Herbalife Management Conflicts Of Interest Questioned By Investment Groups
This article was originally published in The Tan Sheet
Executive Summary
Herbalife execs' dual responsibilities as directors of the firm and trustees in the estate of its founder could produce "serious conflicts of interest," two investment groups charge in a July 24 letter to the board.
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President/CEO Christopher Pair announces departure from supplement company as a result of "mutual agreement," effective Oct. 18. No successor has been named; an executive committee is running the firm until the board appoints a new leader. Company is negotiating severance terms with Pair, who has been with Herbalife since 1985 and will remain an executor of the Mark Hughes Family Trust. Although few details of his exit were released, investors previously have questioned Pair's business practices in light of the negative financial direction the firm has taken since founder Hughes' death in May 2000 (1"The Tan Sheet" July 30, p. 11)
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Tender offer by Chairman and CEO Mark Hughes for the company's Class A and Class B stock is terminated, as is the buy-out agreement Hughes arranged between his MH Millenium Acquisition Corp. and Herbalife. In an April 10 statement, Hughes attributed the transactions' termination to "extremely adverse conditions in the credit markets," but said the firm will continue to "maximize shareholder value by expanding and improving the Herbalife business worldwide." Hughes had announced his intention to buy all the company's remaining shares and take it private on Sept. 13, stating Herbalife had "not been rewarded in the public equity markets" (1"The Tan Sheet" Sept. 20, 1999, p. 15)