that it deceived consumers into believing they could make quick profits by selling its health and personal care products.
The FTC’s complaint highlighted how Herbalife misled people into becoming distributors or members through videos and brochures depicting luxurious lifestyles and promising easy wealth, encouraging them to leave their jobs.
Herbalife settled the lawsuit without admitting wrongdoing, paying a $200 million penalty and overhauling its business model.
Recent Bribery Allegations
Four years later, in 2020, federal prosecutors in New York charged Herbalife with bribing Chinese officials. In this case, the company admitted to criminal conduct and agreed to pay over $123 million in combined penalties.
Tackling Controversies and Shaping the Future
Despite its past, Herbalife is now focused on moving forward. During the earnings call announcing the leadership change, Gratziani emphasized the company’s progress but acknowledged that questions remain about the relevance and future of its business model.
Johnson expressed optimism about Herbalife’s future, highlighting the company’s vision from Gratziani and the team to improve distributor support and foster growth.
Current Status and Financial Performance
Herbalife, founded in 1980, currently boasts more than 2 million distributors in over 90 countries. Its product lineup includes meal replacement shakes, protein bars, vitamins, and skin care items.
For 2023, Herbalife reported a decline in revenue by 1.4% to $4.99 billion. Despite the revenue drop, profits rose to $254.3 million, or $2.53 per share, compared to $142.2 million or $1.44 per share in the previous year.
Investor and Market Response
The company’s earnings report and leadership news were positively received by the market. In after-hours trading, Herbalife’s stock price increased by approximately 18%. However, year-to-date, its stock has declined by nearly 16%, closing at $5.62 per share on Wednesday.
Conclusion
The appointment of Stephan Gratziani as CEO signals Herbalife’s commitment to addressing past controversies and shaping a promising future. As Herbalife continues to rebuild its reputation and financial performance, investors and consumers will watch closely to see if the company can implement lasting positive changes.
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