Herbalife CEO resigns over comments ‘inconsistent’ with company standards

By Adi Menayang

- Last updated on GMT

Herbalife headquarters in Carson, CA, on Aug. 2, 2014. Getty Images / Wolterk
Herbalife headquarters in Carson, CA, on Aug. 2, 2014. Getty Images / Wolterk

Related tags Herbalife MLM Multi-level marketing

The multi-level marketing giant Herbalife announced that CEO Richard Goudis resigned due to comments on “expense-related policies and business practices,” the company said in a press release.
Richard Goudis resigned from his position as CEO of Herbalife Nutrition this week. Photo: LinkedIn

It also added that the comments, which Goudis made before he became CEO of Herbalife Nutrition, were “inconsistent with Herbalife Nutrition’s standards and do not reflect the company’s culture.”

Goudis has worked at Herbalife for almost 15 years. He had been CEO since June 2017, before that serving as COO, and before that, as CFO. Former CEO Michael O. Johnson, the company’s executive chairman who was its CEO from 2003 to 2017, will reassume the role on an interim basis effective immediately.

Herbalife said a permanent CEO will be selected from the company’s senior leadership team.

According to an SEC filing from January 8, 2019​, Goudis will be paid $3,5 million for his departure. This payment is contingent on several requirements—that Goudis will not compete with the company and its business between now and December 31, 2019; will cooperate with the company for any internal or external investigations; and will not disparage, defame, or make any negative or derogatory statements about the company.

Herbalife: Resignation doesn't affect financial outlook

In the announcement, Herbalife reaffirmed its financial outlook for this year, saying that preliminary volume point results for Q4 2018 were up 11.6% worldwide and that the company has “continued confidence in the business moving forward.”

Shares were down nearly 3% Wednesday morning after Goudis’ resignation made headlines, though the company's share price is still up around 67% over the past year.

During Goudis’ leadership, the company’s stock price continued to grow​ as it emerged from a battle with activist investor Bill Ackman.  Ackman, through his investment firm Pershing Square Capital, had taken a huge short position on the company's stock which at one time was valued at as much as $1 billion.  Ackman waged a high profile, multi-year attempt to drive down the company’s stock price with allegations that its business model was an illegal pyramid scheme.

In July 2016, Herbalife agreed to a $200 million fine​ and entered into an agreement with the FTC to restructure its business by changing how it interacts with its independent distributors.

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