Herbalife Chief Executive Officer Michael Johnson, who has led the company through tough times to significantly drive up its sales, will be quitting his position in 2017.
The nutritional supplement company announced on Tuesday that Johnson will step down from a CEO position he has held since 2003 next June. He is to be replaced by Chief Operating Officer Richard Goudis, a close ally of Johnson who has been with Herbalife for 12 years.
Johnson, who believes it is the right time for him to leave the chief executive job, will become the executive chairman of the company under a planned succession program for management.
“Our mission of improving people’s nutrition and health is what attracted me to Herbalife Nutrition more than 13 years ago, and I am extremely proud that we have made incredible strides in bringing our mission to bear around the globe,” the Herbalife chief executive said in a statement by the company.
He has expressed his confidence in the ability of Goudis to lead the company, saying the Herbalife COO has shown “extraordinary integrity, judgment and passion for making Herbalife Nutrition a great company.”
Johnson said he was not quitting his position because of the disagreement with hedge fund manager William Ackman, who has taken a $1 billion short bet against the nutritional supplement maker as running a pyramid scheme.
He expressed his pleasure at having been able to grow Herbalife sales from $1 billion in 2003 to $5 billion this year.
One of the Los Angeles-based company’s major investors, Carl Icahn, has praised Johnson for the great job he has done. The billionaire investor also stated he was in support of the succession plan put in place by the company.
“We would like to applaud Michael Johnson for doing a superb job navigating the company through a number of libelous attacks during this period,” 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 CEO while Michael remains actively engaged as executive chairman.”
The Federal Trade Commission reportedly spent about two years probing into the operations of Herbalife to determine if it was running a pyramid scheme. The verdict from that investigation was mixed.
The nutritional supplement company was able to avoid being charged for running a pyramid scheme and being compelled to shut down in July. It agreed to a payment of $200 million in consumer relief, while also promising to improve on its business practices.
Johnson told CNBC that he wants to ensure that Herbalife complies with FTC regulations to the letter.
The leadership change announcement came as the company reported results for the third quarter, which beat Wall Street expectations for earnings.
Herbalife posted adjusted earnings of $1.21 a share, surpassing estimate of $1.09 per share forecast by analysts in an S&P Global Market Intelligence survey.
But revenues came in slightly lower than expected at $1.12 billion, compared to average analysts’ estimate of $1.14 billion.
CNBC reports that Herbalife shares were down 2 percent in extended trade on Tuesday following the announcements.