LOS ANGELES, Calif. – Herbalife said Monday that it is nominating three people backed by activist investor Carl Icahn to its board.
If elected, the latest nominees would bring the number of Icahn-supported people on Herbalife’s board to five. There are already two currently on the board. Icahn owns about 16.8 per cent of Herbalife Ltd.’s common stock.
Herbalife, which makes supplements and weight-loss products, says it plans to keep the size of the board at 13.
The company has been under attack by hedge fund manager Bill Ackman, who has a $1 billion short position in Herbalife’s stock that puts him in position to profit from a drop in the company’s stock. Ackman says that Herbalife is operating as a pyramid scheme, implying the company makes most of its money by recruiting new sales people rather than from selling its products.
Herbalife has repeatedly denied the claims but earlier this month the company said that it is being investigated by the Federal Trade Commission for possible deceptive practices.
Icahn has sided with Herbalife, taking his battle against Ackman public and increasing his stake in the company.
Less than two weeks ago, Herbalife agreed to push back the date of its annual shareholder meeting by five days so it could continue talks with Icahn about adding his nominees to its board.
Herbalife said that the nominations of Hunter C. Gary, Jesse A. Lynn and James L. Nelson are part of an amended agreement with Icahn. Gary and Lynn work for Icahn Enterprises LP, and will be nominated for board positions currently held by Carole Black and Michael Levitt. Their three-year terms end at Herbalife’s annual meeting.
Colombe M. Nicholas plans to resign from Herbalife’s board. Nelson, an independent director of Icahn Enterprises, will be nominated to serve the rest of Nicholas’ term.
Gary, Lynn and Nelson will be nominated at Herbalife’s annual shareholders meeting, which is currently expected to be held on April 29. The meeting was initially scheduled for April 24.
Shares of Herbalife gained $3.25, or 6.6 per cent, to $52.79 in premarket trading about two hours ahead of the market open.