Fabricant says NPA will overhaul bylaws as a result of lawsuits

By Hank Schultz contact

- Last updated on GMT

Fabricant says NPA will overhaul bylaws as a result of lawsuits

Related tags: Npa, Management, Corporate governance

The Natural Products Association will change some bylaws as a result of its current legal issues, CEO Dan Fabricant told reporters in a conference call yesterday. Fabricant said he is confident the two lawsuits the group is involved in will resolved in favor of the organization.

The two lawsuits are one filed against Fabricant and NPA by former CFO Brent Weickert alleging wrongful dismissal​, and a second countersuit filed by NPA against 10 members of its own board of directors​ whom the organization alleges colluded with Weickert in his actions against NPA.

“We are very confident in the relief we are asking for,”​ Fabricant said. “If this were a privately traded company and board members were involved with a shadow board there would be very significant consequences for that.”

Outdated structure

Fabricant said the suits have exposed what he called an antiquated form of organizational structure at NPA. It’s something the executive committee and the remaining board members will address in the coming months.

“It raises up the issues that were going on prior my arrival and continued to linger after my arrival,”​ Fabricant said. “It pointed to a need for change in the structure and a need for change in the bylaws to be more in line with organizations in our space.”

In Weickert’s suit, it is alleged that Fabricant created a hostile work environment at NPA and that Weickert was fired in October of last year essentially in retaliation for bringing this to the board’s attention. In NPA’s countersuit, the allegation is that Weickert was informed that he was to be let go for performance reasons and because the organization, which is based in Washington, DC, no longer wanted to have senior management working from remote locations (in Weickert’s case, California) and that Weickert then began colluding with the 10 named board members in effort to undermine Fabricant. Both suits have been moved to a court in Washington, DC. 

The board members who have been sued by NPA include Robert Craven, CEO of FoodState, makers of the Megafood line of whole food vitamins, and nine current and former board members who represent small retailers. Fabricant was asked whether that mix of defendants might have a chilling effect on rebuilding retail membership, a key swath of the industry that NPA represents.

“We wouldn’t lump the two together. We didn’t take that action because they were retailers or suppliers or from any specific organization. Any organization like NPA has to have good governance. I think NPA will always be the voice of the industry and retailers will continue to be part of that,”​Fabricant said.

New dues structure

In a move that is certain to grab more attention among retail members than the makeup of defendants in a lawsuit, NPA has radically overhauled the dues structure, doing away with the $49 annual dues level for the smallest companies.  

“The minimum retail dues will be $199. That structure is more in line with what other organizations are doing. If you look at most associations, dues for retailers are based on a percentage of revenues and we are not even doing that, which would be substantially higher,”​ he said.

Fabricant did not provide specifics about what other bylaws might be changed beyond the dues structure, but did say the organization needs to become more nimble. NPA was in difficult financial straits when Fabricant came on board, and he claims to have turned that around since taking the reins in 2014 following a stint at the Food and Drug Administration. Fabricant’s short-tenured predecessor at NPA, John Shaw, attempted to address the financial picture by asking the membership to expand NPA’s potential membership pool to include the largest category of retail chains. That effort came up short, but Fabricant said that it actually had substantial support and failed only to clear the high bar set for a bylaw revision. That’s something he said he’ll try to change, to allow NPA to more easily adapt to changing circumstances.

“The way things move in the food and drug space we have to be swifter than that. We have got to switch our governance platform to one that is welcoming to all and at the same time upholds the traditions of the NPA,” ​Fabricant said.

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Making the laws

Posted by Whistleb,

Funny how Fabricant can be the head of the NPA, then the head of the FDA, then back to the NPA. Seems like quite the opportunity for Fabricant to make his own rules. This type of practice seems very unethical and our Govt should not allow this type of practice. Which happens all to much with the FDA,NPA, DEA, pharmaceutical companies, etc.

Quite the revolving door they've created for themselves

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Thank you, Donnie.

Posted by Stephen Daniells, Senior Editor, NutraIngredients-USA,

We greatly appreciate the clarification. I had taken my numbers from the same document you list, but I'd omitted the qualification that it was based on supplement and body care sales.

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Corect NPA Dues

Posted by Donnie Caffery - NPA board member,

The correct NPA dues can be found at this link from the NPA web site that downloads a pdf: http://www.npainfo.org/App_Themes/NPA/docs/membership/Retail%20Application.pdf
The dues structure is on Page 3.
Stephen Daniells' fact check is a slightly incorrect.
There is no $699 dues level.
The dues for a single store or chain of two is based, not upon store sales, but upon the sales of only supplements and skin care products. That makes a big difference. The dues for a chain of three or more is a flat rate of $2,499.

Happy to clarify.

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