Chief Who Guided Herbalife Through Troubles Will Step Down


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Michael O. Johnson will be stepping down as chief of Herbalife next year. He will be succeeded by Richard P. Goudis, the chief operating officer.

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Patrick T. Fallon/Bloomberg

As the chief executive of Herbalife, Michael O. Johnson has weathered a number of prominent struggles, including a bruising battle with the hedge fund manager William A. Ackman and a settlement with government regulators over the nutritional supplement maker’s business practices.

Now Mr. Johnson is paving the way to step down as chief executive.

Herbalife, the supplements maker, said on Tuesday that Mr. Johnson would step down from the chief executive role next year after 13 years. He will be succeed by Richard P. Goudis, a longtime lieutenant who is the company’s chief operating officer.

In an interview, Mr. Johnson said the transition had long been in the making and was meant to bring in new leadership.

“It was the right time,” he said. “This gives me an opportunity, as executive chairman, to look at the larger picture.”

Mr. Goudis said in an interview that he felt he had been prepared for his new role for most of his tenure at Herbalife.

“Michael and I have been working together for 12 and a half years,” he said. “A lot of the strategies that are in place today, I’ve been right alongside Michael in putting them in place.”

Still, when Mr. Johnson leaves the job on June 1 and assumes the new role of executive chairman, he will close a chapter on perhaps the most tumultuous stretch of the company’s 36-year history.

It was under his tenure that Mr. Ackman emerged as a ferocious critic of Herbalife, accusing it of being a pyramid scheme and betting that the company’s stock would fall to zero after government intervention.

“This is the best-managed pyramid scheme in the history of the world,” Mr. Ackman said when he began his campaign in 2012.

At the heart of his efforts — which ultimately expanded to calling on lawmakers to force action against the company — were accusations that Herbalife’s sales practices, built on independent resellers who are rewarded for pulling in new members, amounted to an unlawful scheme.

That opened the door to an unusually public fight, which at times turned bitter, between Mr. Ackman and his sometime nemesis and fellow financial mogul Carl C. Icahn. Mr. Icahn invested heavily in the company and eventually gained five seats on its board.

Other well-known people of Wall Street, including Daniel S. Loeb and George Soros, jumped into the fray as well.

But the fight over Herbalife essentially ended in July, when the company settled an inquiry by the Federal Trade Commission that included payment of $200 million in consumer relief and changes in its business practices.

The F.T.C. found that the company had deceived both buyers and sellers of its products, and that the majority of its distributors made little to no money or lost money outright.

What the settlement did not include — and which ultimately dealt Mr. Ackman a huge setback — was any move to shut the company or some other action that would lead to a plunge in its stock price.

Shares of Herbalife have swung up and down since then.

Whatever effects the F.T.C. settlement will have on the company’s business in the long term, its most recent earnings report showed little trouble. On Tuesday, the company said that sales in its third quarter were up slightly, at $1.1 billion, while net income was down 6 percent, at $87.7 million.

The company raised its full-year diluted earnings guidance to a range of $2.77 a share to $2.97 a share, from $2.30 a share to $2.60 a share.

On Tuesday, Mr. Icahn offered praise for both Mr. Johnson and Mr. Goudis.

“We would like to applaud Michael Johnson for doing a superb job navigating the company through a number of libelous attacks during this period,” Mr. Icahn said in a statement. “I am glad he intends to stay meaningfully involved in the company and I fully support the board’s choice of Rich Goudis becoming C.E.O. while Michael remains actively engaged as executive chairman.”

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